Close Private Limited Company
What is closure of private limited company?
When the things do not work out properly a business may have to be shut down. There can be many reasons to close up or wind up the company. When existence of the Company as a legal entity comes to an end it is known as the Closure of the Company. Fast Track Exit mode is introduced by Ministry of Corporate Affairs for giving opportunity to non-operating companies for getting their names struck off from the records of Ministry of Corporate Affairs.
Which Companies can apply for company closure under fast track exit mode?
Following Companies can apply under fast track exit mode for striking off its name from register of Registrar of Companies: • A Company has failed to commence its business within one year of its incorporation; or • A Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455 of the companies act, 2013
Which form is required to be filed with ROC for making application under fast track exit mode?
E-Form STK-2 is required to be filed with ROC for making application under fast track exit mode.
What is the effective date of closure of Company?
ROC will send notice (containing list of companies struck off) under section 248(5) of the Act for publication in the Official Gazette. The Applicant Company under fast track exit mode shall stand dissolved from the date of publication of the notice in Official Gazette.
Documents Required for Close Private Limited Company
Process Involved
Step 1
Board Meeting
Step 2
Documentation
Step 3
Filing of forms
Step 4
Tax Dues
Step 5
Approval of Forms
Step 6
Name Strike Off
FAQ'S
- What is an inactive company?
- a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years.
- Can a defaulting company apply for FTE?
- A defaulting Company is a company which does not file the annual returns and/or annual financials for any financial year(s).Such a company can apply for FTE provided it fulfils other conditions.
- What is significant accounting transaction?
- any transaction other than— A) payment of fees by a company to the Registrar; B) payments made by it to fulfil the requirements of this Act or any other law; C) allotment of shares to fulfil the requirements of this Act; and D) payments for maintenance of its office and records.
- What is the advantage of applying for ‘Dormant Status’?
- There is lesser compliance burden for a dormant company which reduces the costs of maintaining such a company.
- What are some of the exemptions provided to a dormant company?
- Dormant Companies’ are exempted from the following: A) To include cash flow statements in their financial statements. B) From holding board meeting in each quarter. Dormant companies are required to hold board meeting in each half of the calender year with a gap of atleast 90 days. Therefore, dormant companies are required to hold only two board meetings mandatorily during the year. C) The provisions of the Act in relation to the rotation of auditors shall not apply to dormant companies.
- What is the process for applying for dormant status?
- Process for obtaining status of dormant company is: A) Call a Board Meeting for fixing date, time of EGM. B) Issue Notice of General Meeting C) Engage an Auditor/ Chartered Accountant to issue certificate. D) Hold Extra Ordinary General Meeting E) Pass Special Resolution. F) Authorize director to make application for Dormant with ROC. G) File E-form MGT-14 with ROC for filing special resolution. H) After filling of form MGT-14, File Form MCS-1 with the registrar.
