{"id":41609,"date":"2022-03-30T12:40:06","date_gmt":"2022-03-30T07:10:06","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=41609"},"modified":"2022-03-30T13:05:20","modified_gmt":"2022-03-30T07:35:20","slug":"process-to-close-a-private-limited-company-in-india","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/process-to-close-a-private-limited-company-in-india\/","title":{"rendered":"Process to close a Private Limited Company in India"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Running a business isn&#8217;t a\nstraightforward undertaking as it revolves around a number of unseen\nchallenges. Series of unsuccessful years seldom compel businesses to quit their\noperation and opt for winding up. Following are the legitimate ways to close a private\nlimited company in India. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/process-to-close-a-private-limited-company-in-india\/#Selling_of_the_Company\" >Selling of the Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/process-to-close-a-private-limited-company-in-india\/#Compulsory_Winding_Up\" >Compulsory Winding Up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/process-to-close-a-private-limited-company-in-india\/#Voluntary_Winding_Up_for_closing_a_Private_Limited_company\" >Voluntary Winding Up for closing a Private Limited company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/process-to-close-a-private-limited-company-in-india\/#An_Overview_on_the_Defunct_Company_Winding_Up\" >An Overview on the Defunct Company Winding Up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/process-to-close-a-private-limited-company-in-india\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Selling_of_the_Company\"><\/span>Selling of the Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Selling off a privately held company also\nfalls under the voluntary winding up. It can be achieved by selling the\ncompany&#8217;s shares. Generally speaking, it is not referred to the actual winding\nup, but the stakes are mobilized to another party or company, and the majority\nshareholders are discharged of their liabilities and stocks. This is a viable\nway to close a private limited company in India. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Compulsory_Winding_Up\"><\/span>Compulsory Winding Up<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Compulsory Winding up is another legitimate way to close a private limited company in India. Any registered entity is falling under the <strong>Companies Act<sup><a href=\"https:\/\/nclt.gov.in\/\"><strong>[1]<\/strong><\/a><\/sup> \n<\/strong>, which committed an illicit act or even if they contributed any action in unlawful undertakings, then such company would be wound up mandatorily by the Tribunal. <\/p>\n\n\n\n<p><strong><em>Compulsory winding up entails the given\nsteps<\/em><\/strong>: <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 1: Petition filing<\/h3>\n\n\n\n<p>Following are the eligible parties or\nentities who can file the petition: <\/p>\n\n\n\n<ul><li>The\nCompany or<\/li><li>Company&#8217;s\nTrade Creditors or<\/li><li>Company&#8217;s\nContributors or any contributory<\/li><li>Any\nor all of the above or <\/li><li>The\nCentral or State Government or<\/li><li>By\nthe ROC, i.e. Registrar of the Companies<\/li><\/ul>\n\n\n\n<p>Form WIN 1 or WIN 2 is used for filing\nthe petition in court. It should be submitted in triplicate. The petitioner is\nrequired to attest Form WIN 3 (an affidavit) with the said petition. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 2: Filing of Statement of\nCompany&#8217;s Affairs<\/h3>\n\n\n\n<p>All the documentation attested with the\npetition ought to be audited by a practising CA. The statement of affairs\nshould be filed in Form WIN 4 in duplicate, which must be approved by an\naffidavit in Form WIN 5.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 3: Advertisement for at\nleast 14 days<\/h3>\n\n\n\n<p>The petitioner must publish the petition\nin a daily journal at least for fourteen days in the regional and English\nlanguages. Form 6 is required for publication purposes. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Step 4: Proceedings of the\nTribunal<\/h3>\n\n\n\n<p>The Tribunal will consider the petition\non the fixed date; accept objections and responses from the petitioner and\nrespondent. The Tribunal might assign a provisional liquidator. Form WIN 8\nshall serve as an order format for appointing a provisional liquidator. <\/p>\n\n\n\n<p><strong><em>The order pertaining to winding up shall\nbe made in Form WIN 11. The winding-up order shall prescribe: <\/em><\/strong><\/p>\n\n\n\n<ul><li>Such\nindividuals must furnish the complete audited books of account up to the date\nof the order. <\/li><li>Furnish\nthe date, time, and place for the Company Liquidator.<\/li><li>Surrender\nthe assets as well as the documentation of the same to the Company liquidator.\nUpon the release of a winding-up order, the said official shall take all\nproperties and effects into his\/her custody and actionable claims and paperwork\nof the company.<\/li><li>The\nCompany liquidator shall furnish a report before the Tribunal within sixty days\nof the date of the winding-up order.<\/li><li>After\nsuccessful winding up, the Company Liquidator shall apply to the Tribunal\nseeking dissolution of the company.<\/li><\/ul>\n\n\n\n<p>If the Tribunal finds it viable to pass\nthe order of the company&#8217;s dissolution, then it will make an order directing\nthat the company be dissolved from the order&#8217;s date. The dissolution of the\ncompany shall be accomplished accordingly. &nbsp;The Company Liquidator shall, within thirty\ndays of the order&#8217;s date, share an order copy to the Registrar. <\/p>\n\n\n\n<p>If the Tribunal finds the account\nlegitimate and in order and all the underlying conditions have been met, the\nTribunal would pass the judgment directing the petitioner to accomplish\ndissolution formalities within sixty days of receiving the application<\/p>\n\n\n\n<p>After the judgment has been passed, the\nRegistrar shall share notification to the Official Gazette confirming that such\na company is dissolved. <\/p>\n\n\n\n<p>Let us proceed to next method of winding\nup under which officials can voluntarily opt to close a private limited company\nin India. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Voluntary_Winding_Up_for_closing_a_Private_Limited_company\"><\/span>Voluntary Winding Up for closing a Private Limited company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Voluntarily winding up adheres to long\nprocedural compliance and it another viable way to close a private limited\ncompany. There are certain underlying conditions that have to be met for\nclosing a company voluntarily. A company can opt for voluntarily winding up in\nthe following scenarios: <\/p>\n\n\n\n<ul><li>The\ncompany passes a resolution in its general meeting after the expiration of the\nduration for which it is established or after the occurrence of any scenario in\nrespect of which the articles provide for the company&#8217;s dissolution. <\/li><li>The\ncompany passes a special resolution (with the consent of at least 3\/4th of the\ncompany&#8217;s shareholders) for a voluntary winding up\u2014such a wind-up starts from\nthe date of passing of the resolutions above. The company is also liable to\nappoint a Company liquidator in such a meeting. Keep in mind that the\nconfirmation of the majority of the company&#8217;s creditors is necessary for this\npurpose. <\/li><\/ul>\n\n\n\n<p><strong><em>Voluntary winding up entails the given\nsteps: <\/em><\/strong><\/p>\n\n\n\n<ul><li>The\ncompany passed a resolution regarding dissolution in the general meeting as\ncited above.But, the majority of directors need to render their\nconfirmation for winding up.<\/li><li>The\nTrade Creditors&#8217; consent is also required for the company&#8217;s wind up. Such\nindividuals have to render their consent that they do not have any\naccountability if the company gets wound up. <\/li><li>The\ncompany must prepare a Declaration of Solvency and the company&#8217;s trade\ncreditors should accept the same. The company has to show the entity&#8217;s\ncredibility in such a declaration. <\/li><li>The\nliquidator above shall undertake the winding-up legalities and prepare a detail\nof the winding-up on the properties, assets, debt, etc. The report will be\nprepared prior to the general meeting for approval and passing a resolution\nregarding dissolution. <\/li><li>The\ncompany liquidator shall share a copy relating to the company&#8217;s final accounts\nand the resolutions to the ROC.<\/li><li>The\nliquidator shall also file an application cum form to the Tribunal for a\njudgement on the company&#8217;s dissolution.<\/li><li>After\nbeing satisfied, the Tribunal shall stamp their approval and pass an order of\ndissolution within sixty of the application. A copy of such an order must be\nfiled with the ROC. <\/li><\/ul>\n\n\n\n<p>All the procedures mentioned above shall be filed in a standard form. It must be noted that the name of the wound-up company remains inaccessible to other entities for two years from the date of wound up. The format for multiple forms and elaborate procedures relating to winding up is cited in the Companies (Winding-up) Rules, 2020.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"An_Overview_on_the_Defunct_Company_Winding_Up\"><\/span>An Overview on the Defunct Company Winding Up<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per to the Companies Act, 2013, a\ndefunct company (non-functional entity) refers to a company that has gained the\nDormant Company&#8217;s Status. Since these entities lack adequate financial support\nand do not have access to financial transactions, India&#8217;s government renders\nplenty of relaxation to them. <\/p>\n\n\n\n<p>The Company Act, 2013 has underpinned the <a href=\"https:\/\/corpbiz.io\/winding-private-limited-company\"><strong>winding-up procedure<\/strong><\/a> of a Defunct Company. A Dormant or Defunct company can be subject to winding up with a fast-track procedure. For this, submission of the STK-2 Form is required. <\/p>\n\n\n\n<p>The STK-2 Form must be filed with the\nrespective ROC, and the same must enclose the signature of the company&#8217;s\ndirector having the permission of the board to do so.<\/p>\n\n\n\n<p><strong><em>For the rationale of this scheme, a\ndefunct entity refers to an entity that has: <\/em><\/strong><\/p>\n\n\n\n<ul><li>Nil\nassets and liability, and <\/li><li>Which\nhas not started any business undertaking post-incorporation or <\/li><li>Has\nnot been performing any business undertakings since last one year prior to\napplying Fast Track Exit Scheme<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> The process of winding up adheres to a copious amount of paperwork and endless legal requisites. This is why it is fair to get in touch with someone who has expertise in this specific area to avert any chances of application rejection and process delay. Corpbiz is well-versed in winding-up legalities and is fully aware of ever-evolving compliances that revolve around it. You can connect with Corpbiz&#8217;s associates to avail of professional-grade assistance to close a private limited company, anywhere in India.  <\/p>\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/why-company-registration-is-important-for-small-businesses\/\">Why Company Registration is important for small businesses?<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Running a business isn&#8217;t a straightforward undertaking as it revolves around a number of unseen challenges. Series of unsuccessful years seldom compel businesses to quit their operation and opt for winding up. Following are the legitimate ways to close a private limited company in India. Selling of the Company Selling off a privately held company [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":41613,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[385],"tags":[2214,2215],"acf":{"service_id":"70"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":6168,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/41609"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=41609"}],"version-history":[{"count":17,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/41609\/revisions"}],"predecessor-version":[{"id":41636,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/41609\/revisions\/41636"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/41613"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=41609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=41609"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=41609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}