If your earlier business hasn’t done well and needs to be shut down, the process is stressful. Its even more time consuming and grueling if you had incorporated your business as Pvt. Ltd Company. Shutting down the Pvt. Ltd Company can be done in the following ways:
- You shutdown the company declaring it as defunct.
- You sell it
- You wind up and dissolve the company.
Given below is how you can shut down a private limited company by declaring it defunct in an application to the Registrar of Companies (ROC).
Step 1 – The board of the company has to make a resolution to make an application to the ROC for declaring the company as defunct. Two directors of the company must sign this application.
Step 2 -Two directors of the company have to sign an affidavit, which is notarized, that verifies that the company did some business for a period up to date and then discontinued its operations, and has no assets or liabilities.
Step 3 –Two directors have to sign an indemnity bond, that is notarized, which says that should there be any liabilities on the company, such liabilities will be met in full by the applicants even after the name of the company is struck off the register of companies.
Step 4 –The company will have to file the financial statement for the latest year prepared up to a period, which ended one month preceding the date of application. This will be accompanied with a declaration that the statement of accounts submitted gives a true and fair view of the company’s financial position.
Step 5 – Companies which discontinued their operations, after carrying the same for some period, should file audited financial statement for the period up to which they carried on the business provided that period is of one accounting year or more. Also, if there is any unsecured loan, then a waiver letter needs to be submitted.
If the registrar is satisfied with the application under the current laws, then it will proceed towards striking the name of the company and declaring it as defunct and thereafter publish a notice in this regard in the official gazette.
The entire process takes about two months and your C.A might charge you about Rs.25,000, including the fees and miscellaneous charges.