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Private Limited Company Closure

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  • Overview
  • Benefits
  • Procedure
  • Documents
  • Reasons
  • Consequences
  • FAQs

What is Private Limited Company Closure?

If you run a business, you may face many challenges. Sometimes, when things do not work properly, your business may be shut down. Closing a business has several reasons, whether it's a financial loss or anything else. However, closing a Private Limited Company is a relatively simple process and can be effectively completed in a few steps by visiting the correct website. So, if you are willing to close a company, you come to the right place, as  ApkaTax is here to assist and guide you with their skilled and professional team. You need to fill out the given form to get more information.

 

Private Limited Company Closure Benefits

  • Free from debts after liquidation: Once the company's liquidation process is completed, company directors and all official members are free from all the creditor liabilities and pressure of the company. 
  • Avoiding legal action against the company: If the company director willingly passes a resolution, they can avoid legal actions taken by the courts or tribunals, as you can focus on new business opportunities. 
  • Comparingly low cost charged for liquidation: In the liquidation process, fees or expenses are relatively low, as charges will be applicable on the sale of assets.
  • Lease agreements will be canceled: If any company or entity gets into a lease for a prescribed time during the liquidation process, all the lease terms and conditions will terminate. If any Penalty has to be paid, it will be deducted from the sale of assets. 
  • Benefits of creditors: Creditors get benefits after a long time of liquidation process as they will be eligible for a default payment based on their credits given by all creditors.

 

What is the Process to Close a Pvt Ltd company?

For closing a company, there are two processes given below: 

  1. Voluntary Company Closure: Voluntary closure is a long compliance process to follow. There are some requirements needed to close a company voluntarily. A company can be voluntarily closed by following these steps: 
  2. Board Meeting Resolution: The board must discuss and approve the closure decision.
  3. Extraordinary General Meeting (EGM) Notice: Notify shareholders about the EGM, where a special resolution for closure will be passed.
  4. Special Resolution at EGM: During the EGM, pass a special resolution supporting the closure of a private limited company.
  5. Notify Registrar of Companies: Request the appointment of an Official Liquidator by informing the Registrar of Companies.
  6. Gazette Notification: Notify the closure in the Official Gazette.
  7. Local Newspaper Advertisement: Advertise the closure in a local newspaper where the company is registered.
  8. Statement of Assets and Liabilities: File an accurate statement of the company's assets and liabilities at most thirty days.
  9. No Form MGT 14 Required: Private limited companies no longer need to submit Form MGT 14 since 2014.For Voluntary Winding Up, the company must make a Declaration of Solvency, get acceptance from trade creditors, and then appoint a liquidator.
  10. Compulsory Company closure: Companies registered under the Company Act 2013 and committing fraud must be compulsorily closed. It can be forced to wind up when a tribunal or court issues an order based on a special resolution proposed by the directors in a board meeting. These are the steps of Compulsory Company closure: 
  • The company needs to file a petition for the tribunal and present the statement of affairs of the company. 
  • A company must appoint a liquidator to carry out all the operations of company closure.
  • A liquidator must draft a report and need to wait for approval. Your report must be submitted to the tribunal when the approval is received. 
  • If the ROC verifies your report, they will approve the process of company closure and strike of the company name from the registered companies. 
  • At the end, ROC will send a notification for the report's publication to the official gazette of India.

 

What are the Documents Required for Private Limited Company Closure?

  • Written consent from all the company's creditors.
  • An indemnity bond notarized by the company's directors.
  • A certified statement of the company's assets and liabilities prepared by a Chartered accountant.
  • An affidavit provided by the company's directors.
  • Duly signed Certified True Copy (CTC) of a special resolution, signed by the company's directors.
  • Digital signatures of all the company's directors.
  • PAN and Aadhar Cards of all the directors.
  • Consent letters from all the directors.
  • A Statement detailing any pending litigation involving the company.
  • No Objection Certificate (NOC) was obtained from the Income Tax Department.

 

What is the reason for winding up of a company?

A private Limited Company can be closed for many reasons, including financial loss or due to the retirement of the director. Whatever the reason, the process of closing a private limited company is easy and straightforward: 

Here are a few things that you need to keep in mind while closing a private limited company: 

  • Make sure you pay all debts and liabilities, including loans, taxes, and other financial obligations. 
  • Finish and submit all necessary documents to the Registrar of Companies (ROC), including a notice of intent to close the company and any other required forms.
  • Conduct a director's or shareholder's meeting and pass a resolution to the closure of a company. You can submit an application to ROC for voluntary strike-off.  
  • Once the Registrar of Companies (ROC) approves the application, they will issue a notice for the company's closing.

 

Private Limited Company Closure Consequences

The Closure of a private limited company has many consequences. Shareholders may face financial issues or losses, employees may lose their jobs, and creditors might not get their dues. In addition, company assets could be liquidated to pay all debts, and the company's name may be dissolved from the ROC. 

The total fees required for closing a company are given below:

Company Closure Items Fees
Professional Fees Rs 10,000
Government Fees Rs 10,000
Document processing fees Rs 999
Total fee of as company closure Rs 20,999

 

FAQs

You can close your company in two ways: voluntary and compulsory closure.

Documents Required for closing a company are given below: • Written consent of the company's creditors. • An indemnity bond notarized by the company's directors. • A certified statement of the company's assets and liabilities prepared by a Chartered accountant. • An affidavit • Duly signed Certified True Copy • Digital signatures of directors. • PAN and Aadhar Cards of Directors • Consent letters • A Statement detailing any pending company litigation. • No Objection Certificate (NOC)

These are the procedures for closing a company: Step 1: Petition filing Step 2: Filing of statement of company's Affairs Step 3: Advertisement for at least 14 Days Step 4: Proceedings of the Tribunal

Closing a company voluntarily requires long procedural compliance to follow. Specific mandatory requirements have to be completed to close down a company voluntarily

In compulsory closure, a creditor asks the High Court to close the affairs of a private limited company. This legal process ends with the company's removal from the Companies House register - effectively ceasing to exist.

The fee for the closure company is 20,999 Rupees, including professional, government, and document process fees.

Yes, defunct company closures are also known as dormant company closures.

Two processes are available for closing a company: Voluntary company closure Compulsory company closure

• The conditions that must be met before a private limited company can be closed in India are as follows: • All debts and liabilities of the company must be fully paid off or provided for. • The company must file all required tax returns until the closure date. • The company must not be involved in any ongoing litigation. • All shareholders must agree to the closure of the company.

The Government fee for STK-2 application is Rs.10,000.

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