Shutting down a Private Limited Company

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.

1,460 Comments
  1. Kirti 4 years ago

    Respected Sir, please let me know the procedure for closing down the company and also let me know one most important thing that after closing down the company if any financial liabalities are raised against the company ,does the Directors of the company is held personaly liable for that, ? I mean to say , that does the private propery of the director will be attached for the recovery of such liabilities?

    • Robin 4 years ago

      Dear Kirti,
      In the normal course, your liability is limited to the balance of unpaid share capital. However, There have been instances where our judiciary has lifted the corporate veil and held directors responsible for corporate liabilities.

  2. lax man 2 years ago

    We Had availed loan of 2 lacs in 1994 we want to close the company now in 2015 but there is charge Id visible on ROC site depsite the loan has been repaid in full by the company .but the bank has no record of repayment . In such circumstances what does the company director do ,what is the role of the bank and role of roc, who is a party at fault here ,and will there be any penalty if so who is liable to pay panelty and to whom ..pl help. If it can be condoned who will do it.

  3. E vijayakumar 1 year ago

    Sir
    We have started a pvt ltd company under msme cluster development.even after 4 years we ate not in a position to get approval.we want to close the company.we have invested for factory land purchase.how to wind up and how to calculate the value for parting the money for all the 21 members.whether we can sell land and part the money

  4. Sandeep Sharma 1 year ago

    Dear Sir,
    i have creat pvt ltd company in july 2015 and not worked till now , no any transaction ,no asset , no liabilities..
    i want to close company. please tell me director card and company pan card will deregistered automatically or have to de-register .
    pls.tell me

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