Closure of Company

Introduction

Company Closure with CorpIQ's Fast Track Exit (FTE) Services

Closing a company can be as critical as running it, especially when the focus is on conserving time, resources, and future liabilities. CorpIQ offers a Fast Track Exit (FTE) service, designed to assist you in winding up dormant or non-operational companies efficiently and in compliance with the latest provisions under the Companies Act, 2013.

CorpIQ's FAST TRACK EXIT: AN EASY PATH TO COMPANY CLOSURE

- Expert Consultation: Begin with a clear understanding of the fast-track exit process. Our consultants explain the prerequisites, process, and implications of closing your company through the FTE route.

- Documentation and Dossier Preparation: CorpIQ helps in compiling and preparing the necessary documentation, including financial statements and board resolutions, required for a smooth closure.

- Due Diligence and Compliance Checks: Prior to filing for closure, we conduct thorough due diligence to ensure all regulatory compliances are met, reducing the risk of objections from stakeholders or authorities.

- E-Filing of Forms: With precision and attention to detail, we handle the e-filing of the requisite forms with the Registrar of Companies (ROC), including Form STK-2, and any additional documentation that may be required.

- Liaison with Authorities: Our team maintains regular communication with the ROC to monitor the status of your application and respond to any queries or concerns that may arise during the process.

- Final Closure and Deregistration: CorpIQ ensures that the process concludes with the formal strike-off of the company's name from the ROC register, thereby relieving you from all future compliance obligations related to the closed entity.

Closing Done Right with CorpIQ

The decision to close a business is significant, but the process need not be daunting. With CorpIQ's FTE services, you can ensure a compliant, dignified, and hassle-free closure, allowing you to move forward with peace of mind.

LEGAL SIDE OF COMPANY CLOSURE IN FTE

It is often observed that young entrepreneurs register a company with great enthusiasm and energy, but they keep neglecting the compliance to be followed in the company which attracts certain fees and fines levied on the company. At the worst scenario Registrar of Companies (ROC) may also order ‘Strike off' or removal of name from the Register of Companies.

ROUTES TO END THE EXISTENCE OF THE COMPANY

There are three routes through which the existence of company may put to end, these are:

• Striking off the name of the company under the grounds referred under section 248 of Companies Act, 2013

• Compulsory or Mandatory Winding-up under the provisions of Companies Act, 2013

• Voluntary winding up under the provisions of Insolvency and Bankruptcy Code, 2016

 

STRIKING OFF THE NAME OF THE COMPANY UNDER SECTION 248

There are two reasons under which strike off order can be passed by the registrar of companies (ROC) and removal of name of company from the register of companies.

• Registrar may Suo moto give notice of strike off on the grounds stated below or

• On an application filed by the company for removal of name from the register of companies on the grounds stated below

The grounds on which name of the company may be removed from the register of companies are as follows:

• Company has failed to commence business within one year of its incorporation.

• Company is not carrying on any business or profession for two consecutive financial years.

• The subscribers to MOA have not deposited the subscription amount to the company and company has not filed Form INC-20A to this effect, which was required to be field, under section 10A.

• The company is not carrying any business as revealed by physical verification of registered office of the company.

 

DOCUMENTS REQUIRED TO CLOSE A COMPANY

To carry out the procedure of striking off the name of the company smoothly from the register of companies maintained by the Registrar of Companies (ROC), the following documents are required-

• Copy ofBoard resolution passed at the duly convened Board Meeting for the purpose.

• Copy of special resolution certified by each of the directors of the company or consent of Seventy-five percent of members of the company in terms of paid-up share capital as on the date of registration.

• Indemnity bond notarized from the director individually or collectively effect that any losses, claims and liabilities on the company, shall be met in full by every director individually or collectively, even after the name of the company is struck off the registrar of companies in form STK-3;

• An affidavit in form STK-4, sworn by each of the existing director/ directors before a Magistrate/ Oath Commissioner/ Notary to the effect that the company did not carry on any business since incorporation or that the company did some business for a period up to date and then discontinued.

• Statement of Accounts containing assets and liabilities of the company prepared up to a day, not beyond thirty days before the date of application and certified by a Chartered Accountant.

• Banks account closure certificate

• Self-attested KYC of directors of the company along with a copy of the PAN card of the company

• Any other document as may be required.

 

LEGAL PROCEDURE OF CLOSING A COMPANY

Below are the steps to legally strike off the name of the company from the register of companies-

• Hold a Board meeting to approve the proposal of striking off after which any of the directors can be authorized to file an application for striking off the name of the company to ROC.

• Closing off the liabilities of the company before the application is made to ROC for striking off.

• Hold the General meeting of the company and take the approval of shareholders for the proposal of striking off by passing a Special resolution and filing form MGT-14 to ROC. Instead of passing a special resolution, one can also take the written consent of 75% of the members of the company.

• File application to ROC for striking off the name of the company in form STK-2 along with all the attachments, which is to be certified by a Practicing Professional such as PCA/PCS/PCMA.

• On receipt of such application ROC will publish a public notice to that effect in the official Gazette for the objection in form STK-5, 5A or STK-6.

• If he does not get any objection within 30 days of the date of publishing, then he will issue an order of striking off in form STK-7.

 

STRIKE-OFF PROCEDURE UNDER SECTION 248 OF THE COMPANIES ACT, 2013

• Fast Track exit mode- Strike off of the name of the company is a fast-track exit mode and company is not required to follow the lengthy procedure given under the procedure of winding up.

• Prevention from defaults under Income Tax Act- Even if a company is not carrying on any business operation, then also it is required to file the income tax return of nil income. Therefore, fast track procedure of company strike-off can give relief to the company from Income Tax compliances.

Involves less cost- The procedure of strike off under section 248 is a way simpler means to dissolve a company than the other methods of dissolution such as voluntary wind up or mandatory wind up.