How to Close a Private Limited Company in India: STK-2 Strike-off Process, Conditions, Cost and Timeline (2026)
- A company that has not started business within a year of incorporation, or has not operated for two years, can apply for strike-off in STK-2 with a ₹10,000 fee — after clearing all liabilities and filing overdue annual returns up to the year it stopped.
- Since 2023 applications go to the Centre for Processing Accelerated Corporate Exit (C-PACE); a clean file closes in roughly 3–6 months.
- Abandoning a company instead of closing it leads to per-day additional fees, director disqualification for five years and a Registrar-initiated strike-off with penalties.
Closing a company properly is cheaper than abandoning it. A private limited company that has stopped operating still owes annual filings, and every unfiled AOC-4 and MGT-7 accrues ₹100 a day in additional fees while pushing the directors towards disqualification. The voluntary strike-off route under section 248(2) of the Companies Act, 2013 — form STK-2 — lets a defunct company exit cleanly. This guide explains who qualifies, the 2023 rule on overdue filings, the documents, the fee, the C-PACE timeline and the alternatives when strike-off is not available.
Who can apply for voluntary strike-off
- A company that has not commenced business within one year of incorporation, or
- A company that has not carried on any business or operation for the two immediately preceding financial years and has not applied for dormant status under section 455.
Before applying the company must have:
- paid off or settled all liabilities — creditors, loans, statutory dues, employee dues;
- closed its bank accounts (or be ready to, with a nil-balance statement);
- filed INC-20A if it was ever required (a company that never filed commencement cannot use this route until it does);
- filed all overdue AOC-4 and MGT-7 up to the end of the financial year in which it ceased operations (the 2023 amendment to the Removal of Names Rules); the two “inactive” years after that do not need annual returns to be filed before STK-2;
- obtained consent of 75% of members by paid-up capital, usually through a special resolution.
Companies that cannot use STK-2
- Listed companies, Section 8 companies, companies with charges outstanding, companies that changed their name or registered office in the previous three months, companies that disposed of property or rights in the previous three months, companies with pending prosecutions or compounding applications, and companies under inspection, investigation or insolvency.
- Companies that accepted deposits which remain unpaid.
Documents and the STK-2 application
| Document | Detail |
|---|---|
| STK-2 e-form | Fee ₹10,000; signed by a director; certified by a practising CA, CS or CMA |
| STK-3 indemnity bond | By every director, on stamp paper, notarised — directors personally indemnify any future claim |
| STK-4 affidavit | By every director, notarised — confirming the facts of no business, no liabilities and no pending litigation |
| Statement of accounts | In STK-8, not older than 30 days before filing, certified by a Chartered Accountant, showing nil assets and liabilities |
| Special resolution / consent | Copy of the resolution or consent letters of 75% members |
| Bank closure letter | Or nil-balance statement |
| Income-tax and GST | Latest ITR acknowledgement; GST cancellation order or application if registered |
| Regulatory NOC | If the company was regulated (NBFC, insurance, etc.) |
Process and timeline at C-PACE
- Board meeting to approve closure and call the EGM; pass the special resolution; file MGT-14 if applicable.
- Settle liabilities, close the bank account, obtain the CA-certified statement of accounts.
- File STK-2 with the attachments and the ₹10,000 fee. Since 1 May 2023 all applications are processed centrally by C-PACE at Manesar, not the regional ROC.
- C-PACE publishes a notice in STK-6 in the Official Gazette and on the MCA website inviting objections within 30 days, and intimates the income-tax and GST authorities.
- If there are no objections, the name is struck off and a notice in STK-7 is published. The company stands dissolved.
A clean application typically completes in three to six months. Queries on the statement of accounts, unfiled annual returns or an income-tax objection are the usual causes of delay.
Worked example: close it now or let it lapse?
A company incorporated in April 2023 traded briefly, stopped in March 2024 and has filed returns up to FY 2023-24. It is September 2026.
- Strike-off now: the company ceased in FY 2023-24 and returns up to that year are filed, so it qualifies. Costs: STK-2 fee ₹10,000, stamp paper and notary for STK-3/STK-4 ≈ ₹1,000, CA certification and professional fee. GST cancellation is filed alongside. Directors exit clean.
- Do nothing: if the company is treated as still liable to file FY 2024-25 and FY 2025-26 returns, additional fees run at ₹100 a day per form — two forms for two years accumulate to lakhs before the Registrar's own strike-off notice arrives. After three consecutive unfiled years each director is disqualified for five years under section 164(2) from every company, including any new startup they want to found.
The maths is not close. Check the company's exact filing status and the year it ceased in the MCA Compliance Tracker before deciding which returns must be filed first.
Alternatives when STK-2 does not fit
- Dormant company (section 455): a company formed for a future project or holding an asset, with no significant accounting transactions, can apply in MSC-1 for dormant status — reduced compliance, no need to close.
- Voluntary liquidation under the IBC: for a solvent company with assets to distribute; run by a liquidator, longer and costlier, but the only route where assets and creditors exist.
- Registrar's strike-off (section 248(1)): the Registrar can strike off a company that is not filing or has no registered office — this is not a substitute for STK-2, as penalties and disqualification still follow.
Common mistakes
- Filing STK-2 with a bank balance or a receivable — the statement of accounts must show nil assets and liabilities; distribute or write off first.
- Ignoring GST. An active GSTIN with unfiled returns brings an objection; cancel it and file the final return in GSTR-10.
- Forgetting a charge on the MCA record from an old loan that was repaid but never satisfied in CHG-4.
- Directors signing STK-3 without understanding it — it is a personal indemnity for future claims against the company.
- Selling assets or shifting the office in the three months before filing, which makes the company ineligible.
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Open MCA Compliance Tracker →Frequently asked questions
How much does it cost to close a private limited company?
The STK-2 government fee is ₹10,000, plus stamp paper and notary charges for STK-3 and STK-4, CA certification of the statement of accounts, and the professional fee. Any overdue annual filings must be completed first with their additional fees.
Do I need to file pending annual returns before strike-off?
Yes, up to the end of the financial year in which the company ceased operations. The two inactive years after that need not be filed before applying, under the 2023 amendment to the strike-off rules.
How long does strike-off take?
Applications are processed by C-PACE; a clean file typically takes three to six months, including the 30-day public notice period in STK-6.
What if I just stop filing instead of closing the company?
Additional fees of ₹100 per day per form accrue, the Registrar may strike the company off with penalties, and after three years of non-filing every director is disqualified for five years from all companies.
General information for FY 2026-27, not professional advice for your specific case. Rules change — verify against the latest notification or ask a KyaTax expert.
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