An Overview of Close Your Public Limited Company

Under the Companies Act, A Public Limited Company is a company that has limited liability & offers shares to the general public. Its stock can be acquired by anyone, either privately through IPO (Initial Public Offering) or through trades on the stock market. This Company is strictly regulated & is required to publish its true financial health to its shareholders. However, running a business comes with its own challenges. Sometimes when things do not work out, a business may have to be shut down. There can be various reasons to wind up or close the Company. A Public Limited Company may shut down if the Company needs to undergo liquidation in order to pay off creditors or if the members of the Company want to close it.

Filing an application to close your Public Limited Company with the Registrar is required only after the records of the MCA are updated that the Company is free from all legal compliance & officially closed. Requirements for Closing a Public Limited Company are tedious procedural steps, so leave the work of figuring them out to Corpbiz Experts by signing up for our Public Company Closure Service today.

Dissolution of a Public Limited Company

The dissolution of a Public Limited Company occurs in 3 stages:

1. A Dissolution Resolution must be adopted by 75% of the shareholders, post which an application should be sent to the Registrar of Companies containing the necessary documentation;
2. And this application is followed by liquidation, which is often the most complex & difficult step requiring careful oversight;
3. At last, they expunged from the records of the MCA, at which point it ceased to remain in existence.

Benefits of Public Company Closure

The following are the benefits of Public Company Closure:

1. It helps you to save compliance costs;
2. No more Director in default;
3. Saves you from non-compliance penalties;
4. It will prevent you from unwanted IT demands;
5. No more headache of record keeping.

Eligibility Criteria for Closing Public Limited Company

• Voluntarily Closing a Public Limited Company in India: This happens when:

1. Voluntary Liquidation of the Members: There Company can pay its debt, but the members want to close it.
2. Voluntary Liquidation of the Creditors: The Company & its Shareholders choose to liquidate the Company because it cannot pay debts.

• Compulsory Closing of Public Limited Company: This happens in the following situations:

1. Tribunal orders the Company to shut down or is of the opinion that Company is equitable & must be shut down or is of the opinion that the Company is equitable & must be shut down;
2. The Company is not able to pay its debts;
3. If the Company has conducted in fraudulent manners or is guilty of misconduct or fraud;
4. When the Company hasn’t filed Financial Statements or Annual Returns in the preceding 5 consecutive years;
5. The Company has acted against sovereignty & integrity of the state & India, friendly relations with the Foreign States, public order, morality or decency.

Who are not eligible to file any application with ROC for the Removal of their Names?

An application under Sub-Section (2) of Section 248 on their behalf shall not be made if, at any time in the last 3 months, the Company:

• Has shifted its office from one state to another or has changed its name;
• Has made a disposal for property value or rights held by it immediately before cesser of trade/otherwise carrying on business;
• Has made an application to Tribunal for the sanctioning of an arrangement or compromise & the matter hasn't been finally concluded;
• Is being wound up or closed under Chapter XX, whether voluntarily or by the Tribunal;
• Has been involved in any other activity except the one which is necessary/expedient for making an application under that Section, deciding whether to do so/concluding the affairs of the Company, or complying with any statutory requirement.

Moreover, the following Companies' categories shall not be removed from the Registrar of Companies under Section 248, read with Rules 3 & 4 of Companies (Removal of Companies' Name from ROC) Rule 2016, namely:

1. Vanishing companies;
2. Listed companies;
3. Companies against which any prosecution for an offence is pending in any court;
4. Companies which have accepted Public Deposits (PD) which are either outstanding or Company is in default in repayment of the same;
5. Companies incorporated under Section 25 of Companies Act, 1956 or Section 8 of the Act;
6. Companies where investigation/inspection is ordered & being carried out or actions on such order are yet to be taken up/were completed, but prosecution arising out such investigation or inspection are pending in the Court;
7. Companies which have accepted Public Deposits which are either outstanding/the Company is in default in repayment of the same;
8. Companies registered under Section 8 of Companies Act or Section 25 of the Companies Act;
9. Companies having charges which are pending satisfaction;
10. Companies where notices under Section 234 of the Act or Section 206 or 207 of the Companies Act have been issued by the Inspector or Registrar & reply thereto is pending/report under Section 208 of the Companies Act hasn't been submitted or follow up of instructions on the report under Section 208 of the Act is pending/where any prosecution arising out of such scrutiny or inquiry, if any, is pending with the Court.

Requirements for Public Limited Company Closure

• It requires a Special Resolution/consent of at least 75% of the members or shareholders.
• Further, the request for Company Closure should be filed after repaying all creditors, disposing of all assets & closing all bank accounts.

Moreover, remember the following points:

• Take NOC (No Objection Certificate) after clearing all the dues or liabilities;
• If registered with any Government Department, you must obtain a NOC to close the Business Operations.

Documents Required for Filing an Application for Closing Public Limited Company

Following are some crucial documents that need to be submitted to close a Public Limited:

1. Application Form: The Company that wants to close its Public Limited Company must file a closing application with the Registrar. Our experts will help you in filing the correct application.
2. Board Resolution: The Company must submit the closing resolution approved by the Board Members.
3. Consent of Directors: A Letter of Consent from the Directors stating their opinion to close the Public Limited Company must be submitted.
4. Consent of all Creditors: The Company or its representative must arrange the consent from its creditors for the Public Limited Company closure.
5. Statement of Assets & Liabilities: A Financial Statement showing the sold-off assets & cleared all debts must be submitted.

How will Corpbiz help you in Public Limited Company Closure?

1. Upon signing up for our Public Limited Company Closure service, our experts will review the activities of your Company & determine the documents required for the commencing of the Closure process.
2. After going through a consultation successfully, our team shall prepare an advisory to help you with the vital steps & draft the necessary paperwork.
3. Once the required documentation is compiled, our experts will file the application for the Public Company Closure with the Ministry of Corporate Affairs.