Procedure of Company Strike Off

Procedure of Company Strike Off

Striking a company off the Register of Companies under Section 248 of the Companies Act, 2013 is the most cost-effective way to close an entity that has stopped doing business. With the Centre for Processing Accelerated Corporate Exit (C-PACE) handling voluntary applications since 2023, a clean dormant company can move from board resolution to the official Form STK-7 dissolution order in roughly three to six months — provided every pre-filing condition is met, every statutory return is up to date, and every bank account is closed. Miss any of those conditions and C-PACE will push back, costing you months.

Two Routes to Strike Off: Section 248(1) and Section 248(2)

The Companies Act provides two distinct entry points into the strike-off process.

Route 1 — Suo moto removal by the Registrar of Companies (ROC) under Section 248(1). The ROC can initiate removal on its own when: (a) a company has not commenced business within one year of incorporation; (b) a company has not been carrying on any business or operations for two immediately preceding financial years and has not applied for dormant status under Section 455; or (c) subscribers to the memorandum have not paid subscription money. The ROC sends a notice in Form STK-5 (for a single company) or STK-5A (for a list of companies), allowing 30 days to respond. Directors who do not respond lose control of the timeline.

Route 2 — Voluntary application by the company under Section 248(2) via Form STK-2, filed through C-PACE on the MCA V3 portal. This is the route most directors choose because it is planned, it gives you time to close obligations in sequence, and it prevents a messy ROC-initiated removal that can catch directors off guard.

This article covers Route 2 in full.

Eligibility Conditions for Voluntary Strike Off

Before a company can file STK-2, it must satisfy every one of the following conditions. A single failure is grounds for rejection.

The company must have:

• Extinguished all liabilities (zero outstanding dues to creditors, banks, employees, vendors, and government authorities)
• Obtained a special resolution passed by members holding at least 75% of paid-up share capital, or obtained consent in writing from 75% of members in terms of paid-up share capital

The company must NOT be:

• A listed company on any recognised stock exchange
• A company registered under Section 8 (not-for-profit / charitable objects)
• Under active investigation, inspection, inquiry, or prosecution before any court or tribunal
• A company whose application for compounding of offences is pending before the ROC or any court
• A vanishing company as defined by SEBI
• A company that has issued debentures that are outstanding or has accepted deposits that remain unpaid
• A company that has active secured loans with any financial institution
• A company that has been struck off earlier and not revived via the NCLT

If your company falls into any of the above categories, voluntary strike-off is not available. Evaluate whether voluntary liquidation under Section 59 of the IBC or winding-up under Chapter XX is the appropriate route instead.

Step-by-Step Procedure: Filing STK-2 Through C-PACE

Work through these steps in sequence. Each step depends on the previous one being complete.

Step 1 — Hold a Board Meeting and Pass the Initial Resolution

Call a board meeting with proper notice under Section 173. At this meeting, the board must: (a) decide to apply for strike-off; (b) authorise a director to sign STK-2 and related forms; and (c) resolve to convene an Extraordinary General Meeting (EGM) to pass the special resolution.

Capture the board resolution accurately — C-PACE reviewers check the language.

Step 2 — Settle Every Liability Before the EGM

Do not pass the special resolution until all liabilities are extinguished. Work through this checklist:

• Bank loans and overdrafts — obtain a no-dues certificate from the bank
• Vendor and trade creditors — make full payments and collect acknowledgements
• Employee dues — clear salaries, gratuity, and any provident fund arrears
• TDS — deposit all pending TDS and file any overdue TDS returns (Form 24Q, 26Q)
• GST — file all pending GSTR-1, GSTR-3B, and GSTR-9 returns; clear any outstanding tax, interest, and late fees on the GST portal
• Income tax — file the final ITR (for AY 2026-27 or 2027-28 as applicable); pay all advance tax and self-assessment tax; verify no demand is outstanding in the AIS/TIS portal or the outstanding demand tab on the income tax portal
• MCA annual returns — file AOC-4 (financial statements) and MGT-7A (or MGT-7, depending on company type) up to the last completed financial year. Any default here will block C-PACE.
• DIR-3 KYC — ensure every director has filed DIR-3 KYC for the current year; deactivated DINs cause STK-2 rejection

Step 3 — Pass the Special Resolution and File MGT-14

Hold the EGM. Pass a special resolution approving the application for strike-off. Under Section 117 read with Rule 24, file Form MGT-14 with the ROC within 30 days of passing the resolution. Attach a certified copy of the special resolution and the explanatory statement.

Missing the 30-day deadline for MGT-14 attracts an additional fee of Rs. 100 per day. Get this filed immediately after the EGM.

Step 4 — Assemble the STK-2 Package

STK-2 is a composite form that must be accompanied by four statutory enclosures:

The STK-8 statement is the most time-sensitive document. Prepare it as close to filing day as possible. The statement must show nil liabilities — any entry for outstanding creditors, loans, or statutory dues will trigger rejection.

Step 5 — Close the Bank Account and File STK-2 on MCA V3

Before submitting STK-2, close all bank accounts linked to the company and obtain a closure confirmation letter from the bank. C-PACE cross-checks active bank accounts; an open account is the single most common reason for rejection in 2025-26.

File Form STK-2 on the MCA V3 portal (mca.gov.in). The prescribed government fee is Rs. 10,000. The form is digitally signed by a director (DSC mandatory) and certified by a practising Company Secretary or Chartered Accountant as applicable.

Step 6 — ROC Publishes STK-6 Notice

After accepting the application, C-PACE causes a notice in Form STK-6 to be published in the Official Gazette and on the MCA website, inviting objections from any person (creditors, regulators, or the public) within 30 days. The ROC may also issue individual notices to relevant authorities.

During this 30-day window, do not take any action on behalf of the company. Any business activity post-filing voids the application.

Step 7 — STK-7 Dissolution Order

If no valid objection is received and the Registrar is satisfied that all conditions are met, the ROC issues Form STK-7 — the official order removing the company's name from the Register of Companies. The order is published in the Official Gazette. From this date, the company is dissolved and ceases to exist as a legal entity.

Download and preserve the STK-7 order permanently.

Tax and Statutory Closure: The Work That Runs in Parallel

Strike-off dissolves the corporate entity but does not extinguish pre-existing tax obligations. Several steps must run alongside or before the STK-2 filing.

Income Tax:

• File the final ITR for the last year of operation. For a company closing in FY 2025-26, this means filing for AY 2026-27 by the applicable due date.
• Verify in the income tax portal that no outstanding demand notices exist under Sections 143(1), 147, or 271.
• Check the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) for any third-party reported income that has not been returned.
• If TAN is active, file all pending TDS returns and surrender the TAN after final deposit.

GST:

• File all pending GSTR returns.
• Submit Form GST REG-16 on the GST portal to apply for cancellation of GST registration. The officer will issue a cancellation order in REG-19 after verification. Do this before or concurrently with STK-2; an active GST registration does not automatically cancel on strike-off.
• File GSTR-10 (final return) within three months of the date of cancellation.

Other Registrations:

• Provident Fund (PF): Submit a closure application to the EPFO regional office and ensure all PF dues are cleared.
• ESI: Intimate the ESIC regional office of the closure and close the ESI account.
• Professional Tax: Surrender the professional tax registration with the state authority.
• Import Export Code (IEC): Surrender to DGFT if active.
• Shops and Establishment licence: Surrender to the local municipal body.
• Other trade licences: Food Safety (FSSAI), drug licence, etc. — surrender each to the issuing authority.

Worked Example: The Real Cost of Keeping a Dormant Company Alive

Consider a private limited company incorporated in 2021 that ran operations for one year, then went dormant. The directors are evaluating whether to strike it off in 2026 or let it continue.

Annual cost of dormant compliance (FY 2026-27 estimate):

One-time strike-off cost:

The break-even point is just over 12 months. By year two, the company has saved Rs. 35,000+. By year three, it has saved Rs. 70,000+ — and has eliminated the risk of Section 164(2) disqualification that triggers when annual returns are not filed for three consecutive financial years.

Now consider what happens if the company does nothing. If AOC-4 alone is filed 200 days late, the additional fee at Rs. 100 per day = Rs. 20,000 per form, per year. Across AOC-4 and MGT-7A over two years of default, a director could be looking at Rs. 80,000 in additional fees before any prosecution risk is assessed.

The arithmetic heavily favours voluntary strike-off for a genuinely dormant company with no future use.

Strike Off vs. Winding Up: Choosing the Right Exit

Many directors conflate the two. They are structurally different.

Strike-off under Section 248 is an administrative removal. There is no liquidator, no formal creditor process, and no asset realisation mechanism. It is available only to companies that have already cleared all liabilities. Think of it as removing a blank page from a register.

Voluntary winding-up under Section 59 of the Insolvency and Bankruptcy Code (IBC) is available to solvent companies — companies that can pay all debts — but where creditors exist and their consent or formal discharge is required. A liquidator is appointed, creditors are formally settled, and the liquidator files a dissolution application with the NCLT. The process takes longer (typically 9-18 months) and costs more, but provides a structured exit with creditor discharge documentation that protects directors from future claims.

Compulsory winding-up under Chapter XX of the Companies Act is court-driven and applies where the company is unable to pay debts. This is not a director-led process.

The decision rule is simple: If your company has zero external creditors and all statutory dues are cleared, use Section 248(2) strike-off. If you have creditors — even friendly ones who are willing to release claims — consider voluntary liquidation under IBC Section 59 for the legal finality it provides.

Common Mistakes That Lead to Rejection or Delay

In practice, these are the errors that most frequently push back STK-2 applications at C-PACE.

1. Stale STK-8 statement. The CA-certified statement of accounts must be dated within 30 days of the STK-2 filing date. Preparing it in advance and then delaying the filing by five weeks is the most avoidable error. Prepare STK-8 and file STK-2 on the same day or within a week.

1. Active or non-closed bank account. C-PACE checks bank account status. Any operative current account, savings account, or fixed deposit in the company's name will result in rejection. Obtain the bank's closure confirmation letter and attach it.

1. Pending MCA filings. AOC-4 or MGT-7A not filed for any year triggers C-PACE rejection immediately. Check the MCA V3 company master data for all pending e-forms before filing.

1. MGT-14 not filed or filed late. The special resolution must be registered with the ROC via MGT-14 before STK-2 is submitted. C-PACE verifies this in the system.

1. Unsettled TDS. An outstanding demand in the TRACES system or an unfiled TDS return will surface during verification. C-PACE coordinates with tax authorities. Clear TDS dues and file nil or final TDS returns as applicable.

1. Directors with deactivated DINs. If a director has not filed DIR-3 KYC, their DIN is deactivated, and they cannot digitally sign STK-2. Reactivate DINs before assembling the form.

1. Attempting strike-off when the company was previously struck off by the ROC. Such a company must first be revived via NCLT under Section 252 before a fresh voluntary application can be made.

1. Active GST registration with outstanding returns. An active GSTIN with pending GSTR-3B returns will flag during verification. File all returns and initiate REG-16 before or simultaneously with STK-2.

Record Retention and Director Protection After STK-7

Dissolution does not mean you can shred everything. The Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 and the broader Companies Act impose the following obligations on directors even after STK-7.

• Books of accounts, statutory registers, and records must be preserved for a minimum of eight years from the date of the STK-7 order. Store physical and digital records securely.
• A struck-off company can be restored to the register by the NCLT under Section 252 within 20 years of strike-off — by the company, any member, any creditor, or any person aggrieved by the removal. If a creditor surfaces after strike-off claiming an unpaid liability, the STK-8 nil-liability statement and payment acknowledgements you preserved are your primary defence.
• Directors remain personally liable for acts done while the company existed. Strike-off does not discharge personal guarantees given to banks or liabilities arising from fraud or misfeasance under Section 339.
• If the company is restored post-strike-off and it is found that assets were distributed among members before creditors were paid, those recoveries can be clawed back.

Keep a complete strike-off file: board resolutions, EGM minutes, MGT-14 acknowledgement, all STK forms filed and received, the STK-7 order, all tax closure certificates, and bank account closure letters.

Key Takeaways

• Section 248(2) voluntary strike-off via Form STK-2 through C-PACE is the correct exit route for a private company with zero liabilities, no litigation, and no future business purpose.
• Eligibility is non-negotiable — listed companies, Section 8 companies, companies under investigation, and companies with outstanding deposits or debentures cannot use this route.
• STK-8 has a hard 30-day freshness window from the date of filing; prepare it and file STK-2 the same week.
• Close every bank account before filing — an active account is the single most common cause of C-PACE rejection.
• Tax and GST closure runs in parallel — file the final ITR, surrender GST registration via REG-16, file GSTR-10, and verify nil demand in AIS/TIS before submitting STK-2.
• The cost-benefit calculation strongly favours strike-off for a genuinely dormant company; annual compliance costs of ~Rs. 35,000-40,000 outstrip the one-time strike-off cost within 12-15 months.
• Preserve all records for eight years post STK-7; NCLT can restore a struck-off company within 20 years and directors remain personally liable for pre-dissolution acts.