Company & LLP Closure India: The Process, Start to Finish
The mechanics of Company & LLP Closure India are what clients ask about once they have decided to proceed. The questions below are the ones raised most often in practice; the full scope of the service is on the Company & LLP Closure India page.
What is the difference between a company being struck off by the RoC and a company voluntarily applying for strike-off?
The RoC can strike off a company's name under s248(1) of the Companies Act 2013 on its own motion — typically when it has reason to believe the company is not carrying on business and has not responded to notices. This is compulsory strike-off, and it carries serious consequences for the directors (no prior clearance of liabilities, possible personal liability for outstanding obligations). Voluntary strike-off under s248(2) is initiated by the company — it is a controlled process where the company verifies its eligibility, clears all liabilities, obtains the required approvals, and applies to the RoC on its own initiative. Voluntary strike-off gives directors control over the process and is the legally clean route. Compulsory strike-off is what happens when a company is abandoned.
In practice: We receive queries from promoters whose companies have been compulsorily struck off by the MCA — often after years of non-filing. Restoration after compulsory strike-off requires an NCLT petition under s252 and is far more expensive and uncertain than having applied for voluntary strike-off correctly in the first place.
Can a company apply for STK-2 if it has pending income tax assessments or GST demands?
No. A company with pending statutory demands — whether from Income Tax, GST, customs, or any other regulatory authority — does not meet the eligibility conditions for STK-2. The strike-off process requires a declaration by the directors that the company has no liabilities. A pending demand, even if disputed, is a contingent liability. The correct approach is to resolve or settle these demands before applying. If the company is in an active assessment proceeding, the RoC will typically not process the strike-off application until the proceedings are concluded. PNPC assesses all outstanding statutory positions before advising on closure timing.
In practice: A company can complete a STK-2 without disclosing pending Income Tax assessments. If the tax demand is confirmed after strike-off, the revenue department may pursue the directors personally. The strike-off does not extinguish personal liability for tax fraud or misrepresentation in the affidavit.
What happens to the company's PAN after it is struck off?
Once the company is struck off and its name removed from the RoC register, the company ceases to exist as a legal entity. The company's PAN remains on the Income Tax database but the entity is treated as defunct. The company cannot file any new income tax returns or claim refunds after strike-off. Any outstanding refunds should be claimed before the closure process is completed. If any income tax proceedings were pending, they must be resolved before or managed appropriately as part of the closure process. Directors' individual PANs are unaffected.
In practice: If the company has unclaimed TDS refunds or advance tax credits, these should be claimed before closure — once the company is struck off, claiming refunds for a non-existent entity becomes procedurally complex.
Does the company need to file pending annual returns before applying for strike-off?
Yes. This is one of the most important pre-conditions for STK-2. The company must have all MCA annual filings — AOC-4 and MGT-7 — current at the time of application. There is no shortcut — the MCA system will reject a STK-2 from a company with pending filings. PNPC calculates the total regularisation cost before the process begins, so there are no surprises.
In practice: The penalty computation for a company that has not filed for 3 years can be significant. This is the real cost of 'just abandoning' a company and the main reason why timely closure matters.
What is dormant company status and when is it better than closure?
Section 455 of the Companies Act 2013 allows a company with no significant accounting transactions for two or more financial years to apply for 'dormant' status via Form MSC-1 to the RoC. Once granted, the company is relieved of the obligation to hold AGMs and file AOC-4/MGT-7 — instead, it files a simpler Form MSC-3 (Return of Dormant Company) annually by 30 April. The company retains its legal existence, its CIN, and its name — it can be reactivated. Dormant status is better than closure when: the promoters want to preserve the company name for a possible future restart; the company holds an IP licence, a domain, or a regulatory clearance worth preserving; or a temporary pause in operations is expected to reverse within 1–3 years.
In practice: Dormant status is not a free pass — it requires MSC-3 to be filed annually and current filings at the time of the MSC-1 application. A company that misses its MSC-3 for a year automatically loses dormant status and reverts to full compliance obligations — without any notice from the RoC.
When is voluntary liquidation under the IBC the right route instead of STK-2?
Voluntary liquidation under the Insolvency and Bankruptcy Code 2016 is appropriate when: (1) the company has distributable assets that need to be formally distributed to shareholders after paying creditors — under STK-2, you cannot distribute assets as part of the strike-off process; (2) the company is solvent but prefers a more formal, legally complete dissolution with a registered Insolvency Professional overseeing the process; or (3) the company's complexity (multiple creditors, significant assets, litigation) makes the simpler STK-2 route inappropriate. The IBC route is also the only option when the company has creditors who must be formally paid or discharged through a liquidator-supervised process.
In practice: STK-2 is designed for shell companies or companies that ceased minimal operations — no assets, no liabilities. If the company has assets (even bank balances) that need to be distributed to shareholders, voluntary liquidation under the IBC is the correct route. Misusing STK-2 for a company with undistributed assets is legally improper.
Can a company apply for STK-2 if it was incorporated but never actually started operating?
Yes. A company that was incorporated but never commenced any business activity qualifies for STK-2 under the 'not commenced business since incorporation' criterion — without needing to wait for two years of non-operation. However, it must still: (1) confirm that no INC-20A (Commencement of Business Declaration) was filed — which would indicate business was never commenced; (2) have all MCA filings current from the date of incorporation; (3) have no liabilities (including any outstanding professional fees or registration expenses that remain unpaid); and (4) have no bank account with a residual balance.
In practice: Many founders incorporate companies speculatively and then change direction. A company that was incorporated but never used is still accruing compliance obligations from the date of COI. The sooner the STK-2 is filed, the smaller the backlog and penalty cost.
What is the indemnity bond required for STK-2 — what does it commit the directors to?
The indemnity bond required under the STK-2 process is a document signed by each director (and sometimes shareholders above a threshold) undertaking to indemnify the Central Government, the RoC, and any person who suffers loss as a result of any false or misleading statement made in the strike-off application, and to pay any Government dues that may emerge after the strike-off. It is typically notarised. The directors are affirming, on record, that all their representations — no liabilities, no assets, no pending claims — are true. A false statement in this bond exposes the signatories to personal liability and perjury.
In practice: The indemnity bond is not a formality. The company's full liability position should be reviewed before the bond is signed. A director who signs this bond on a company with undisclosed creditors is personally exposed. PNPC prepares the bond only after verifying the underlying facts.
Are the directors disqualified or penalised if the company is voluntarily struck off through STK-2?
No. A voluntary strike-off under s248(2), properly executed, does not result in director disqualification. The company simply ceases to exist. The directors' DINs remain active and they can continue to be directors of other companies. Director disqualification under s164(2) arises from three consecutive years of filing defaults — a separate consequence of inaction, not of closure. PNPC completes STK-2 with all filings regularised so there is no residual disqualification exposure on the directors.
In practice: This distinction is important — directors who are worried about disqualification sometimes delay closure. Voluntarily closing through STK-2 with current filings is the opposite of the behaviour that triggers disqualification.
Where this sits in the wider engagement
Company & LLP Closure India rarely arrives on its own. The statutory basis and the current requirements are set out on the Company & LLP Closure India service page, and the related services are grouped under Conversion Closure.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On Company & LLP Closure India we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.