Starting a business is exciting, but sometimes a company or LLP may need to be closed due to inactivity, financial challenges, or strategic shifts. In such situations, opting for strike off offers a simple and lawful way to shut down operations. The Ministry of Corporate Affairs (MCA) in India provides this route under specific provisions of the Companies Act, 2013 for companies and the LLP Act, 2008 for Limited Liability Partnerships.
This article explains the strike-off procedure for companies and LLPs in India, its legal framework, conditions, steps involved, and key documentation — all in plain and human language.
What is Strike Off?
Strike off means legally removing the name of a company or LLP from the Register of Companies, resulting in dissolution without the need for winding up proceedings.
Legal Provisions Applicable
– For Companies:
Strike off is governed under Section 248 of the Companies Act, 2013, read with Rule 4 of the Companies (Removal of Names of Companies) Rules, 2016.
– For LLPs:
Strike off is governed by Rule 37 of the LLP Rules, 2009, and the application is made using Form 24.
When Can a Company or LLP Apply for Strike Off?
A company or LLP can apply when it has ceased all commercial activities, has no liabilities, and has obtained consent of all partners or shareholders.
Grounds for Strike Off (Company under Section 248)
The Registrar may strike off a company if:
It has not commenced business within one year of incorporation.
It is not carrying on business for two financial years and has not filed an application for dormant status.
The company itself can apply voluntarily if it meets the conditions mentioned above.
Conditions for LLP Strike Off
The LLP must not be carrying any business for the last one year.
All filings must be up to date, including Form 8 and Form 11.
There must be no pending litigation or dues.
Step-by-Step Procedure for Strike Off
– For Companies: Filing Form STK-2
Step 1: Hold a Board Meeting
Pass a resolution approving the proposal for strike off, authorising a director to sign and file Form STK-2 with ROC.
Step 2: Clear Liabilities
Ensure there are no outstanding liabilities, loans, taxes, or penalties owed by the company to any government or private entity.
Step 3: Obtain Shareholder Approval
Conduct a general meeting to pass a special resolution, requiring at least 75% of shareholder consent in terms of paid-up capital.
Step 4: File Pending Returns
Complete all overdue filings such as Form AOC-4, MGT-7, and DIR-3 KYC to bring the company status to ‘Active’.
Step 5: File Form STK-2 with ROC
Submit STK-2 with government fees of ₹10,000 along with affidavit, indemnity bond, board resolution, and latest statement of accounts.
– For LLPs: Filing Form 24
Step 1: Pass Partner Resolution
All designated partners must approve the strike off and authorise one of them to file the application with the Registrar.
Step 2: Clear LLP Obligations
Ensure there are no liabilities outstanding. All creditors, if any, must be paid off before proceeding with closure.
Step 3: File Pending Returns
File Form 8 and Form 11 up to the financial year when the LLP ceased its business operations to maintain compliance.
Step 4: Obtain Income Tax Clearance (if applicable)
If the LLP has filed returns in past years, ensure that it has obtained No Objection Certificate (NOC) from Income Tax Department.
Step 5: Submit Form 24 to ROC
File Form 24 with prescribed documents including LLP resolution, indemnity bond, affidavit, PAN, and last income tax return (if filed).
Key Documents Required
– For Company (STK-2):
Board Resolution and Shareholder Resolution
Affidavit by Directors (Form STK-4)
Indemnity Bond (Form STK-3)
Statement of Accounts not older than 30 days
PAN and Aadhaar copies of directors
– For LLP (Form 24):
LLP Resolution
Affidavit and Indemnity by Designated Partners
Consent of partners
Statement of Assets and Liabilities
Income Tax acknowledgment copy
What Happens After Filing?
After receipt of the application, the ROC verifies documents. If satisfied, the name is published in the Official Gazette, and the entity is dissolved.
Timeframe for Strike Off
The strike off process typically takes 3 to 6 months depending on the Registrar’s workload and correctness of documents submitted.
Caution: When Strike Off is Not Allowed
You cannot apply for strike off if:
There are pending litigations
The entity has defaulted in statutory dues
The name was struck off previously and restored under appeal
The entity is under inspection or prosecution
Penalties for Incorrect Filing
If false information is submitted during strike off, the directors/partners are liable for penalty under Section 251 of the Companies Act, 2013 (in case of companies) or similar rules for LLP.
The penalty includes fine up to ₹1 lakh and disqualification of directors/partners.
FAQs
Q1. Can a company apply for strike off without filing annual returns?
No, the company must file all pending returns including AOC-4 and MGT-7 before applying for strike off.
Q2. Is GST cancellation required before strike off?
Yes, if GST was registered, cancellation must be done first, and the GST certificate must be surrendered.
Q3. Is director DIN deactivation possible after strike off?
DIN remains active even after strike off unless the director chooses to surrender it voluntarily or is disqualified.
Q4. Can an LLP with a bank account apply for strike off?
Yes, but the bank account must be closed before filing Form 24, and closure proof should be attached.
Q5. Can a company or LLP be revived after strike off?
Yes, within 20 years for companies under Section 252(3), and within 5 years for LLPs by applying to NCLT.
Q6. Is it necessary to appoint a Chartered Accountant for filing strike off?
While not mandatory, professional help is recommended to prepare accounts and file accurate documentation.
Q7. What is the cost of strike off?
For companies, government fees for STK-2 is ₹10,000. For LLPs, Form 24 filing costs around ₹500 (excluding professional fees).
Q8. Can strike off be applied voluntarily by a dormant company?
Yes, if a dormant company has no activity and no liabilities, it may opt for strike off under Section 248.
Final Thought
Strike off is a practical and lawful way to close a non-functional business without going through long court procedures. Whether you own a company or an LLP, timely closure saves compliance burden and future penalties. However, filing accurate documents and clearing all dues beforehand is key to a smooth exit. Seeking help from professionals ensures error-free submission and peace of mind.