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Company Strike Off and LLP Closure

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Company Strike Off and LLP Closure

Striking off a company or closing an LLP (Limited Liability Partnership) in India involves a formal process to remove the entity from official records when it ceases operations. Here’s a detailed guide to each process:

Company Strike Off Process

Striking off a company is a formal process to dissolve the company from the Ministry of Corporate Affairs (MCA) register. This option is available for companies that are inactive or have minimal operations.

Eligibility for Strike Off

A company may apply for strike off if:

  1. It has not started any business operations since incorporation.
  2. It has ceased all operations for at least two years before applying.

The company must meet additional conditions, such as having no liabilities, settling any pending liabilities, and complying with filing requirements.

Process of Striking Off a Company

  1. Board Resolution: The Board of Directors must approve a resolution for closure, initiating the voluntary strike-off process.
  2. Clearance of Liabilities: All pending liabilities, dues, and taxes must be cleared before proceeding with the strike-off.
  3. Application Filing with MCA: File Form STK-2, including:
    • A copy of board resolution for closure.
    • Statement of assets and liabilities certified by a Chartered Accountant.
    • Copy of Special Resolution, signed by all directors.
    • Affidavits, indemnity bonds, and a statement of no pending litigation.
  4. Publication of Notice: The Registrar will publish a notice for strike-off, allowing creditors and other stakeholders to raise objections if any.
  5. Approval from ROC: If no objections are raised, the Registrar of Companies (ROC) will approve the strike-off, and the company will be officially dissolved.

LLP Closure Process

For LLPs, the closure process is slightly different but follows similar principles. Closing an LLP is governed by the Limited Liability Partnership Act, 2008, and the LLP Rules, 2009.

Eligibility for LLP Closure

An LLP can apply for closure if:

  1. It has not started any business since incorporation.
  2. It has ceased business activities for at least one year before applying for closure.

Process of Closing an LLP

  1. Consent of Partners: All partners must consent to the LLP’s closure.
  2. Settlement of Liabilities: Clear all outstanding dues, liabilities, and pending taxes.
  3. Application to Registrar: File Form 24 with the ROC, attaching:
    • A statement of account detailing the LLP’s assets and liabilities (dated within 30 days of filing).
    • An affidavit from partners confirming the closure of the LLP and the settlement of all liabilities.
    • Consent of all partners for the closure.
  4. Publication and Objections: The Registrar may publish a notice or request further clarification. Any objections from creditors or other stakeholders must be resolved before closure.
  5. Approval from ROC: Upon satisfying all conditions, the ROC will approve the closure, and the LLP will be struck off from records.

Key Considerations

  1. Tax Clearance: Ensure that all tax dues, GST, and returns are filed to avoid penalties.
  2. Pending Compliances: Complete any pending annual filings or compliance to avoid delay.
  3. Time Frame: The process typically takes 3-6 months but may vary depending on the ROC.

Alternative Closure Methods

If a company or LLP has debts or is involved in ongoing litigation, they may need to explore other closure options, such as voluntary liquidation or insolvency proceedings. Consulting with legal and financial experts can ensure a smooth, compliant closure process.