19 July 2024
Closing a private limited company in India involves a formal procedure with regulatory compliance to ensure all legal obligations are fulfilled. Here’s a step-by-step guide on how to close a private limited company:
### Step-by-Step Procedure to Close a Pvt. Ltd. Company:
#### 1. Board Resolution:
Hold a board meeting to pass a resolution recommending the voluntary winding up of the company. This resolution should be approved by a majority of directors and recorded in the minutes of the meeting.
#### 2. Extraordinary General Meeting (EGM):
Convene an Extraordinary General Meeting (EGM) of shareholders and pass a special resolution for winding up the company. The resolution must be approved by shareholders holding at least 75% of the voting rights.
#### 3. Filing with Registrar of Companies (RoC):
File necessary forms and documents with the Registrar of Companies (RoC):
- **Form MGT-14**: Filing of special resolution passed in EGM. - **Form STK-2**: Application for striking off the name of the company. - **Declaration of Solvency**: Form should be signed by majority of directors, stating that the company has no debts or can pay its debts within a reasonable period.
#### 4. Clearance of Liabilities:
Ensure all liabilities of the company are cleared or adequately provided for. This includes: - Payment of creditors and liabilities. - Disposal of assets, if any, to clear debts.
#### 5. Tax Clearance:
- Obtain Tax Clearance Certificate from income tax authorities. - Clear any outstanding tax dues.
#### 6. Dissolution Advertisement:
- Publish a notice in a newspaper notifying the public of the intention to dissolve the company. - Provide a copy of the notice to the RoC.
#### 7. Final Audit:
- Conduct a final audit of the company’s financial statements up to the date of winding up. - Prepare final accounts.
#### 8. Application to RoC:
- File the application for striking off the name of the company (Form STK-2) along with required documents including: - Special resolution copy. - Board resolution copy. - Affidavit from directors. - Indemnity bond.
#### 9. Approval from RoC:
- The RoC will scrutinize the application and documents submitted. - If satisfied, the RoC will strike off the name of the company from the register and issue a notice in the Official Gazette.
#### 10. Finalization:
- Once the company is struck off, it ceases to exist as a legal entity. - The bank accounts of the company should be closed. - Dispose of any remaining assets and distribute proceeds among shareholders.
### Points to Consider: - **Compliance**: Ensure all statutory compliances are met throughout the process. - **Legal Advice**: Seek legal advice to understand specific requirements and implications of company closure. - **Employee Dues**: Clear dues of employees including salary, benefits, and provident fund contributions.
### Professional Assistance: It’s advisable to engage a qualified Company Secretary or a Chartered Accountant to manage the procedural complexities and ensure compliance with all legal requirements during the closure process of a private limited company. They can provide guidance tailored to your specific situation and ensure smooth closure without legal repercussions.
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