Not every company succeeds, and an idle company that nobody is using still carries the full weight of annual compliance. Many founders make the costly mistake of simply abandoning a company - they stop filing returns, assuming it will quietly disappear. It does not. Penalties keep accruing and directors risk disqualification. The clean, legal way to shut down a non-operational company is striking off under Section 248 of the Companies Act, 2013 using Form STK-2.
What does striking off mean?
Striking off is the removal of a company's name from the Register of Companies maintained by the ROC. Once struck off, the company is dissolved and ceases to exist as a legal entity. It is the simplest and cheapest exit route for small companies that have either never commenced business or have stopped operating.
Who is eligible to apply?
A company can apply for voluntary striking off if:
- it has not commenced any business since incorporation; or
- it has not carried on any business for the two immediately preceding financial years and has not applied for dormant status.
Before applying, the company must extinguish all its liabilities - close bank accounts, settle creditors, and dispose of assets. Importantly, all pending annual filings (AOC-4 and MGT-7) up to the date of cessation of business must be completed first.
Companies that cannot use this route
Striking off is not available to certain companies, including listed companies, companies under inspection or investigation, companies with pending prosecutions, and companies that have changed their name or shifted their registered office in the previous three months. Section 8 (non-profit) companies are also excluded.
The step-by-step process
- Board meeting: pass a board resolution authorising the application and authorising a director to file Form STK-2.
- Settle liabilities: clear all dues and close bank accounts; obtain a bank closure certificate.
- Shareholder approval: obtain consent of at least 75% of members in terms of paid-up share capital, usually through a special resolution.
- Prepare documents: a statement of accounts (Form STK-8) certified by a Chartered Accountant, not older than 30 days from the date of application, and affidavits and indemnity bonds from every director (Forms STK-3 and STK-4).
- Obtain NOCs: secure a No-Objection Certificate from the Income Tax Department and cancel your GST registration (or attach proof), so no dues remain with either.
- File Form STK-2 on MCA V3: log in to the MCA V3 portal (mca.gov.in), select Form STK-2, enter the CIN, attach all documents, and pay the Rs. 10,000 fee. Since 2024 STK-2 is filed only on V3 and is processed by C-PACE (the Centre for Processing Accelerated Corporate Exit), which has cut processing time to under two months.
- Review and public notice: C-PACE/ROC publishes a notice (STK-7) inviting objections. If none are received within the notice period, the company's name is struck off and it stands dissolved.
Documents you must keep ready
- Indemnity bond from all directors (STK-3)
- Statement of accounts certified by a CA (STK-8), not older than 30 days
- Affidavit by each director (STK-4)
- Special resolution or written consent of 75% of members
- Bank account closure certificate / latest statement showing nil balance
- NOC from the Income Tax Department and proof of GST cancellation, where applicable
Strike off or dormant status: which to choose?
If you are confident the company has no future, strike it off. But if you may want to revive the entity later - for instance, to hold an asset or a brand name - consider applying for dormant status under Section 455 instead. A dormant company stays on the register with minimal compliance and can be reactivated when business resumes.
Remember: even after a company is struck off, the liability of every director and member continues as if the company had not been dissolved. Striking off is not a shield against past wrongdoing.
What happens if you simply stop filing?
Some founders gamble that the ROC will eventually strike off a defunct company on its own under Section 248(1). It can - but you do not control the timing, and in the meantime penalties for non-filing pile up at Rs. 100 per day per form, the directors can be disqualified under Section 164, and the directors may even be barred from incorporating new companies. A compulsory strike-off initiated by the ROC also looks far worse on a director's record than a clean, voluntary closure. Doing nothing is almost always the most expensive option.
How long does the process take?
From the board resolution to final dissolution, a voluntary strike-off typically takes around three to four months, most of which is the mandatory public-notice period during which objections can be raised. Plan for this timeline - you cannot rush the statutory notice window. Keep the company's bank account open just long enough to settle final dues, then close it and obtain the closure certificate before filing.
Can a struck-off company be revived?
Yes. If a company was struck off (whether voluntarily or by the ROC) and a stakeholder is aggrieved, an application for restoration can be made to the National Company Law Tribunal (NCLT) within three years (and in some cases up to twenty years for certain applicants). The Tribunal can order the company's name to be restored to the register as if it had never been struck off. This is, however, a contested legal process - far more costly than keeping the company compliant or choosing dormant status in the first place.
A quick comparison: strike off vs winding up
Striking off is for small, defunct companies with no real assets, liabilities, or disputes. Winding up (liquidation) is the formal, court or tribunal-supervised process used when a company has significant assets to distribute, creditors to settle, or is insolvent. Winding up involves a liquidator, public advertisements, and detailed accounting. If your company has genuine assets and liabilities to unwind, strike-off is not the right route - you need a proper winding-up or insolvency process.
Tax and PAN housekeeping before you close
Striking off the company at the ROC does not automatically settle your obligations with other authorities. Before and after closure you should file the company's final income-tax return, cancel its GST registration through the proper process (filing the final return GSTR-10), and surrender the company's PAN and TAN once all dues are cleared. Leaving these loose ends open can result in notices arriving long after the company is gone, addressed to its former directors.
A practical pre-filing checklist
- All annual filings (AOC-4, MGT-7) completed up to cessation of business
- All creditors paid and a no-dues position confirmed
- Bank accounts closed with a closure certificate on hand
- Assets disposed of and proceeds applied to liabilities
- Income-tax and GST returns up to date
- Affidavits (STK-4) and indemnity bond (STK-3) from every director
- CA-certified statement of accounts (STK-8) not older than 30 days
- Special resolution or 75% member consent obtained
Working through this list methodically is what turns a potentially messy abandonment into a clean, defensible closure that protects the directors.
Key takeaways
- Never abandon a company - close it properly through STK-2.
- Clear all liabilities and complete pending annual filings first.
- The government fee is Rs. 10,000 and a CA-certified statement of accounts is mandatory.
- Choose dormant status if you might revive the company later.