How to Close an Inactive Company under Companies Act 2013?

  • August 01, 2022
  • Update date: December 01, 2024
  • Dushyant Sharma

If you are running a business, then you are already aware of the risks that are involved with it. To that end, there are times when the business just stops working out for you. Now, even when you have put your heart and soul into that company, you might have to close it under this circumstance. 

Furthermore, there are also times when you might have to close the company if there are some fraudulent conditions within your premises. There are several ways to do so. However, when you are thinking about closing your company under Companies’ act 2013, there are 4 ways that you can do this. These 4 ways to do so:

  1. Compulsory winding up the company
  2. Voluntary closing
  3. Selling the company
  4. Defunct Company closing

Ways to wind up a Private Limited Company

  1. Compulsory winding up the company:

If the company is registered under the companies act and engaged with certain activities tha5ta redeemed fraudulent, then the tribunal closes this company down on a compulsory basis. The procedure to do so entail:

  1. First, the company, the trade creditors, the central or state government or the registrar of companies will have to file a petition.
  2. Then this petition is going to be attached together with the statement of affairs of the company.
  3. Now, this petition is going to be advertised in the daily journal for a period of 14 days. This advertisement is carried out under form 6.
  4. Then, the proceedings will take place that applies form 11 to close the company. at that time,  the company will have to :
    1.  Surrender its assets
    2. Submitted all the audited books up to the date when the company did their last transaction
    3. Provide the dare, time and place for the liquidator of the company.
  5. If everything is in order, the company will be dissolved in the next 60 days.
  1. Voluntary Closing:

Now, if your company is not making any profit and you have to close it down on a voluntary basis, then there is a lost list of compliances that you will have to follow through with. Once you are adhering to them, the process of voluntary closing is as follows:

  1. You have to make sure that the majority of directors agree to this.
  2. A special resolution is needed to be passed where about 3/4th of the directors will have to agree to wind up the company.
  3. The trade creditors should also consent to the same.
  4. The company then has to make a declaration of insolvency. This declaration should then be accepted by the trade creditors of the company.
  5.  Finally, the liquidator will be appointed who is going to see that your assets, liabilities and capital reserves are reported properly.
  1. Selling the company:

This is another kind of voluntary winding up. To that end, you can actually sell of your company. The way to do so is the following:

  1. Selling the majority of shares of the company.
  2. This is the way to transfer the stakes of the company to someone else.
  1. Closing a defunct company:

A defunct company gets the status of a dormant company. This company can be closed down using a fast-track procedure. The way to do so is to file the form STK-2:

  1. The form will have to be filled and submitted to the registrar of companies.

However, the defunct company should be:

  1. Without any liability
  2. There have been no business after the incorporation
  3. Have not been functioning one year prior to filing the application of Fast track scheme

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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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