Quick answer
Under Section 248(2) of the Companies Act, 2013, an inactive company can apply for closure using Form STK-2 (Strike-Off). The company must have had nil liabilities and not commenced any business within 1 year of incorporation, or not been operating for the 2 preceding financial years. The official MCA government filing fee is Rs 10,000. Before filing, all bank accounts must be closed, all liabilities extinguished, and a Board Resolution along with an EGM Special Resolution (or 75% shareholder consent) passed. The application must include an indemnity bond (STK-3), affidavit (STK-4), and a Nil Statement of Accounts certified by a Chartered Accountant.
Quick Answer
Operating a non-functioning private limited company is a major compliance risk in India. Even if your startup or business has stopped operations, failing to file annual returns with the Registrar of Companies (ROC) attracts severe penalties, late fees, and risk of director disqualification. Under Section 248(2) of the Companies Act, 2013, the MCA allows inactive companies to strike off their names from the register using a fast-track process. At Inamdar Legal, we help founders in Surat and across India prepare the nil statements, draft indemnity bonds, coordinate CA certification, and file Form STK-2 online.
Under Section 248(2) of the Companies Act, 2013, an inactive company can apply for closure using Form STK-2 (Strike-Off). The company must have had nil liabilities and not commenced any business within 1 year of incorporation, or not been operating for the 2 preceding financial years. The official MCA government filing fee is Rs 10,000. Before filing, all bank accounts must be closed, all liabilities extinguished, and a Board Resolution along with an EGM Special Resolution (or 75% shareholder consent) passed. The application must include an indemnity bond (STK-3), affidavit (STK-4), and a Nil Statement of Accounts certified by a Chartered Accountant.
- Official MCA Fee: Rs 10,000 (standard fast-track government fee).
- Eligibility: Inactive for 2 consecutive years or no commencement within 1 year.
- Pre-requisite: Nil liabilities, closed bank accounts, and active annual filings up to closure date.
- Key documents: Form STK-3 (Indemnity Bond), Form STK-4 (Affidavit), and CA-certified Nil Accounts.
Why You Must Strike Off a Defunct Company
Leaving a defunct company open without compliance is a serious legal risk. The Ministry of Corporate Affairs (MCA) imposes continuous late fees (Rs 100 per day of delay per form for annual filings like AOC-4 and MGT-7). Furthermore, if a company fails to file financial statements for 3 consecutive years, the ROC will automatically disqualify its directors under Section 164(2) for a period of 5 years, blocking them from starting or managing any other company. Filing a voluntary strike-off protects directors from these liabilities.
Overview of Company Closure vs. Other Options
Depending on your company's status, you can choose between strike-off, dormant status, or formal winding up. The comparison below highlights the differences:
| Feature / Parameter | Strike-Off (Form STK-2) | Dormant Status (Form MSC-1) | Voluntary Liquidation (IBC) |
|---|---|---|---|
| MCA Government Fee | Rs 10,000 | Rs 2,000 | High (liquidator fees + ads) |
| Liability Status | Must be NIL | Can exist (minimal) | Settled by Liquidator |
| Annual Compliances | None (Company closes) | Minimal (Form MSC-3 yearly) | None (Company dissolves) |
| Timeline to Complete | 3 to 6 months | 1 month | 6 to 12+ months |
| Key Utility | Permanent closure for defunct entity | Pausing company for future use | Closing active business with assets |
Prerequisites for Filing Form STK-2
Before submitting your strike-off application, the following conditions must be met: Step 1: Reconcile and Extinguish Liabilities The company must have zero outstanding debts, commercial liabilities, or pending litigations. Any creditors must be paid off or their written consent obtained. Step 2: Close Bank Accounts All active bank accounts in the name of the company must be formally closed, and a closure certificate or letter from the bank branch obtained. Step 3: Complete Overdue Filings Under the latest MCA guidelines, the company must file its annual returns (AOC-4 and MGT-7) up to the financial year in which it ceased operations before applying for strike-off. Step 4: Hold Board & General Meetings Convene a Board Meeting to approve the strike-off and call an EGM. In the EGM, pass a Special Resolution, or obtain the written consent of at least 75% of the shareholders in terms of paid-up capital.
Documents Required for Strike-Off File
The strike-off package requires precise legal drafting and professional certification. The following documents must be attached to Form STK-2: 1. **Form STK-3 (Indemnity Bond)**: An indemnity bond executed by every director on non-judicial stamp paper, declaring that they will pay any future liabilities if they arise after closure. 2. **Form STK-4 (Affidavit)**: An affidavit sworn by every director on stamp paper, declaring that the company has no debts and that the declarations are true. 3. **Nil Statement of Accounts**: A statement of assets and liabilities showing zero balances, certified by an independent Chartered Accountant (CA). This statement must not be older than 30 days from the filing date. 4. **Bank Closure Certificate**: A formal statement from the bank confirming that the account is closed. 5. **Special Resolution Copy**: Signed copy of the EGM resolution along with the explanatory statement.
How Inamdar Legal Helps with Company Closure
Inamdar Legal provides a fully remote, end-to-end service. Operating from Surat, we handle MCA filings for clients nationwide. Our process is as follows: 1. We verify your company records on the MCA portal and review the status of pending filings. 2. We draft the customized Indemnity Bond (STK-3) and Affidavit (STK-4) formats for the directors. 3. We coordinate with our associate CAs to certify the Nil Statement of Accounts. 4. We draft the EGM notice, Board Resolution, and compile the entire package to file Form STK-2 online. To begin, the client provides: (1) MCA portal login credentials (if any), (2) Director DIN numbers, (3) Financial ledgers showing nil transactions, and (4) Bank account closure letters.
When to Review This
- Startup or business stopped operations and has no future plans
- Want to avoid yearly compliance audit costs for an inactive entity
- Wish to protect directors from potential disqualification risks
- Need to clean up multiple inactive entities under a common promoter group
Disclaimer
This guide is based on public records and procedures available as of the date of publication. It is not legal advice. Rules, fees, and timelines are subject to change by government authorities. Consult a qualified advocate to review your specific documentation. Inamdar Legal is based in Surat, Gujarat, and provides remote support across India.