Let us Understand Situations behind Closure of Company

To run any business smoothly, company needs to fulfill all the compliances set by the respective registrar. But sometime it happens that your company is in dormant mode for long and you are taking the burden of filing regulatory compliances to avoid any fine and penalties. Sometime it may also happen that your company suffers a huge loss due to unsatisfactory performance and it becomes difficult for the members to run a company further. In all above situations, closing a company is best legal solutions to avoid penalty or fine for any non-compliance.

Possible Ways to Close a Company

Any company can be closed easily by the means of following legal solutions

Sell a Company
To sell a company, any company just needs to sell their major shares and intimate the same to respective Registrar.

Mandatory Closure
If any company is performing or contributing to any fraudulent or unlawful activities, then strong action directly as a closure of respective company would be taken by Tribunals or Members of the company under Section 270 of the Companies Act, 2013.

Voluntary Closure
All the shareholders has right to voluntarily close the company by passing special resolution in general meeting and following the filings as prescribed by Registrar. Company need to settle their entire outstanding prior to start of closure procedure.

Closure as Defunct Company
If a company is not in functional mode since very long, it can be closed by declaring itself as Defunct Company. To make this process faster, government initiated Fast Track Exit Scheme by which companies can file form FTE to respective Registrar to strike off their name from register.

Process of Winding Up of Company

Following steps must be followed by any company for their closure process

Pass a Resolution and Submit it to ROC
To close a company, special resolution need to be passed for approval of 2/3rd members. Once resolution is passed for closure of company, copy of it must be submitted to Registrar within 10 days.

Use Form FTE
To strike off the company from register of Registrar of Companies (ROC), filing of form FTE is mandatory within 30 days of passing a resolution.

Publish Advertisement of Resolution in News Paper
It is mandatory for any company to publish notice of its resolution passed for closure of company in the form of advertisement in a local newspaper.

Appointment of Voluntary Liquidator
All requisite reports, statement of assets and liabilities, statement of accounts, indemnity bond etc. need to be submitted to Tribunal and respective Registrar by the company and for this purpose company must appoint a voluntary liquidator to maintain these records and submit it timely.

Company Closed
Tribunal and Registrar takes action over the FTE form submitted by the company, verifies it and then approves the closure and at last declare company as closed.

Documents Required for Closure of Company

Any company must be ready with all the following documents prior to their closure procedure

  • Application for Striking off of the Company
  • Indemnity Bond
  • Consent Letter of Directors
  • Statement of Accounts
  • Consent of the Creditors
  • Statement of the Assets and Liabilities

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