Quick answer: Company Winding Up & Strike Off: Complete Process Under the Companies Act, 2013 Featured Answer: A company in India can cease to exist through two primary...
Strike Off (Section 248): An administrative mechanism to remove a defunct company from the Register of Companies maintained by the Registrar of Companies (ROC), either on the application of the company (voluntary) or by the ROC suo motu.
The choice between strike off and winding up depends on the company’s financial position and the complexity of its affairs. We at Virtual Auditor advise clients based on the following criteria.
Section 248(2) of the Companies Act, 2013 permits a company to apply to the ROC for strike off. Here is the complete process we follow at Virtual Auditor.
Convene a Board Meeting and pass a resolution authorising the filing of an application for strike off. Subsequently, obtain approval of members holding not less than seventy-five per cent of the total voting power by way of a special resolution. The special resolution must be filed with the ROC in Form MGT-14 within 30 days. For guidance on board resolutions, refer to our board resolution templates guide.
Before filing the application, the company must ensure that:
A practising Chartered Accountant (or Company Secretary) must certify that the company has no assets and no liabilities as on the date of the application. This certificate must be attached to Form STK-2. As a firm with CA V. Viswanathan, FCA (IBBI/RV/03/2019/12333) at the helm, we issue this certificate after thorough verification of the company’s books.
Form STK-2 must be filed on the MCA portal along with the following attachments:
Upon receiving Form STK-2, the ROC publishes a notice in the Official Gazette and on the MCA portal, giving 30 days for any objections from members, creditors, or the public. If no objections are received, the ROC proceeds to strike off the name of the company.
The ROC strikes off the name of the company from the Register of Companies and publishes a notice in the Official Gazette. The company stands dissolved from the date of such publication.
When strike off is not feasible — typically because the company has unsettled liabilities, disputed assets, or ongoing litigation — the winding up route under Section 270 must be followed.
Under Section 272, the following persons may present a petition to the NCLT for winding up:
The Tribunal may order winding up on the following grounds:
The Company Liquidator is a key functionary in the winding up process. Under Section 275, the Tribunal appoints an Insolvency Professional registered with the IBBI as the Company Liquidator.
The distribution follows a statutory priority order under Section 326 (overriding preferential payments) and Section 327 (preferential payments):
The ROC has the power to strike off a company suo motu under Section 248(1) in the following circumstances:
Before initiating suo motu strike off, the ROC sends a notice to the company and all directors, providing 30 days to show cause why the company should not be struck off. If no satisfactory reply is received, the ROC proceeds with the strike off process.
A company that has been struck off can be restored to the Register of Companies by filing an application before the NCLT under Section 252.
The application must be made within 20 years from the date of publication of the notice of strike off in the Official Gazette. This is a long window, but early application is advisable as the company remains liable for all compliances during the struck-off period.
Under Section 46 of the Income Tax Act, 1961, any distribution of assets by a company to its shareholders on liquidation is not treated as a transfer. However, the shareholders are taxed under Section 46(2) — the money received or the market value of assets received is treated as consideration for the transfer of shares.
The company must file its final income tax return up to the date of dissolution. Additionally, a nil TDS return must be filed for the final quarter, and the TAN must be surrendered.
The company must apply for cancellation of GST registration by filing Form GST REG-16 on the GST portal. Any input tax credit balance in the electronic credit ledger as on the date of cancellation must be reversed and paid. The final GST return (GSTR-10) must be filed within three months of the date of cancellation order.
If the promoters intend to revive the company at a future date, obtaining dormant company status under Section 455 is a practical alternative to strike off. A dormant company has reduced compliance requirements — it need only file an annual return in Form MSM E-2 and is exempt from holding regular board meetings.
To obtain dormant status, file Form MSC-1 with the ROC along with a special resolution and a statement that the company has no pending liabilities. The ROC grants dormant status for a period of five years, extendable by another five years.
The ROC may strike off the company, but the Income Tax department can still raise demands against the directors personally. Always obtain a tax clearance before filing STK-2.
An active bank account after strike off creates complications. The bank may freeze the account, and any balance becomes inaccessible. Close all bank accounts before filing.
Unpaid gratuity, leave encashment, PF dues, and ESI contributions are personal liabilities of directors under various labour laws. Settle all employee-related dues before initiating strike off.
Under Section 164(2), directors of companies that have not filed annual returns for three continuous financial years are disqualified from being appointed as directors in any company. This disqualification must be addressed before or as part of the strike off process.
For comprehensive governance compliance before closure, refer to our corporate governance checklist.
| Parameter | Strike Off (Section 248) | Winding Up (Section 270) |
|---|---|---|
| Timeline | 3-6 months | 1-3 years |
| Forum | ROC (administrative) | NCLT (judicial) |
| Government Fee | Rs 5,000 – ₹10,000 | Rs 5,000 – Rs 25,000 (court fees) |
| Professional Fee (approx.) | Rs 15,000 – Rs 50,000 | Rs 1,00,000 – Rs 5,00,000+ |
| Eligibility | Nil assets and liabilities | Any company |
| Creditor Settlement | Must be done before filing | Done during the process |
We manage company closures across India — from dormant shell companies to operational businesses requiring full NCLT winding up. Our process includes:
For company secretary services related to winding up or strike off, visit our company secretary services page. For valuation requirements during winding up, see our valuation services. To understand our fee structure, check our pricing page.
Also read: Company Secretary & Secretarial Services Guide
Winding up under Section 270 involves a formal NCLT-supervised process to liquidate assets and settle liabilities. Strike off under Section 248 is a simpler administrative process to remove a defunct company (with nil assets and liabilities) from the Register of Companies. Winding up suits companies with outstanding debts and assets; strike off suits dormant or shell companies.
The complete strike off process typically takes 3-6 months from the date of filing Form STK-2. This includes the mandatory 30-day notice period by the ROC and 30 days for objections from creditors or the public.
Yes. Under Section 252, an application for restoration can be filed before the NCLT within 20 years from the date of the Official Gazette publication. The applicant must file all pending returns and pay all outstanding fees and penalties.
The grounds include: special resolution by the company; acting against sovereignty and integrity of India; fraudulent conduct of affairs; failure to file financial statements or annual returns for five consecutive years; and the Tribunal finding it just and equitable to wind up.
Yes. A practising Chartered Accountant or Company Secretary must certify that the company has no assets and no liabilities. This certificate, along with a notarised indemnity bond from all directors, is mandatory for Form STK-2.
Under Section 248(7), the liability of every director, manager, and member continues even after the company is struck off. Creditors can pursue personal claims against directors, and the NCLT may order restoration if creditors demonstrate outstanding liabilities.
The government fee is Rs 5,000 for companies with authorised share capital up to Rs 10,00,000 and ₹10,000 for higher capitalisation. Professional certification fees and any pending ROC filing fees apply additionally.
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Strike off is an administrative mechanism under Section 248 for defunct companies with no assets or liabilities. Winding up, governed by Sections 270-365, is a formal judicial process used when a company has outstanding debts, assets to liquidate, or ongoing disputes that require tribunal intervention.
A company is eligible if it has not commenced business within one year of incorporation, has been inactive for two preceding financial years, possesses nil assets and liabilities, has no pending litigation, has filed all statutory returns, and obtained NOCs from relevant regulatory authorities.
Under Section 252, a company can be restored to the Register of Companies by filing an application before the NCLT. This application may be submitted by the company, a member, a creditor, or a workman within 20 years from the date the strike off notice was published.
Under Section 272, a winding up petition can be filed by the company via special resolution, a creditor with an undisputed debt, any contributory member, the Registrar of Companies with Central Government sanction, or any person authorized by the Central Government.
Yes, under Section 248(1), the ROC can strike off a company suo motu if it failed to commence business within one year, remained inactive for two financial years, or failed to file required declarations regarding subscription money within 180 days of incorporation.