Company Strike Off vs Dormant Company: Latest 2026 Guide

Introduction: Strike Off vs Dormant Company – Which One is Right for You?

When a business becomes inactive, company owners often face a choice: apply for strike off or convert to a dormant company. While both options deal with inactive companies, they have very different legal and financial implications. The latest 2026 rules from the Ministry of Corporate Affairs (MCA) have made it even more important to choose wisely.

What is Company Strike Off?

Company strike off (also called removal of name) is a process under the Companies Act, 2013 where the Registrar of Companies (ROC) removes the company's name from the register. It means the company ceases to exist legally.

• Voluntary strike off: Company applies for closure when it has no assets or liabilities.
• Strike off by ROC: ROC can strike off if the company fails to file returns or hasn't operated for years.
• Effect: The company is dissolved permanently and cannot carry on any business.

What is a Dormant Company?

A dormant company is one that has not carried on any business or operation for at least two years. The Companies Act allows such companies to apply for dormant status, which means they remain registered but are inactive.

• Advantage: You can start business again without incorporating a new company.
• Compliance: Dormant companies have minimal compliance requirements.
• Status: The company is alive, but not operating.

Why Choosing the Right Option Matters for Your Business

• Legal consequences: Strike off ends the company's legal existence; dormant keeps it alive.
• Future plans: If you plan to restart, dormant is better. Strike off requires fresh incorporation.
• Compliance burden: Dormant companies have lighter compliance, but strike off removes all obligations.
• Cost: Strike off has a one-time fee; dormant status requires annual filing but lower fees.
• Asset holding: Dormant companies can hold assets; strike off requires asset disposal.

Eligibility & Requirements

Eligibility for Strike Off:

• No assets or liabilities (or all cleared).
• Company has not commenced operations within one year of incorporation.
• All pending returns filed up to date.
• No legal disputes or pending litigations.

Eligibility for Dormant Status:

• Company has not carried any business for two consecutive years.
• No outstanding liabilities or pending dues.
• Company should have no borrowings or loans.
• Financial statements and returns filed.

Step-by-Step Process to Apply

Process for Company Strike Off:

1. Board resolution and shareholder approval.
2. Settle all liabilities and file pending returns.
3. Apply to ROC with Form STK-2.
4. Public notice via Form STK-5.
5. ROC verifies and strikes off the company name.

Process for Dormant Status:

1. Board resolution for dormant status.
2. Apply to ROC with Form MSC-1.
3. Submit a declaration of no operations for two years.
4. ROC approves and grants dormant status.
5. File annual return in Form MSC-3.

Documents Required

• PAN and TAN of the company.
• Certificate of Incorporation and Memorandum of Association (MOA) / AOA.
• Financial statements and audit reports.
• Board resolution and shareholder consent.
• Indemnity bond and declaration of no liabilities.
• Director identification numbers (DIN) and KYC.

Government Fees (Latest 2026)

• Strike off fee: ₹5,000 (Form STK-2) + additional late fee if returns pending.
• Dormant status fee: ₹5,000 for Form MSC-1 and ₹5,000 annual filing (MSC-3).
• Penalty for non-compliance: Up to ₹10,000 per month for failure to file returns.
• Professional fees: Liquetax charges competitive fees for end-to-end service.

How Liquetax Can Help You with Strike Off or Dormant Status

• Expert consultation: We assess your business needs and recommend the best option.
• Document preparation: We draft all forms, resolutions, and declarations.
• Filing support: We file applications on the MCA portal.
• Compliance review: We ensure all returns are filed and liabilities are cleared.
• Post-approval support: We handle any follow-up queries from ROC.

Choose Liquetax for a hassle-free and compliant process.

Client Success Story: Smooth Strike Off for a Delhi-based IT Firm

With Liquetax, you can close or keep your company inactive with complete peace of mind.

FAQs on Strike Off vs Dormant Company