How to Close a Registered Company in India

A company may be brought to an end through strike off under the Companies Act, 2013, winding up by the National Company Law Tribunal, or voluntary liquidation under the Insolvency and Bankruptcy Code, 2016. Conversion of an eligible company into an LLP is another restructuring route, but it is not a company closure procedure in the same sense as strike off or liquidation.

Main Legal Routes for Company Closure

The correct route depends on the company's status, liabilities, business activity and reason for closure. The principal routes are:

1. Strike off: removal of the company's name from the register under Section 248 of the Companies Act, 2013, where the statutory conditions are met.
2. Winding up by the Tribunal: winding up by the NCLT under Chapter XX of the Companies Act, 2013 on the grounds specified in Section 271.
3. Voluntary liquidation: liquidation of a corporate person that has not committed default, under Section 59 of the Insolvency and Bankruptcy Code, 2016 and the IBBI (Voluntary Liquidation Process) Regulations, 2017.
4. Conversion into LLP: an eligible private company or unlisted public company may convert into a limited liability partnership under the LLP Act, 2008 and applicable rules. This changes the legal form rather than simply striking off the business.

1. Strike Off of a Company under Section 248

Section 248 empowers the Registrar of Companies to remove a company's name from the register in specified circumstances. It also permits an eligible company to apply voluntarily for removal of its name after extinguishing all liabilities.

Grounds under Section 248(1)

The Registrar may initiate action where there is reasonable cause to believe, among other statutory grounds, that the company failed to commence business within one year of incorporation; has not carried on business or operations for the two immediately preceding financial years and has not sought dormant status under Section 455; the subscribers have not paid the subscription undertaken at incorporation and the prescribed declaration has not been filed under Section 10A; or physical verification under Section 12(9) reveals that the company is not carrying on business or operations.

Voluntary application under Section 248(2)

A company may apply for removal of its name after extinguishing all liabilities. The application requires a special resolution or consent of seventy-five per cent of members in terms of paid-up share capital. A company regulated under a special law must also obtain the approval of the relevant regulatory body. Section 8 companies cannot use the voluntary application route under Section 248(2).

Practical steps for voluntary strike off

1. Stop business activity and identify the statutory ground on which strike off is proposed.
2. Extinguish the company's liabilities and complete the necessary financial, tax and regulatory compliances applicable to the company.
3. Obtain Board approval and the required special resolution or consent of seventy-five per cent of members in terms of paid-up share capital.
4. Check the restrictions in Section 249 before making the application.
5. Prepare and file Form STK-2 with the prescribed attachments, declarations and supporting documents through the MCA portal.
6. Respond to any resubmission or clarification raised during processing.
7. After the statutory notice process and satisfaction of the competent authority, the notice of striking off is published and the company stands dissolved in accordance with Section 248.

Restrictions under Section 249

Section 249 restricts an application under Section 248(2) where, during the previous three months, specified events have occurred. These include a change of name or shifting of the registered office from one State to another, certain disposals of property or rights, activities beyond those necessary for closure or statutory compliance, a pending application to the Tribunal for compromise or arrangement, or a winding-up process under the Companies Act or the IBC. The facts of the company should therefore be checked before STK-2 is filed.

Effect of strike off

Publication of the prescribed notice results in dissolution of the company, subject to the Companies Act. Strike off does not automatically erase every pre-existing responsibility. Section 248 preserves specified liabilities of directors, managers, officers and members, and Section 250 governs the effect of dissolution. Fraudulent applications may attract Section 251. Section 252 provides for appeal or restoration in the circumstances stated in that provision.

Official reference: MCA Instruction Kit for Form STK-2 and Companies Act, 2013 on India Code.

2. Winding Up by the National Company Law Tribunal

The older description of compulsory winding up under Section 425 of the Companies Act, 1956 is outdated. Under the present framework, Chapter XX of the Companies Act, 2013 deals with winding up by the Tribunal. Section 270 states that the relevant Part applies to winding up by the Tribunal, and Section 271 specifies the circumstances in which a company may be wound up by the NCLT.

Grounds under Section 271

Section 271 includes, in substance, the following grounds: a special resolution that the company be wound up by the Tribunal; specified conduct against sovereignty, integrity, security, public order, decency or morality; fraudulent or unlawful formation or conduct of affairs where winding up is proper; default in filing financial statements or annual returns for the immediately preceding five consecutive financial years; and the Tribunal's opinion that it is just and equitable to wind up the company.

A petition for winding up is governed by Section 272 and may be presented by the persons or authorities specified there. Tribunal winding up is a formal adjudicatory process and should not be confused with the simpler administrative strike-off mechanism.

3. Voluntary Liquidation under Section 59 of the IBC

Voluntary winding up provisions formerly contained in company law were substantially replaced by the insolvency framework. For a corporate person that intends to liquidate voluntarily and has not committed any default, the principal provision is Section 59 of the Insolvency and Bankruptcy Code, 2016, read with the IBBI (Voluntary Liquidation Process) Regulations, 2017.

The process generally requires a declaration from the prescribed majority of directors that the company has no debt or will be able to pay its debts in full from the proceeds of assets and that the liquidation is not intended to defraud any person. The members then pass the required resolution and appoint an insolvency professional as liquidator. Where debt is owed, the statutory creditor approval requirement must also be complied with. The liquidator then carries out the process in accordance with the Code and the applicable regulations, culminating in an application for dissolution.

The IBBI lists the Voluntary Liquidation Process Regulations, 2017 as amended up to 2 June 2026. Users should check the latest regulations, circulars and prescribed formats before initiating the process.

Official reference: IBBI updated regulations and IBBI circulars.

4. Conversion of an Existing Company into LLP

Conversion into a limited liability partnership is an alternative restructuring route for an eligible private company or unlisted public company. It is governed by the Limited Liability Partnership Act, 2008, the applicable schedules and the LLP Rules.

Under the current MCA filing system, where the type of incorporation is conversion of a private company or unlisted public company into an LLP, LLP Form No. 18 is filed as a linked form with Form FiLLiP. Eligibility and system checks apply, including conditions relating to the status of the company, pending filings, charges and other matters specified in the MCA instruction kit. After conversion, the statutory intimation requirements applicable to conversion should also be complied with.

Official reference: MCA Instruction Kit for Form FiLLiP.

Which Company Closure Route Applies?

Official Resources

• Ministry of Corporate Affairs - MCA portal
• Companies Act, 2013 - India Code
• Form STK-2 Instruction Kit - MCA
• Updated IBBI Regulations
• IBBI Circulars