How To Close A Private Limited Company In India?

Closing a company is never an easy decision. Many business owners begin searching for how to close a private limited company when compliance costs keep rising, operations have completely stopped, or maintaining statutory filings becomes a burden. Whether the company is inactive, solvent, or facing financial stress, choosing the correct legal route is essential for a smooth and compliant closure. In India, there are three lawful methods to close a private limited company. The first is Strike off under Section 248(2) of the Companies Act, which works best for companies with no operations and no liabilities. The second is Voluntary Liquidation under Section 59 of the Insolvency and Bankruptcy Code, suited for solvent companies that can pay all debts in full. The third is winding up by the NCLT under Sections 271 to 273 of the Companies Act, used for cases involving insolvency, misconduct, or other statutory grounds. With the introduction of C PACE, the government has significantly accelerated strike-off processing, bringing the average timeline to less than two months in 2025.

We Will Explore in This Blog:

• Quick Decision Tree: Which Route Fits You
• Route 1: Strike Off under Companies Act Section 248(2)
• Route 2: Voluntary Liquidation under IBC Section 59
• Route 3: Winding Up by NCLT under Sections 271 to 273
• Private Limited Company Closure Fees and Timelines
• Conclusion

Quick Decision Tree: Which Route Fits You?

Choosing the correct method to close your private limited company depends on your financial status, compliance history, and whether the business has any ongoing activity. Use this quick decision guide to identify the right path.

No operations and no liabilities:

If your company has not carried out any business and has no outstanding dues or assets, the best option is to strike off using Form STK 2 through C PACE. The government filing fee is 10,000 rupees. This is the fastest and simplest method for inactive or dormant companies.

Solvent and able to pay all debts:

If your company is still solvent and can completely pay off all creditors, choose Voluntary Liquidation under Section 59 of the Insolvency and Bankruptcy Code.
This route requires:

• A declaration of solvency by directors.
• Approval from at least two-thirds of the creditors in value.
• Appointment of a liquidator who completes the closure process.

Voluntary liquidation is more structured and is suitable for companies with assets, creditors, or ongoing obligations.

Insolvent or falling under statutory grounds:

If the company is unable to pay its debts, or if there are grounds like fraud, misconduct, or the business cannot be continued lawfully, then the closure must happen through Winding Up by the National Company Law Tribunal under Sections 271 to 273 of the Companies Act. For small-scale cases, the summary procedure introduced by the 2020 Rules may apply, which simplifies the process for companies with limited assets and lower liabilities.

Route 1: Strike Off (Fast Track Exit) under Companies Act Section 248(2)

Strike off means the removal of the company’s name from the Register of Companies. Once the order is published by the Registrar, the company is considered dissolved and no longer exists legally.

Eligibility and Preconditions

A company can choose the strike off route if:

• It has not commenced business, or
• It has not carried on any business for the last two financial years, and
• It has no outstanding liabilities

Before filing the application, all overdue AOC 4 and MGT 7 filings must be completed up to the financial year in which operations stopped.

Strike off is not allowed if the company falls under the restrictions listed in Section 249. These include:

• Recent change in company name
• Change of registered office from one state to another in the last three months
• Disposal of property or assets for financial gain within the last three months
• Any ongoing compromise or arrangement
• Any ongoing inquiry, inspection, or investigation

Documents Checklist to Attach with STK 2

• STK 3 Indemnity Bond from each director
• STK 4 Affidavit from each director
• STK 8 Statement of Accounts certified by a Chartered Accountant and not older than 30 days
• Board Resolution and Special Resolution or written consent of at least 75 per-cent shareholders
• Regulatory NOC if the company is governed by RBI, IRDAI, SEBI, or any similar authority

Pro Tip: Strike off cannot move forward if even one year’s filing is pending. Complete all annual filings up to the last year of operation to avoid delays.

Step-by-Step Filing through C PACE on MCA V3

1. Hold a board meeting to approve the closure and call an Extraordinary General Meeting.
2. Conduct the EGM and pass the special resolution or obtain 75 percent shareholder consent.
3. Prepare all attachments, including STK 3, STK 4, STK 8 and all necessary declarations.
4. File e-Form STK 2 on the MCA V3 portal addressed to the Registrar at C PACE and pay the government fee of 10,000 rupees.
5. The Registrar issues a public notice in Form STK 6 and allows a 30-day window for objections.
6. If no objection is received and all documents are correct, Form STK 7 is issued confirming strike off and dissolution in the Official Gazette.

Timelines and What to Expect:

• Average processing time under C PACE is less than two months, compared to earlier delays of more than two years.
• Common RoC queries include:
• 1. Pending or missing statutory filings
  2. Bank accounts are still open

Pro Tip: If the signature style or spelling mismatches the MCA master data, STK-2 often gets sent back for resubmission.

Route 2: Voluntary Liquidation (IBC Section 59) for Solvent Companies

Voluntary liquidation is the preferred route when the company has assets or liabilities but is fully solvent and capable of paying all dues in full. This method offers a structured, legally supervised closure through an appointed liquidator and results in a court-backed dissolution order from the NCLT.

Preconditions

Voluntary liquidation can begin only when all the following conditions are satisfied:

• The directors issue a declaration of solvency confirming that the company has not defaulted and is capable of paying all debts in full.
• The shareholders pass a special resolution to liquidate the company and appoint an insolvency professional as the liquidator.
• The creditors approve the liquidation by at least two-thirds in value. This approval must be obtained within seven days or at the creditors' meeting.

Process Snapshot

1. Directors issue the declaration of solvency and place it before the board.
2. An Extraordinary General Meeting is held to pass the resolution for voluntary liquidation and appoint the liquidator.
3. A public announcement of liquidation is made so that all creditors can submit their claims.
4. The liquidator takes control of the company, realises and sells the assets, settles all claims, distributes the surplus, and files ongoing reports as required under the Code.
5. After completing the process, the liquidator submits the final report to the NCLT.
6. The NCLT reviews the report and passes the dissolution order, officially closing the company.

Route 3: Winding Up by NCLT (Companies Act Sections 271 to 273)

Winding up by the National Company Law Tribunal is the most formal and court-driven method of closing a company. This route is used when the company is insolvent, when it is just and equitable to wind it up, when the company has failed to file financial statements or annual returns for five consecutive years, or when any other statutory ground under Section 271 applies.

High-Level Steps

1. A petition for winding up is filed in Form WIN 1 or WIN 2 under Section 272. This petition can be filed by the company, creditors, contributories, the Registrar, or other authorised persons, depending on the circumstances.
2. The Tribunal examines the petition under Section 273 and decides whether to admit or dismiss it.
3. If admitted, the Tribunal may appoint a Provisional Liquidator or directly appoint a Company Liquidator.
4. The liquidation proceeds according to the Companies Winding Up Rules 2020, which include a structured process through the WIN series of forms.
5. The liquidator takes charge of the assets, realises them, settles claims, distributes funds, and files reports with the Tribunal.
6. After completion, the Tribunal issues the final dissolution order, bringing the company to an end.

Private Limited Company Closure Fees and Timelines

Below is a simple comparison table to help you understand the government fees and usual timelines for each closure route.

Pro Tip: RoC cannot strike off a company if any inspection, inquiry, or investigation is in progress under Sections 206 and 207. Get a status check done first.

Conclusion

Understanding how to close a private limited company becomes much easier when you know which legal route fits your situation. Strike off is the fastest option for inactive companies with no liabilities. Voluntary liquidation works best when the company is solvent and wants a structured, court-supervised closure. Winding up before the NCLT applies to cases involving insolvency or other statutory grounds. By choosing the correct route and following the required filings and procedures, you can complete the closure smoothly, avoid future compliance risks, and ensure that the business is dissolved lawfully and cleanly.

Disclaimer: This blog provides general legal information for awareness only. It should not be treated as professional legal advice. Consult a qualified Legal Expert for specific cases.

Legal References

1. Companies Act, 2013 – Section 248 (Strike Off)
   https://www.indiacode.nic.in/show-data?actid=AC_CEN_22_29_00008_201318_1517807327856&sectionId=49174&sectionno=248&orderno=252
2. Companies Act, 2013 – Section 249 (Restrictions on Strike Off)
   http://ca2013.com/249-restrictions-on-making-application-under-section-248-in-certain-situations/
3. Companies (Removal of Names) Rules, 2016 – STK Forms and Requirements
   https://ibclaw.in/the-companies-removal-of-names-of-companies-from-the-register-of-companies-rules-2016/
4. C PACE Press Release – 11 August 2025
   https://www.pib.gov.in/PressReleasePage.aspx?PRID=2155051
5. Insolvency and Bankruptcy Code – Section 59 (Voluntary Liquidation)
   https://ca2013.com/section-59-voluntary-liquidation-corporate-persons/
6. IBBI (Voluntary Liquidation Process) Regulations, 2017
   https://ibbi.gov.in/IBBI (Voluntary Liquidation) Regulations 2017.pdf
7. Companies Act, 2013 – Sections 271 to 273 (Winding Up by Tribunal)
   https://ca2013.com/271-circumstances-in-which-company-may-be-wound-up-by-tribunal/
8. Companies (Winding Up) Rules, 2020
   https://ibclaw.in/companies-winding-up-rules-2020/