Closure of Private Limited Company in India: Fast Track Exit (FTE)

✔️ Expert-assisted closure under the Companies Act, 2013
✔️ Covers strike-off via Fast Track Exit (FTE) and voluntary winding up with MCA filing
✔️ Complete ROC coordination and compliance support until closure

Overview

Closing a Private Limited Company involves a structured legal process that includes reviewing the company’s assets, liabilities, and financial records, followed by passing a Board Resolution approving the closure.

If the company has ceased operations, holds no assets or liabilities, has not filed annual returns, or has not conducted any business for two or more years, it may apply for voluntary strike-off by filing Form STK-2 with the Ministry of Corporate Affairs (MCA).

This guide covers the closure process, available methods, step-by-step procedure, checklist, required documents, and applicable fees.

KMG CO LLP manages the complete closure process—from drafting resolutions and affidavits to filing applications with the MCA. Our experts ensure full compliance with the Companies Act, 2013 and coordinate with the Registrar of Companies (ROC) to facilitate a smooth and hassle-free closure.

Closure of Private Limited Company in India

What Is Closure of a Private Limited Company?

Closure (or winding up) of a Private Limited Company is the formal legal process of shutting down operations and removing the company’s name from the Register of Companies maintained by the Registrar of Companies (RoC).

Closure can be:

Voluntary – Initiated by the company when it is no longer operational and has no outstanding liabilities.
Compulsory – Ordered by a tribunal due to non-compliance, insolvency, or other legal grounds.

Once the company is officially struck off, it ceases to exist as a legal entity, and the directors are relieved from future compliance requirements and liabilities.

For voluntary closure, shareholders must approve a Special Resolution in a general meeting, expressing their intent to wind up the company. The application, along with the prescribed fee, is filed with the Registrar of Companies. The ROC then publishes a public notice in the Official Gazette. If no objections are received, the company is officially struck off.

Modes of Closing a Private Limited Company

A Private Limited Company in India can be closed through three main modes under the Companies Act, 2013:

Strike Off (Fast Track Exit – FTE)
Voluntary Winding Up
Compulsory Winding Up by Tribunal (NCLT)

The appropriate mode depends on the company’s operational status, financial health, and compliance record.

1. Strike Off under Fast Track Exit (FTE)

Eligibility:

Companies that have not conducted business or commercial operations for the last two years.
No assets or liabilities.

Objective:

Provides a simple and cost-effective method for dormant companies to be formally dissolved from the ROC register.

Key Steps:

Compliance: Ensure all statutory filings and returns are up to date, and liabilities are cleared.
Form Submission: File Form STK-2 with supporting documents and government fee.
Public Notice: ROC publishes notice in the official gazette to allow objections.
Closure: If no objections are raised, the ROC strikes off the company and updates its status online.

2. Voluntary Winding Up

When to Use:

Company is solvent but wishes to exit the market due to restructuring, strategic changes, or other internal reasons.

Key Steps:

Declaration of Solvency: Directors declare that all debts can be paid within 12 months.
Shareholders’ Resolution: Pass a special resolution to initiate winding up.
Appointment of Liquidator: Liquidator manages asset collection, liability settlement, and prepares final accounts.
Final Meeting & NCLT Filing: Conduct a final shareholders’ meeting and submit the liquidator’s report to NCLT for approval and final closure order.

3. Compulsory Winding Up by Tribunal (NCLT)

When to Use:

Court-directed closure due to legal or financial reasons like insolvency, non-compliance, or public interest concerns.

Key Points:

Petition can be filed by creditors, ROC, or central government.
NCLT reviews the case, appoints a liquidator, and orders winding up.
A stringent and regulated process, usually following investigations or serious breaches.

Step-by-Step Procedure for Private Limited Company Closure

Strike Off Procedure (Section 248 of Companies Act)

Board Meeting: Pass resolution approving strike off and authorizing a director to file Form STK-2.
Special Resolution: Obtain consent from 75% shareholders or pass a special resolution in a general meeting.
Document Preparation:
- Directors’ affidavit confirming no liabilities
- Indemnity bond for legal liabilities
- Financial statements not older than 30 days
- Statement of accounts and board declaration
Filing Form STK-2: Submit application online to MCA with documents and fee.
ROC Review & Gazette Notification: ROC examines the application, and if approved, strikes off the company name officially.

Voluntary Winding Up Process

Declaration of Solvency: Directors confirm ability to pay all debts within 12 months.
Passing Winding Up Resolution: Shareholders approve a special resolution and file it with ROC.
Appointment of Liquidator: Oversees asset disposal, debt settlement, and account preparation.
Asset Disposal & Report: Liquidator settles dues, disposes of assets, and prepares final report.
Final Meeting & NCLT Approval: Conduct final meeting and submit winding up petition to NCLT for final approval.

Documents Required for Closure of a Private Company

Proper documentation is essential for both Strike Off and Voluntary Winding Up to ensure smooth and compliant closure under the Companies Act, 2013.

A. Documents for Strike Off (Fast Track Exit under Section 248)

Board Resolution
- Approving the closure and authorizing a director to file Form STK-2.
Special Resolution or Shareholder Consent
- Passed by shareholders or written consent from at least 75% of shareholders.
Directors’ Affidavit
- Confirming the company has no liabilities and is not involved in any legal proceedings.
Indemnity Bond
- Signed by all directors, indemnifying any future claims against the company.
Statement of Accounts
- Certified by a Chartered Accountant, reflecting nil assets and liabilities, and not older than 30 days from filing.
Company Proofs
- Copy of PAN card and Certificate of Incorporation.
Regulatory Consent / NOC
- Consent letters from relevant authorities, if applicable.
Proof of Cessation of Business
- Examples include bank account closure statement, utility disconnections, etc.

B. Documents for Voluntary Winding Up

Declaration of Solvency
- Signed by directors and verified by an affidavit, affirming the company can pay all debts.
Auditor’s Report & Audited Financial Statements
- Showing no outstanding liabilities.
Special Resolution
- Passed by shareholders approving voluntary winding up.
Board Resolution
- To initiate winding up and appoint a liquidator.
Consent Letter from Liquidator
- Confirming acceptance of appointment.
Liquidator’s Report
- Detailing management of assets and liabilities.
Winding Up Petition
- Submitted to NCLT, along with final accounts.
Notice of Final Meeting
- Includes meeting minutes of shareholders.
Additional Forms
- As required: Form MGT-14, Form GNL-2, Form STK-8.

Cost of Closing a Private Limited Company in India

The total cost depends on the method of closure, professional fees, pending compliances, and the company’s financial condition.

Method	Average Cost	Time to Close	Breakdown / Cost Components
Strike Off (Normal Closure)	₹22,000 – ₹25,000	6 – 8 months	– MCA Filing Fee (Form STK-2): ₹10,000- Stamp & Notary Charges: ₹2,000- Professional Fees (CA/CS/Lawyer): ₹10,000 – ₹15,000
Strike Off (Fast Track Exit – FTE)	₹50,000 – ₹60,000	2 – 4 months	– MCA Filing Fee (STK-2): ₹10,000- Stamp & Notary: ₹2,000- Professional Fees (CA/CS/Lawyer): ₹60,000 – ₹70,000
Voluntary Winding Up	₹1,00,000 – ₹1,50,000+	6 – 12 months	– NCLT Filing & Legal Fees: ₹15,000 – ₹25,000- Professional Fees (Liquidator, CA, CS): ₹90,000 – ₹1,25,000
Compulsory Winding Up (Tribunal / Court)	₹1,00,000 – ₹3,00,000+	12 – 24 months or more	– Court filing & litigation fees (vary)- Legal representation and procedural costs

Benefits of Properly Closing a Company

Legal Compliance Relief
- Once a company is formally closed, it is no longer required to file annual returns, financial statements, or other statutory documents, saving time, effort, and administrative hassles.
Avoid Penalties & Late Fees
- Inactive companies that remain non-compliant continue to attract fines under the Companies Act. Timely closure ensures you avoid penalties for missed filings and statutory obligations.
Prevent Director Disqualification
- Non-filing of returns for three consecutive years can result in director disqualification under Section 164 of the Companies Act. Proper closure safeguards directors’ professional standing.
Peace of Mind & Legal Finality
- A legally struck-off or wound-up company cannot be held liable for future claims, giving promoters and directors a clean exit and protection from unforeseen legal complications.
Protect Credit Score & Market Reputation
- Leaving a company inactive but non-compliant can harm both the company’s and directors’ credibility, affecting loan approvals, tender applications, or new business ventures.

Why Choose Us for Company Closure?

Closing a private limited company in India can be complex, but with expert guidance, it can be cost-effective, compliant, and hassle-free. KMG CO LLP provides end-to-end assistance to ensure your company is wound up smoothly, without leaving any legal or financial burdens behind.

Expert Legal Assistance

Our team of seasoned professionals guides you through the entire closure process—whether it’s a strike-off under Section 248 or voluntary winding up. We ensure that all legal requirements are met and your rights as a director or shareholder are fully protected.

Comprehensive Document Drafting

From board resolutions, affidavits, and indemnity bonds to financial statements, we handle the preparation of all documents required for closure, so you can focus on other priorities.

MCA Filing Support

We manage all necessary filings with the Ministry of Corporate Affairs (MCA), including Form STK-2, ensuring accurate and timely submission for a smooth online strike-off process.

Transparent Pricing & Quick Turnaround

Our pricing is upfront, clear, and free from hidden charges. With efficient workflows and expert handling, we help you complete the closure within the shortest legally possible timeframe.

Personalised Support

Have questions about pre-closure compliance, director obligations, or ROC notices? Our support team is always just a call or message away, providing real-time updates and expert guidance tailored to your company’s situation.

Disclaimer: The content on this website is for informational purposes only and does not constitute legal, financial, or professional advice. Please consult qualified experts before acting on any information. K M GATECHA & CO LLP accepts no liability for errors, omissions, or outcomes from the use of this content. This site is not an advertisement or solicitation.

Private Limited Company Closure

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Frequently Asked Questions (FAQs)

Q1. What are the steps to close a Private Limited Company?

A: The closure process generally involves:

Convening a Board Meeting and passing a closure resolution.
Obtaining shareholder approval where required.
Preparing and filing necessary documents with the MCA, including Form STK-2, affidavits, indemnity bonds, and financial statements.
Verification by the Registrar of Companies (ROC) and publication of a public notice for objections.

Upon no objections, the company’s name is removed from the Register of Companies.

Q2. How can a Private Limited Company be closed in India?

A: A company can be closed in two ways:

Strike Off: Applicable to inactive/non-operational companies with no outstanding liabilities.

Voluntary or Tribunal-led Winding Up: For active companies with assets and liabilities, conducted via the NCLT with a liquidator managing the closure process.

Q3. How much does it cost to close a Private Limited Company?

A: Costs usually range from ₹10,000 to ₹50,000, depending on the closure type. This includes government fees, professional/legal fees for affidavits, indemnity bonds, board resolutions, and compliance verification.

Q4. How long does it take to close a Private Limited Company?

Strike Off: Typically 3–6 months.

Voluntary or Tribunal-led Winding Up: 6 months to 2 years, depending on company complexity, outstanding liabilities, and regulatory approvals.

Q5. Is a board resolution mandatory for company closure?

A: Yes. A board resolution authorizing the closure and filing of relevant forms is required for both Strike Off and Winding Up procedures.

Q6. Do I need to clear all compliances before applying for closure?

A: Yes. All pending filings such as annual returns, financial statements, tax returns, and other statutory dues must be completed before initiating closure to avoid rejection or legal complications.

Q7. Can a company with pending liabilities apply for Strike Off?

A: No. Strike Off is only available for companies with no outstanding debts, liabilities, or legal disputes. Companies with liabilities must opt for Voluntary Winding Up.

Q8. Is it necessary to cancel GST registration before closure?

A: Yes. Canceling GST registration ensures compliance and smooth processing of Strike Off or Winding Up without post-closure tax issues.

Q9. What is the easiest and most cost-effective method to close a company?

A: Strike Off under Section 248 is the simplest and most economical route for inactive companies with no liabilities or ongoing legal matters.

Q10. What role does a liquidator play in voluntary winding up?

A: The liquidator manages the closure process:

Settles debts and liabilities
Sells assets and distributes proceeds
Maintains records of the company

Prepares and submits final reports to the NCLT for approval

Q11. Can a company be restored after being struck off?

A: Yes. A struck-off company can be restored by filing a petition with the NCLT within 3 years from the date of strike-off notice publication in the Official Gazette.

Q12. What documents are required for closing a Private Limited Company?

A: Commonly required documents include:

Board and shareholder resolutions
Affidavits and indemnity bonds
Copies of financial statements and annual returns
No-objection certificates from authorities or creditors, if applicable