How to Close a Company in India - Strike-Off Process Under STK-2 Explained

How to Close a Company in India - Strike-Off Process Under STK-2 Explained

Not every company story ends with an IPO or an acquisition. Sometimes the business simply didn't take off the way you hoped, or you started it for a specific project that's now complete, or life just moved you in a different direction. Whatever the reason, if your company is sitting idle - not doing any business, not generating revenue, but still technically "alive" on the MCA register - it is quietly costing you money and creating compliance risk every single year.

Many founders assume that if they just stop filing returns and walk away, the company will somehow fade into non-existence. It doesn't work that way. An inactive company that keeps missing its annual filings accumulates penalties, and its directors can even face disqualification, which affects their ability to be directors in other companies too. The right way to close a company that has genuinely stopped operating is through the strike-off process using Form STK-2. This guide explains exactly when you can use this route, what it requires, and how to do it properly.

What is Strike-Off and How is it Different from Winding Up

Strike-off is a simplified, faster route to close a company under Section 248 of the Companies Act, 2013, meant specifically for companies that are defunct or have not carried on any business for a certain period. When the Registrar of Companies (ROC) strikes off a company's name from the register, the company legally ceases to exist, except for the limited purpose of realising any remaining amounts due to it or discharging its liabilities.

There are actually two routes to strike-off:

• Suo motu strike-off, where the ROC itself initiates the process against companies that appear to be defunct or non-compliant, usually after issuing notices
• Voluntary strike-off, where the company itself applies to be struck off using Form STK-2, after settling its affairs and obtaining the necessary internal approvals

This guide focuses on the voluntary route, since that gives you control over the timing and ensures the closure is done cleanly, without the complications that can arise from a ROC-initiated strike-off.

It's important to distinguish strike-off from winding up, which is a more formal, court or Tribunal-supervised process (or via liquidator, under the Insolvency and Bankruptcy Code framework) typically used for companies with more complex affairs, ongoing disputes, or significant assets and liabilities that need formal liquidation. Strike-off is meant to be a lighter-touch option for genuinely inactive, asset-light companies with no major pending issues.

Why and When You Should Consider Strike-Off

Strike-off is the right choice when:

• The company has not commenced business within one year of incorporation
• The company has not been carrying on any business or operations for the two immediately preceding financial years, and has not applied for dormant company status
• The founders have decided to discontinue the business and there are no significant assets or liabilities left to be settled through a formal liquidation process
• The company wants to avoid the recurring burden of annual compliance (ROC filings, audits, ITR) for a business that is no longer active
• Directors want to avoid future disqualification risk that comes from continued non-filing of annual returns

On the other hand, if your company has ongoing litigation, has taken loans or advances that remain unpaid, has assets that need to be distributed, or has other unresolved liabilities, strike-off is likely not the correct route - you may need to explore formal winding up or first settle these matters before applying.

Eligibility and Conditions for Strike-Off

Before filing STK-2, make sure your company meets these conditions:

• The company must have no active business operations for the prescribed period (generally the two preceding financial years, or since incorporation if it's a newer company that never commenced business)
• The company should not have any outstanding liabilities, or all liabilities must be cleared/settled before applying
• The company must not be under investigation or inspection by any regulatory authority
• There should be no pending prosecutions, inquiries, inspections, or proceedings against the company
• The company must not have accepted public deposits that remain unpaid, or have any pending default on deposits or debentures
• The company should have filed all overdue annual returns and financial statements up to the date it became inactive (or, in most practical cases, ensure filings are reasonably current before applying, since incomplete filing history often needs to be regularised first)
• The company must not be a listed company, a Section 8 company, or fall under certain other excluded categories that have separate closure mechanisms
• All bank accounts must be closed, and a certificate to that effect obtained

A board resolution and, in most cases, a special resolution approved by at least 75% of shareholders (or consent of 75% of shareholders in terms of paid-up share capital) is required to authorise the strike-off application.

Documents Required for STK-2 Filing

To apply for voluntary strike-off, you will typically need:

• Board resolution approving the decision to apply for strike-off
• Special resolution or consent of 75% of members in terms of paid-up share capital, authorising the strike-off application
• Statement of Accounts containing assets and liabilities of the company, made up to a date not more than 30 days before the date of application, certified by a Chartered Accountant
• Indemnity Bond in Form STK-3, given by every director, indemnifying any liability that may arise even after the company's name is struck off
• Affidavit in Form STK-4, from every director, declaring that the company has not carried on any business and confirming the facts stated in the application are true
• A statement regarding pending litigations, if any, involving the company
• NOC from the relevant regulatory authority, if the company was engaged in a regulated activity requiring such approval
• Copy of the PAN card of the company
• Bank account closure certificate or a statement confirming all bank accounts have been closed
• Certificate of a practising Chartered Accountant certifying the statement of accounts
• Digital Signature Certificate (DSC) of the director filing the application

Step-by-Step Process and MCA Forms

Here is the process broken down into clear steps:

1. Assess eligibility - confirm the company has been inactive for the required period, has no material liabilities, and does not fall into an excluded category.

1. Close all bank accounts of the company and obtain a closure certificate or statement from the bank confirming this.

1. Settle all liabilities - pay off creditors, employees, statutory dues, and any other outstanding obligations before proceeding.

1. Prepare the Statement of Accounts, certified by a practising Chartered Accountant, showing the company's assets and liabilities as of a date not more than 30 days before filing the application.

1. Convene a board meeting and pass a resolution approving the strike-off application and authorising a director to file it.

1. Convene a general meeting and pass a special resolution (or obtain consent from 75% of members in terms of paid-up share capital) approving the strike-off.

1. File Form MGT-14 with the ROC within 30 days of passing the special resolution (where applicable, since strike-off approval is typically via special resolution).

1. Prepare the indemnity bond (STK-3) and affidavit (STK-4) from all directors, duly notarised.

1. File Form STK-2 with the ROC, attaching the board and special resolutions, statement of accounts, indemnity bond, affidavit, and other required documents, along with the prescribed government fee.

1. ROC processes the application and, if satisfied, publishes a public notice in Form STK-6 in the Official Gazette and on the MCA website, inviting objections from the public within the prescribed period (usually around 30 days).

1. If no valid objections are received, the ROC proceeds to strike off the company's name and publishes a notice of dissolution in Form STK-7 in the Official Gazette.

1. The company stands dissolved from the date of publication of the notice in the Official Gazette, and its name is removed from the MCA's register of companies.

Note that STK-2 itself does not have a fixed 30-day filing deadline tied to a triggering event the way DIR-12 or SH-7 do; instead, it is filed once the company has satisfied all eligibility conditions and gathered the necessary internal approvals and documents. However, the special resolution, if used as the basis for approval, should be filed via MGT-14 within 30 days of being passed, consistent with the general rule for special resolutions.

Cost and Government Fees in 2026

The government fee structure for strike-off is relatively straightforward compared to other MCA filings:

• Filing Form STK-2 attracts a fixed government fee, which has historically been set at a flat amount rather than a slab based on authorised capital - however, this should always be verified for the current rate at the time of filing, since fee notifications can be revised
• There may be incidental costs for notarising the indemnity bond and affidavit, and stamp duty on these documents (which varies by state)
• If the company has overdue annual filings that need to be regularised before applying for strike-off, you will also need to budget for the additional/late fees on those pending MGT-7/AOC-4 filings, which can add up significantly if several years are pending
• Professional fees for a Chartered Accountant to certify the statement of accounts, and for a CA/CS/lawyer to prepare and file the application, should be budgeted separately

Because there are often hidden costs in the form of pending late fees on old annual filings, it's worth getting a full compliance health-check done before committing to a strike-off timeline and budget - this is often the single biggest cost variable in the entire process.

Timeline

A realistic breakdown of how long strike-off takes:

• Settling liabilities, closing bank accounts, and preparing the statement of accounts: typically 1-3 weeks, depending on how tidy the company's affairs already are
• Regularising any pending annual filings (if applicable): this can range from a few days to several weeks depending on how many years are overdue
• Board and general meeting process, plus MGT-14 filing: about 3-4 weeks, factoring in meeting notice periods
• Filing STK-2 and ROC's initial review: a few weeks
• Public notice period (STK-6) inviting objections: generally around 30 days
• Final strike-off and dissolution notice (STK-7): shortly after the objection period closes, if no valid objections are raised

Altogether, a clean, well-prepared strike-off application usually takes around 4 to 6 months from start to final dissolution, though this can extend if there are pending filings to regularise or objections to address. Companies with truly clean records and no compliance backlog tend to move through this faster; those with several years of pending annual returns should expect a longer runway.

Key Distinctions: Strike-Off vs Winding Up vs Dormant Status

It helps to understand the alternatives before committing to strike-off:

• Strike-off (Section 248, Form STK-2) is a simplified administrative closure route for defunct, asset-light companies with no major pending liabilities or disputes. It's faster and cheaper than winding up, but only available if the eligibility conditions are genuinely met.
• Winding up (voluntary or via Tribunal/liquidator under the Insolvency and Bankruptcy Code framework) is a more formal process used when the company has significant assets or liabilities that need to be properly realised, distributed, or settled under supervision. It takes considerably longer and involves more procedural rigour, including possibly a liquidator's appointment.
• Dormant company status (Section 455) is not a closure option at all - it's a way to keep a company legally alive but with reduced compliance obligations, useful for companies that are inactive but intend to resume operations or hold assets (like a future project or intellectual property) without needing full annual compliance. This is a good middle path if you're not sure you want to permanently close the company.

Choosing the wrong path - for instance, trying to strike off a company that still has unresolved liabilities - can lead to rejection of the STK-2 application, or worse, personal liability concerns for directors if issues surface after strike-off despite the indemnity bond.

Common Mistakes to Avoid

• Applying for strike-off while liabilities are still outstanding, which is one of the most common reasons applications get rejected or challenged later
• Not regularising pending annual filings first, assuming strike-off is a shortcut to avoid old penalties - the ROC typically expects filings to be reasonably up to date before considering the application
• Forgetting to close all bank accounts before filing, since this is a standard eligibility check
• Underestimating the objection period, and assuming the company is dissolved as soon as STK-2 is filed - dissolution only happens after the public notice period concludes without valid objections
• Not obtaining proper indemnity bonds and affidavits from every director, or getting the notarisation wrong, leading to document rejection
• Ignoring pending litigation or regulatory action, which disqualifies the company from using the voluntary strike-off route
• Assuming strike-off erases director liability entirely - directors can still be held liable for certain matters (like fraud or specific statutory dues) even after the company is struck off, despite the indemnity bond
• Not informing all stakeholders (employees, vendors, landlords) before initiating strike-off, which can lead to unexpected objections during the public notice period

Frequently Asked Questions

What is the difference between strike-off and winding up a company?

Strike-off under Section 248 is a simplified, faster route meant for defunct companies with no significant assets, liabilities or pending disputes - it's essentially an administrative removal from the register. Winding up is a more formal, detailed process (often court, Tribunal or liquidator-supervised) used when a company has meaningful assets or liabilities that need to be properly realised and settled before closure.

How long is a company inactive before it becomes eligible for strike-off?

Generally, a company becomes eligible for voluntary strike-off if it has not commenced business within one year of incorporation, or has not carried on any business for the two immediately preceding financial years, and has not applied for dormant company status. It's important to verify the exact eligibility criteria applicable to your situation before applying.

Do all directors need to sign the indemnity bond and affidavit?

Yes, every director of the company is generally required to give an indemnity bond in Form STK-3 and an affidavit in Form STK-4 as part of the voluntary strike-off application, declaring that the company has no pending liabilities and has not carried on business as stated.

Can a company with pending loans apply for strike-off?

Generally, no. A company must clear all its liabilities, including any outstanding loans, before it can be considered eligible for strike-off. If liabilities remain unresolved, the application is likely to be rejected, and the company may need to explore a formal winding-up process instead.

What happens if the ROC receives an objection during the strike-off process?

If a valid objection is raised during the public notice period (Form STK-6), the ROC will examine it before proceeding further. Depending on the nature of the objection, the strike-off application may be put on hold, rejected, or the company may need to resolve the underlying issue before the process can continue.

Are directors still liable for anything after the company is struck off?

Yes, to a limited extent. Even after strike-off, the liability of every director, manager or other officer who was exercising any power of management continues and can be enforced as if the company had not been dissolved, particularly for matters like fraud, unpaid statutory dues, or issues that surface later despite the indemnity bond given at the time of application.

Can a struck-off company be revived later?

In certain circumstances, a company that has been struck off can apply to the National Company Law Tribunal (NCLT) for restoration of its name to the register, typically within a specified period from the date of the strike-off order, provided valid grounds (such as the company still being in operation or having been struck off unfairly) are shown.

Is it mandatory to file pending annual returns before applying for strike-off?

While the exact requirement can depend on your specific facts, in practice the ROC generally expects a company's annual filings to be reasonably current before it will process a voluntary strike-off application. It's advisable to regularise any overdue MGT-7/AOC-4 filings first, or discuss this with a professional to understand the best sequencing for your case.

How Legal Suvidha Makes This Effortless

This is exactly the kind of process where one wrong document, a mismatched detail, or a missed deadline turns into a rejection, a resubmission, or a running penalty. Legal Suvidha handles the whole thing end-to-end so you can focus on your business.

• Fixed, all-inclusive price quoted upfront — professional fee plus government fee, itemised, with no hidden charges appearing later.
• A dedicated Chartered Accountant / Company Secretary who owns your case from the first call to the final certificate.
• Proactive updates and deadline alerts at every stage — we do not disappear after payment.
• Trusted by 10,000+ founders with a 4.9/5 rating and a multi-disciplinary team of CAs, CSs and lawyers.

Talk to a Legal Suvidha expert today for a free consultation and an exact, transparent quote on WhatsApp — and get it done right the first time.