Closing a Private Limited

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Closure Of Private Limited Company

A company is a legal entity and a juristic person established created under the Companies Act. Therefore, a company required regular maintenance of Compliance throughout its The non-compliance of a Company leads to heavy fines and penalties and if the company is incurring heavy losses or not operating properly, then it is better to wind up the company and look for a new beginning.

Therefore, if a private limited company has become inactive and there are no transactions in the company, then it is best to wind up the Company. Generally, a company can be wind up voluntary or compulsorily. The Ministry of Corporate Affairs has introduced Fast Track Exit Mode - an easier way to close inactive companies at a cheaper cost with lesser formalities. A defunct company which has not carried out any business activity or operations for last one year or since incorporation and having NIL assets & liability can apply for striking-off of name under the Fast Track Exit Mode.

So, the key requirements for closure of private limited company are as follows:
• Ordinary resolution in the board of directors meeting.
• No business activity from the date of resolution.
• Declaration by members that there is no debt pending.
• Age of Company is more than 1 year from the date of its incorporation.

Closure Of Private Limited Company Process

Documents required

1. Application for Striking off of the Company.

2. Board Resolution for closure.

3. Consent of Directors.

4. Director's Affidavit.

5. Indemnity Bond.

6. Statement of Assets and Liabilities.

Frequently Asked Questions

When the existence of the Company as a legal entity comes to an end it is known as the Closure of the Company.

• Closure of the company is done voluntarily and is done through the fast track exit scheme.
• Winding up of the company may be voluntary or by the order of the Court by appointing an official liquidator to monitor the process of winding up.
• Dissolution is initiated by the Court for ending the legal existence of the Company.

It is necessary to file Closure with the ROC as ROC or MCA database need to be updated and the Company is free from all its legal compliances as it is officially closed. Even though the business of the company is closed unless closure documents are filed and approved by the ROC, the company is not legally closed and the company needs to file all the regular returns.

FTE is a company closure scheme initiated by MCA for easy and faster closure of the Company.

A resolution of Directors approving the closing of the Company and the same being declared with the condition that there are no pending debts is a key requirement for filing the voluntary closing of the Company.

There are two main criteria:-
•The company applying under FTE should not have any assets and liability.
•The company should not have commenced any business activity or operation since incorporation or at least one year must have been passed since last business activity or operation.

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