Company Closure Under MCA: Process, Costs, and Key Compliance Step by Step

A company may apply for closure under the following conditions:

• It has not commenced business within one year of incorporation.

• It has not carried out any business operations for the last two consecutive financial years.

• The company intends to close its business voluntarily.

Pre-requisites for Filing an Application for Closure under FTE

1. Nil Assets and Liabilities

   • The company must have no remaining assets or liabilities before filing for closure.

2. Bank Account Closure

   • The company’s bank account must be closed before submitting the application.

3. Income Tax Compliance

   • The latest Income Tax Return must be filed under the Income-tax Act, 1961.

4. Restrictions on Name and Registered Office Changes

   • The company must not have changed its name or shifted its registered office in the last three months.

5. Restrictions on Property Disposal

   • The company should not have sold any property or rights immediately before ceasing trade to gain profit.

6. No Pending Litigations

   • The company must not have any pending litigations.

7. No Other Business Activity

   • The company must not have engaged in any other business activity except those necessary for closure.

8. No Pending Compromise or Arrangement Applications

   • No application for compromise or arrangement should be pending with the Tribunal.

9. No Winding-Up Proceedings

   • The company should not be under the process of winding up under the Companies Act or Insolvency and Bankruptcy Code, 2016.

Categories of Companies Not Eligible for Strike-Off Under FTE

• Listed companies.

• Companies delisted due to non-compliance with listing regulations.

• Vanishing companies.

• Companies under investigation or pending court proceedings.

• Companies with outstanding public deposits or defaults in repayment.

• Companies with pending charges for satisfaction.

• Companies registered under Section 25 of the Companies Act, 1956, or Section 8 of the Companies Act, 2013.

Procedure for Closure of Companies Under FTE

Step 1: Board Meeting

• Convene a Board Meeting to discuss and approve the closure of the company.

• Obtain approval to call an Extraordinary General Meeting (EGM).

Step 2: Preparation of Documents

• Prepare the closure application along with necessary supporting documents, affidavits, and consents.

Step 3: Extraordinary General Meeting (EGM)

• Convene an EGM to pass a resolution for closure.

• Obtain a special resolution or 75% consent from members in terms of paid-up share capital.

• If regulated under a special Act, obtain approval from the respective regulatory body.

• File Form MGT-14 for special resolution approval.

Step 4: Execution of Documents

• All directors must sign and execute the required documents.

• If documents are executed outside India, they must be notarized and apostilled.

• If any director has been deactivated, removed, or has not resigned, file Form DIR-12 for necessary updates.

Step 5: Filing with ROC

• File an application for removal of the company’s name with the Registrar of Companies (ROC) in the prescribed form.

Step 6: Public Notice and Statutory Intimations

• Upon application submission, the ROC publishes a notice in the Official Gazette, MCA website, and newspapers in English and the vernacular language of the state where the registered office is located.

• ROC notifies various statutory authorities.

Step 7: Striking Off the Company’s Name

• After the notice period, the ROC removes the company's name from the register of companies.

• Upon publication in the Official Gazette, the company stands dissolved.

Forms to be Filed and Fee Structure

Forms Required for Company Closure

1. Form STK-2 (Application for Striking Off)

   • To be filed with the ROC along with the necessary documents.

   • Requires an affidavit and indemnity bond from directors.

2. Form MGT-14 (Approval of Special Resolution)

   • Filed to approve the closure resolution passed at the EGM.

3. Form DIR-12 (Director Changes, if Required)

   • Filed to update director details if any director has been deactivated or not resigned.

Fee for Filing Forms

Form	Filing Fee (INR)
STK-2	10,000
MGT-14	200 to 600 depending on share capital
DIR-12	300 to 600 depending on share capital

Timeline for Closure

Step	Estimated Time
Board Meeting and EGM	7-10 days
Preparation and Filing of Application	15-20 days
Public Notice Period	30 days
Final Striking Off by ROC	60-90 days

This process ensures compliance with MCA regulations and facilitates the orderly closure of non-operational companies.