Closing a Company or LLP: Strike Off through C-PACE, or Voluntary Liquidation?

Many companies and LLPs are formed for a project that never takes off, or a business that later moves into another entity. Leaving them dormant is not free: annual filings continue, and missed filings lead to penalties and director disqualification. Formal closure is usually the better choice.

Route 1: Strike off (fast track exit)

For companies – Section 248 and STK-2. A company can apply to have its name removed from the register if:

it has not commenced business within one year of incorporation, or
it has not carried on any business or operation for the two immediately preceding financial years and has not applied for dormant status.

The company must have no assets and no liabilities on the date of application, or its liabilities must be fully provided for. It also must not be:

listed on a stock exchange
under investigation or inspection, or facing prosecution
subject to pending litigation, or an application for compromise or arrangement
a Section 8 company that has not obtained clearance

A government fee of ₹10,000 applies. All pending annual filings, AOC-4 and MGT-7, must be completed up to the end of the financial year in which the company ceased business before applying.

For LLPs – Form 24. An LLP that has not carried on business for one year or more can apply for strike off. Pending Form 8 and Form 11 filings must be completed first.

C-PACE. Since 2023, strike-off applications are processed centrally by the Centre for Processing Accelerated Corporate Exit at IICA, Manesar. This has substantially reduced processing time compared with the earlier jurisdictional ROC process.

Documents for a company strike off

a statement of accounts showing assets and liabilities, made up to a date not more than 30 days before the application and certified by a Chartered Accountant
indemnity bond by each director (STK-3)
affidavit by each director (STK-4)
special resolution, or consent of 75% of the members by paid-up capital
the latest income tax return acknowledgement
a statement about pending litigation, if any

What to close before applying

Collect receivables and settle payables. The balance sheet must be clean.
Close bank accounts, and get a closure certificate from the bank.
Cancel GST registration (REG-16) and file the final return GSTR-10.
Surrender TAN after filing the final TDS statements.
Close PF and ESI registrations, and cancel the IEC, FSSAI and other licences.
File the final income tax return.

Directors remain liable for liabilities that come to light later. The indemnity they sign is enforceable, and the Registrar can restore a struck-off company on application by an aggrieved person within 20 years.

Route 2: Voluntary liquidation

Where the company has assets to distribute or liabilities to settle, the strike-off route is not available, or not advisable. Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code involves:

a declaration of solvency by the majority of directors, with an audited statement of affairs and a valuation report
a special resolution of the members, and approval of creditors holding two-thirds of the debt where there is debt
appointment of an insolvency professional as liquidator, who realises the assets, pays the creditors and distributes the surplus
a final order from the NCLT dissolving the company

It takes longer and costs more than strike off, but gives a clean, court-approved closure.

Which route to choose

Company never started business, or is fully wound down with nothing left → strike off
Company has property, investments or creditors to deal with → voluntary liquidation
Company is temporarily inactive and may restart → consider dormant status under Section 455

The information in this article reflects the law as on the date of publication and is for general guidance only.