What is Company Strike Off?

Striking off a company refers to the process of removing a company's name from the Register of Companies maintained by the Registrar of Companies (ROC). This effectively dissolves the company and brings its legal existence to an end. The process is governed by Section 248 of the Companies Act, 2013 and the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

There are two ways a company can be struck off:

• Voluntary Strike Off: Initiated by the company itself when it's no longer carrying on business
• Suo Motu Strike Off: Initiated by the ROC when the company has failed to commence business within one year of incorporation or isn't carrying on business for two consecutive financial years

Eligibility Criteria for Voluntary Strike Off

Not all companies can apply for strike off. The company must meet specific conditions to be eligible:

Companies That CAN Apply:

• Companies that haven't commenced business within one year of incorporation
• Companies that aren't carrying on any business for the last two financial years
• Companies with no assets and no liabilities (or minimal assets/liabilities that can be settled)
• Companies that have not filed any application for compounding
• Companies not involved in any pending litigation

Companies That CANNOT Apply:

• Listed companies
• Companies that have defaulted in repayment of deposits
• Companies that have charges registered with ROC
• Companies against which any prosecution is pending
• Companies where arbitration or conciliation proceedings are pending
• Companies that have been ordered by Tribunal for winding up

Essential Documents for Company Strike Off

Proper documentation is crucial for a successful strike off application. Here's the complete checklist:

Mandatory Documents:

• Indemnity Bond: In prescribed format duly notarized
• Statement of Accounts: Audited or unaudited as applicable
• Affidavit: From all directors in prescribed format
• Special Resolution: Or consent of 75% members in terms of paid-up share capital
• No Objection Certificates: From secured creditors, if any
• Latest Financial Statements: Including balance sheet and profit & loss account

Additional Documents (If Applicable):

• Copy of published newspaper advertisement
• Copy of Board Resolution authorizing the application
• Copy of utility bills showing no operations
• Bank account closure proof
• PAN surrender application

Step-by-Step Process for Company Strike Off

Follow this detailed process to ensure smooth and compliant company closure:

1. Board Meeting: Convene a board meeting to approve the strike off proposal and authorize a director to make the application
2. Special Resolution: Pass special resolution or obtain consent of 75% members in terms of paid-up share capital
3. Settle Liabilities: Clear all outstanding liabilities and close bank accounts
4. Newspaper Advertisement: Publish notice in Form STK-6 in one English and one vernacular newspaper
5. Application Filing: File Form STK-2 with ROC along with required documents and fees
6. ROC Verification: ROC verifies the application and may seek additional information
7. Public Notice: ROC publishes notice on MCA website for 30 days for objections
8. Final Order: ROC issues strike off order and publishes in official gazette

Complete Timeline for Company Strike Off

Understanding the timeline helps in proper planning and compliance. Here's the typical timeline:

Cost Involved in Company Strike Off

The total cost for striking off a company includes government fees, professional charges, and incidental expenses:

Government Fees:

• Form STK-2 Filing Fee: ₹1,000 to ₹5,000 based on authorized capital
• Form STK-6 Publication Fee: Included in newspaper advertising costs

Professional Fees:

• Chartered Accountant/Company Secretary: ₹5,000 - ₹15,000 for documentation and certification
• Legal Consultant: ₹3,000 - ₹10,000 for affidavit and indemnity bond

Other Expenses:

• Newspaper Advertisement: ₹2,000 - ₹5,000 per newspaper
• Notarization Charges: ₹500 - ₹1,000 per document
• Incidental Expenses: ₹1,000 - ₹2,000 for miscellaneous costs

Important Points to Remember

Keep these critical points in mind throughout the strike off process:

• Director Liability: Directors remain liable for company actions prior to strike off for up to 3 years
• Asset Distribution: Any assets remaining after strike off become property of the government
• Tax Clearances: Obtain income tax clearance and close PAN with IT department
• GST Cancellation: Cancel GST registration before applying for strike off
• Employee Settlements: Clear all employee dues including provident fund and gratuity
• Record Keeping: Maintain company records for at least 8 years after strike off
• Bank Account Closure: Close all company bank accounts before filing application

Common Mistakes to Avoid

Avoid these frequent errors that lead to application rejection or legal complications:

1. Incomplete Documentation: Submitting forms without required attachments or with incorrect information
2. Pending Compliances: Applying while annual returns or financial statements are pending
3. Outstanding Liabilities: Not clearing all dues including taxes, loans, and vendor payments
4. Incorrect Newspaper Publication: Not following format requirements or publishing in wrong newspapers
5. Missing Director Consent: Not obtaining consent from all directors for the application
6. Bank Account Active: Filing application while company bank accounts are still operational
7. Ignoring ROC Queries: Not responding to ROC queries within stipulated time

Case Study: Smooth Strike Off for Tech Startup

Company: InnovateTech Solutions Pvt. Ltd. (Name changed for confidentiality)
Situation: A technology startup that ceased operations after 2 years due to market conditions. The company had minimal transactions but pending statutory compliances.

The Challenge:

• Pending annual filings for the last financial year
• Active GST registration with nil returns
• Operational bank account with minimal balance
• Unclear about strike off eligibility and process

The Liquetax Solution:

• Conducted compliance audit to identify pending filings
• Filed all pending annual returns and financial statements
• Assisted in GST cancellation and bank account closure
• Prepared and filed Form STK-2 with all required documents
• Managed newspaper publication and ROC communication

The Outcome:

• Successfully obtained strike off approval in 95 days
• Zero queries or objections from ROC
• Complete compliance with all legal requirements
• Directors relieved from ongoing compliance burden

Frequently Asked Questions (FAQ)

About Liquetax: Your Corporate Compliance Partner

At Liquetax, we specialize in corporate compliance and business closure services. With extensive experience in MCA regulations and company law, we ensure your strike off process is seamless, compliant, and stress-free.

Our team of qualified professionals including Company Secretaries, Chartered Accountants, and legal experts provides end-to-end assistance from eligibility assessment to final strike off approval.

Why Choose Us: 500+ successful company closures, 100% compliance rate, transparent pricing, and dedicated relationship managers for personalized service.