How to Close a Private Limited Company in India?

Deciding to shut down your business is never easy. But if your company is inactive, financially non-viable, or undergoing restructuring, then knowing how to close a private limited company in India becomes critically important. A formal closure ensures that you avoid legal complications, penalties, and ongoing compliance costs. More importantly, it gives a clean break from the entity’s past liabilities.

In this guide by Bright Advis, we’ll walk you through the complete company closure procedure, from choosing the right closure method to complying with legal formalities. Whether you’re a business owner, director, or investor, this step-by-step process will help you wind up operations the right way.

Why Closing a Company Legally Matters

Many businesses stop operating but continue to exist on paper. This leads to mounting non-compliance penalties, legal notices from the Ministry of Corporate Affairs (MCA), and a bad credit history for directors. By understanding how to close a private limited company, you can avoid these long-term issues.

Here’s why a formal closure is necessary:

• Prevents late filing penalties and ROC notices
• Stops recurring compliance requirements (audits, GST returns, MCA filings)
• Frees directors from future liabilities or investigations
• Releases locked capital and assets legally

Whether your company has never started operations or is shutting down after active years, the process must be initiated in compliance with the Companies Act, 2013.

Methods of Closing a Private Limited Company

There are three primary ways to close a private limited company in India. The choice depends on the company’s financial position and business activity status.

1. Strike-Off by ROC (Fast Track Exit)

This is the most common route if your company has not carried out any business activity for the last two financial years. You can apply under Section 248 of the Companies Act, 2013 for strike-off. This route is fast, cost-effective, and widely used by dormant companies.

2. Voluntary Winding Up

If the company has assets, liabilities, and wants to close voluntarily, the shareholders must pass a special resolution and appoint a liquidator. After clearing debts and distributing assets, the ROC will remove the company from the register.

3. Compulsory Winding Up

This route is used when the Tribunal (NCLT) orders closure due to insolvency, fraud, or serious regulatory violations. It involves a legal process with hearings and investigation.

Step-by-Step Process: How to Close a Private Limited Company

Let’s explore the company closure procedure in a step-wise manner for voluntary closure or strike-off. These are the most common options available to business owners.

Step 1: Hold a Board Meeting

• Call for a board meeting to pass a resolution recommending the closure of the company.
• Approve the appointment of a professional (CA or CS) to help with compliance and filing.

Step 2: Pass a Special Resolution (Shareholder Approval)

• Hold an EGM (Extraordinary General Meeting) within 30 days.
• Pass a special resolution (at least 75% of shareholders) approving closure.
• File MGT-14 with the Registrar of Companies within 30 days of the resolution.

Step 3: Clear All Liabilities

• Settle all outstanding dues, including government taxes, vendor payments, employee salaries, and statutory dues.
• Obtain No Objection Certificates (NOC) from relevant departments if needed.

Step 4: Prepare Financial Statements

• Prepare the latest financial statements up to closure date.
• Get them certified by a Chartered Accountant.
• These are mandatory for filing strike-off or winding-up applications.

Step 5: File STK-2 or Other Applicable Forms

• For Strike-Off: File Form STK-2 with the following documents:
  • Indemnity Bond (STK-3)
  • Affidavit by Directors (STK-4)
  • Statement of Accounts (CA certified)
  • Copy of special resolution
• For Voluntary Winding Up:
  • File Form GNL-2 for appointment of liquidator
  • File Form MGT-14 and INC-6 after asset distribution

Step 6: Public Notice by ROC

• MCA will publish a public notice in the official Gazette and invite objections within 30 days.
• If no objections are received, ROC proceeds with strike-off.

Step 7: Receive Closure Confirmation

• Once approved, the ROC will issue a notice under Form STK-7, stating the company name has been removed from the register.
• This is the final confirmation of company closure procedure completion.

Documents Required for Company Closure

To execute how to close a private limited company correctly, you will need:

• Board and shareholder resolutions
• Statement of accounts (not older than 30 days)
• Affidavit and indemnity bond from all directors
• PAN, Aadhaar, and ID proof of directors
• MOA and AOA of the company
• Updated ROC filings (if any are pending)
• NOC from creditors or regulatory departments (if applicable)

Estimated Timeline for Closing a Company

Here’s an approximate timeline based on the route chosen:

• Strike-Off by ROC: 90 to 120 days (subject to document accuracy and no objections)
• Voluntary Winding Up: 6 to 12 months (more complex, involves liquidation and audit)
• Compulsory Winding Up: Varies; may take 1–2 years due to legal proceedings

Key Statutory Obligations Before Closure

Before initiating the company closure procedure, the company must:

• File all pending ITRs and MCA annual returns
• Pay off GST dues and file returns
• Surrender TAN, GSTIN and other licences
• Cancel business PAN post-closure (optional but recommended)
• Maintain books of accounts and records for at least 8 years after closure

What Happens After Closure?

Once the company is legally closed:

• Its name is struck off from MCA records
• The company cannot carry out business anymore
• Bank accounts must be closed
• Directors are free from company liabilities

The company ceases to exist as a legal entity, and all rights, duties, and operations come to an end.

Comparison of Closure Methods

How Bright Advis Can Help

At Bright Advis, we’ve helped hundreds of companies across India close down legally and smoothly. Our experienced team handles:

• Evaluation of eligibility for strike-off or winding up
• Preparation of board and shareholder resolutions
• CA-certified financials and director affidavits
• Filing of STK-2 and related MCA forms
• Post-closure guidance including GST and PAN surrender

Our goal is to give you a stress-free exit from your business, backed by compliance and documentation.

Conclusion

Knowing how to close a private limited company the right way is as important as starting one. Don’t leave your inactive company hanging—act today to shut it down legally and avoid penalties.

With Bright Advis by your side, the company closure procedure becomes straightforward and worry-free. Reach out to our experts and close your chapter, clean and clear.

Frequently Asked Questions

Q1: Can I close my private limited company without clearing dues?
No. All dues including taxes, vendor payments, and employee dues must be cleared before closure.

Q2: Can a company be reactivated after strike-off?
Yes, under Section 252 of the Companies Act, you can apply for revival through NCLT within 20 years.

Q3: Do I need to file annual returns even if the company is inactive?
Yes. Until the company is officially closed, annual filings are mandatory.

Q4: Can I close a company online?
Yes. The entire strike-off and voluntary winding-up process can be completed through the MCA portal.

Q5: How can Bright Advis help?
We provide full legal assistance—from document preparation to final ROC filing—ensuring your company is closed properly without future liabilities.