How-To · Company Closure
Procedure For Winding Up Of The Company (India, 2026)
Closing a company properly matters, because an inactive company that is not wound up keeps attracting annual filing duties, late fees, and the risk of director disqualification. "Winding up" is used loosely to cover several different exit routes, and the right one depends on whether the company is solvent and whether it has been trading. This guide explains the main routes, the step-by-step procedure for the most common one (strike-off), and when a full liquidation is needed instead.
- Strike-off: the common voluntary route under section 248 of the Companies Act, 2013, using form STK-2.
- Voluntary liquidation: under the IBC, through a liquidator, for a solvent company with assets and creditors.
- Insolvent companies: go through the NCLT insolvency process, not a simple strike-off.
- Clear filings first: overdue AOC-4 and MGT-7 must be filed before applying for strike-off.
- Settle dues: liabilities, GST registration, income tax, and bank accounts should be closed before applying.
- Certified accounts: strike-off needs a statement of accounts certified by a chartered accountant.
01Winding up, strike-off and liquidation
Three different exits are often all called "winding up". They are not the same, and choosing the right one is the first step.
- Strike-off (removal of name): the simplest route, under section 248 of the Companies Act, 2013. The company applies to the Registrar of Companies (ROC) to remove its name, or the ROC removes it. Suited to a solvent company that has stopped or never started business.
- Voluntary liquidation: under the Insolvency and Bankruptcy Code (IBC), for a solvent company that wants to wind up affairs through a liquidator and distribute assets.
- Compulsory winding up or insolvency: through the National Company Law Tribunal (NCLT), where a company is insolvent or being wound up by order of the tribunal.
Solvent vs insolvent decides the route
If the company can pay its debts and simply wants to close, strike-off or voluntary liquidation is used. If it cannot pay its debts, the matter moves into the insolvency process before the NCLT. Get this distinction right before starting, because the procedures are very different.
02Strike-off: the common voluntary route
For most small companies that have stopped trading and have no significant assets or liabilities, voluntary strike-off under section 248(2) is the practical way to close. The company files form STK-2 with the ROC to have its name removed.
Broad conditions for voluntary strike-off include:
- The company has not been carrying on business for a defined period, or never commenced business.
- It has no outstanding liabilities, or has settled them.
- Its overdue annual filings have been brought up to date before applying.
- A special resolution or consent of the required majority of members has been passed.
03Step-by-step procedure for strike-off
The voluntary strike-off procedure runs roughly as follows. The exact forms and attachments should be confirmed on the MCA portal before filing.
- Clear pending compliance. File any overdue AOC-4 and MGT-7 so the company is up to date.
- Settle liabilities and close accounts. Pay off dues, close bank accounts, and prepare a statement of accounts (nil or near-nil) certified by a chartered accountant.
- Board meeting. The board passes a resolution to apply for strike-off and to authorise a director.
- Members' approval. Obtain the special resolution or consent of the required majority of members.
- Prepare documents. Indemnity bond and affidavit from directors, the statement of accounts, and the members' consent.
- File STK-2. Submit form STK-2 with the ROC along with the fee and attachments.
- Public notice and removal. The ROC issues a public notice; if there is no objection, it strikes the company off the register.
Strike-off is only clean if the overdue filings are cleared and the liabilities are settled first.
04Voluntary liquidation under the IBC
A solvent company with assets and creditors to deal with may use voluntary liquidation under the Insolvency and Bankruptcy Code instead of strike-off. This is a more formal process run by a registered insolvency professional acting as liquidator.
- The directors make a declaration of solvency, supported by audited financials and a statement that the company can pay its debts.
- Members pass a resolution to wind up voluntarily and appoint a liquidator.
- The liquidator realises the assets, settles creditors, distributes the surplus to members, and then applies for dissolution.
- The process is overseen under the IBC framework and the Insolvency and Bankruptcy Board of India (IBBI) regulations.
This route is used where there are real assets, creditors, or stakeholders to account to, and a simple strike-off would not be appropriate.
05What to settle before you close
Whichever route you use, tidy up these items first, or they will block the closure or come back later.
- ROC filings: bring annual returns up to date; see the deadlines in ROC filing due dates for a private limited company.
- Income tax: file pending returns and close any assessment or refund.
- GST: surrender the GST registration and file the final return if the company was registered.
- Bank accounts: close the company's bank accounts and keep the closure letters.
- Statutory dues: clear PF, ESI, TDS, and any other dues.
Closing a partnership follows a different path; for that, see dissolution of a partnership firm.
06How Claw Tax helps
Claw Tax and Accounts is an online tax, GST and accounting service for India that connects you with a verified chartered accountant at a fixed, published price, with a Claw reviewer checking every filing before it is submitted.
Closing a company is less about one form and more about getting the company clean first: overdue annual filings cleared, the statement of accounts certified, GST surrendered, and the STK-2 prepared correctly so the ROC does not reject it. Much of this you can do yourself on the MCA portal, but the sequence and the certified accounts are where people get stuck. With Claw Tax and Accounts, a verified chartered accountant handles the pending filings, the statement of accounts, and the strike-off application at a fixed, published price, and a Claw reviewer checks each document before it is filed.
This is an online service, and it is not legal or tax advice; a verified professional handles your specifics.
07Frequently asked questions
What is the easiest way to wind up a small company in India?
For a solvent company that has stopped trading and has no significant assets or liabilities, voluntary strike-off under section 248(2) of the Companies Act, 2013 is usually the simplest route. The company clears its overdue filings, settles its dues, prepares a certified statement of accounts, passes the required member approval, and files form STK-2 with the Registrar of Companies to have its name removed.
What is the difference between strike-off and liquidation?
Strike-off simply removes the company's name from the register and suits a dormant company with no real assets or liabilities. Liquidation is a formal process, run by a liquidator, that realises assets, settles creditors, and distributes any surplus before dissolution. A solvent company with assets and creditors uses voluntary liquidation under the IBC, while an insolvent company goes through the NCLT insolvency process.
Can I strike off a company that has not filed its annual returns?
You generally have to bring the overdue annual filings, such as AOC-4 and MGT-7, up to date before the strike-off application will be accepted. An application for a company that is in default on its filings is likely to be rejected, and the late-filing fees still have to be paid. So clearing pending compliance is the first step, not something you can skip by closing.
Do I need to cancel GST and close bank accounts before winding up?
Yes. Before closing a company you should surrender its GST registration and file the final GST return if it was registered, file any pending income tax returns, clear statutory dues such as TDS, PF and ESI, and close the company's bank accounts, keeping the closure letters. These items either block the closure or come back as problems if left open.
How long does it take to wind up a company?
A clean voluntary strike-off typically takes a few months, because the Registrar issues a public notice and waits for objections before removing the name. A voluntary liquidation under the IBC usually takes longer, since a liquidator has to realise assets, settle creditors, and complete the process before applying for dissolution. The exact time depends on how clean the company's affairs are when you start.
What happens if I just stop using the company instead of winding it up?
An inactive company that is not formally wound up still has to file its annual returns, so the Rs 100 per day late fees keep building and the directors risk disqualification. Eventually the Registrar may strike the company off on its own, but on its own timeline and with the dues still owed. Winding up properly closes the liabilities cleanly, which simply stopping does not.