Often, we register a company for a business idea we wanted to implement and for some reasons it does not work, we do not even start the work. Also, there are times when we register a company for a future project and hence those companies are not operational in present.

There are various compliances which one needs to meet after registering a company and it takes a cost to meet them. Who would want to bear more cost for the company which is not working in the first place?

So, what do we do, we just keep the company like that, either we get the compliances done or many times we just ignore it.

Earlier, closing a company was a tedious process, which required a lot of formalities, things have changed now and there are now quicker modes to close the company.

Here we bring you process for such companies that you have formed but not functional anymore to Close Private Limited Company

Fast Track Exit (FTE) mode: Let’s Close Private Limited Company

This mode as suggested by name lets you close your company quickly, any company which is defunct can apply for this mode.

Let’s understand what’s a defunct company

A Defunct company is a company which has:

1. Nil asset and nil liability, and

2. Not commenced any business or activity since its incorporation

1. To close a company under FTE, one should apply through Form STK-2, available in MCA website. This form should be digitally signed by authorised director.

The application fee will be Rs. 10,000/-

2. On receiving the application, the Registrar would display the name of the company on its website for a period of 30 days, to give notice to anyone who may have objection to the striking off the name of the company.

3. After 30 days, the Registrar will issue a certificate for closure of the company stating that its name is struck off from the register of companies maintained with the ROC.

The documents stated below are to be attached with the Form STK-2 to Close Private Limited Company

i) We need a Board of Directors approval to Close Private Limited Company

Through a board resolution, BOD must approve applying for the FTE to Close Private Limited Company

Note: All bank accounts, Registrations with the govt. authorities should be closed/ cancelled before applying to Close Private Limited Company.

ii) Once board resolution is passed, all the directors of the company should produce an affidavit on a stamp paper or Rs 100/- duly notarized & individually stating the following in it:

• The directors swear that they are the directors of the company applying for closure.
• That the company has closed all the bank accounts in its name.
• That the company has nil assets & liability.
• That the company has not been carrying on any business for the past one year at least.
• The reasons for not carrying on any business.
• That the company has no statutory dues as on the date of declaration and that there are no litigations pending before any court of law against or involving the company.

iii) Next, all the directors of the company should execute an Indemnity Bond witnessed by 2 persons on a stamp paper of Rs 200/- and undertake to do the following:

• To indemnify any person for any losses that may arise pursuant to striking off the name of the company.
• To pay and settle all lawful claims arising in future after the striking off the name of the company
• To settle all lawful claims and liabilities which have not come to our notice up to this stage.