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Company Closure (Strike Off) in India – Process & Fees

Updated on January 08, 2026 01:26:16 PM

Company closure is a notable event which signifies the end of the operation of the business concerned. Even though company closure may be perceived as a failure or a challenge, the process of strike off liquidation or winding up may also indicate a new beginning that the company’s management wants to take up.

It is very essential to understand the significance of the winding up of a company or strike off company because, by understanding this, all concerned parties will be able to know what has transpired in making this decision, which will help them prepare for what is next for them. The provisions regarding the closing down of a company and liquidation of the company are provided under the Companies Act 2013, and all these provisions need to be followed very strictly.

The shutting down of a company can be a procedure to formally close down businesses in a company for various reasons. For the shutting down of a company to take place, there has to be a procedure followed for the liquidation of the company.

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Table of Content

What does company closure mean?
Process for Company Closure in India
Documents Required for Company Closure in India
Fees for Company Closure in India
Modes of Company Closure in India
Key Reasons for Company Closure in India
Consequences After Closing Your Company
Conclusion
faqs

What does company closure mean?

Company closure refers to the process of permanently shutting down a business entity or ceasing its operations. It involves the cessation of all activities, including production, sales, and services, within the company.

During the closure of a company, it typically involves the liquidation of assets, settlement of outstanding liabilities, and the termination of contracts and employment agreements.

The closure of a company means the end of its existence as a legal entity and often has significant implications for employees, shareholders, creditors, and other stakeholders associated with the business.

Law Related to Company Closure

The Companies Act 2013 serves as the most recent legislation regulating the establishment of companies in India. Enacted by the parliament on December 13, 2012, this act officially commenced on April 1, 2013.

Process for Company Closure in India

The procedure for winding up a company or closing a company in India is as follows:

Procedure of Voluntary company closure or winding up

Steps to be followed in case of voluntary winding up a company are as follows:

Step 1: Board Resolution must be passed by all the board members regarding voluntary winding up of the company.
Step 2: Approval from shareholders must also be taken for the purpose of winding up of the company.
Step 3: Trade creditors must also give their consent that they do not have any responsibility towards the liquidation of the company.
Step 4: A document of Declaration of Solvency must also be prepared.
Step 5: Creation of Report of Assets and liabilities of the winding company by the appointed liquidator.
Step 6: Application of company closure to the Tribunal for liquidation of the company must be filed by the liquidator.
Step 7: After verification of documents, the Tribunal will pass a resolution for dissolution of the company within 60 days of application.
Step 8: Advertisement in the Newspaper and removing the name from the list of registered companies.

Procedure for Compulsory winding up a Company

The procedure for compulsory winding up a company is as follows:

Step 1: Company must file a petition to Tribunal and present the statement of affairs of the company.
Step 2: Company must appoint a liquidator to carry out all the company closure operations.
Step 3: The liquidator must draft a report and wait for the approval. Once the approval is received, the report must be submitted to the Tribunal.
Step 4: If the ROC finds the draft report satisfactory, they will approve the winding process and strike off the company name from the list of registered companies.
Step 5: ROC will send the notice for the publication of this report to the Official Gazette of India.

Documents Required for Company Closure in India

The mandatory list of documents required for company closure as per the Companies Act, 2013 are:

Board Resolution
List of creditors
Statement of Affairs
Financial Statement
Notarized Indemnity Bond
An affidavit in Form STK - 4
CTC of Special Resolution
Statement Containing any Pending Litigation

Fees for Company Closure in India

The Total cost of company closure in India is given in table below:

Company Closure Items	Fees
Government Fee	₹10,000/-
Professional Fee	₹10,000
Documents Processing Fee	₹999
Total fee for Company Closure	₹20,999

Note: The aformentioned Fees is exclusive of GST.

Note: For the purpose of company closure a professional fee is charged by the company secretary, and an additional fee for Documents Processing and auditing (Notary and Stamp Paper)

Modes of Company Closure in India

According to the Companies Act, 2013 there are two main types of processes through which the process of company closure can be initiated. These are:

Voluntary Company Closure

Dissolution by Shareholders: This subheading will explore the process by which shareholders collectively decide to dissolve the company and cease its operations.
Strike-off by Registrar of Companies: Here, we will explain the circumstances in which the Registrar of Companies can strike off a company from the official register due to non-compliance or other specified reasons.
Voluntary Winding-up: This subheading will cover the voluntary winding-up process initiated by the company's shareholders, including the appointment of a liquidator and the subsequent steps involved.

Involuntary closure by Tribunal

Compulsory Winding-up by Court: This subheading will focus on the scenarios in which a court orders the winding-up of a company due to factors such as insolvency or failure to meet financial obligations.
Dissolution by Government Authorities: Here, we will explore the instances where government authorities possess the power to dissolve a company based on specific circumstances, such as non-compliance or regulatory violations.

Key Reasons for Company Closure in India

There are multiple reasons which leads to closure of a company, and these reasons are as follows:

Financial difficulties: A company may face significant financial challenges, such as declining sales, increasing debts, or inability to secure funding. If these issues become insurmountable and there are no viable solutions, the company may choose to close down.
Market changes: Industries and markets are dynamic, and sometimes a company's products or services become obsolete or face intense competition. If a company cannot adapt to changing market conditions or sustain profitability, it may opt for closure.
Strategic decision: Sometimes, a company may decide to shut down a specific business unit or division as part of its strategic planning. This could be due to a shift in focus, a desire to consolidate resources, or to redirect investments into more promising ventures.
Legal or regulatory challenges: Companies may face legal or regulatory issues that impede their ability to operate effectively. This could include violations, lawsuits, compliance challenges, or changes in regulations that make their business model unviable.
Owner's retirement or personal reasons: The owner or founders of a company may choose to retire or pursue other personal interests, leading to the decision to close the business. This is especially common for small or family-owned businesses.
Merger or acquisition: In some cases, a company may be acquired by another entity or merged with another company. As part of the consolidation process, redundant operations may be closed down to streamline resources and maximize efficiency.

Consequences After Closing Your Company

There are multiple reasons which leads to closure of a company, and these reasons are as follows:

Financial Losses: Company closure may result in financial losses, especially if the company has outstanding debts or liabilities that cannot be fully repaid. The process of settling debts and obligations may lead to financial strain on the company's stakeholders.
Job Losses: Closure often involves the termination of employment for company employees. This can have a significant impact on individuals who relied on the company for their livelihoods, causing financial hardships and uncertainty.
Business and Industry Reputation: Company closure can negatively impact the reputation of the business and its stakeholders. It may raise questions about the company's stability, reliability, or management, which can affect future business opportunities and relationships.
Emotional and Psychological Impact: Closing a company that entrepreneurs or business owners have invested significant time, effort, and emotions into can be emotionally challenging. It may lead to stress, disappointment, and a sense of loss.

Disruption to Supply Chains and Business Relationships: Closure can disrupt existing relationships with suppliers, clients, or partners, potentially affecting their trust and confidence in future business dealings.
Legal and Regulatory Complexities: Closing a company requires adherence to various legal and regulatory requirements. Failure to comply with these obligations can lead to legal disputes, penalties, or fines. Navigating the legal complexities of closure can be time-consuming and challenging.

Conclusion

The company closure is the process of winding up the operations of a company due to various reasons. The process of liquidation of a company involves appointment of a liquidator who will finally initiate and carry on the liquidation process. Closing a company is a complicated process and it requires expert consultation to close a company successfully to avoid any penalties in the future.

Consult with Professional Utilities for more information on Company closure or liquidation and get the expert advice on your company closure to avoid any penalty.

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FAQs on Company Closure

What is a company closure?

Company closure means officially shutting down a business. It’s about wrapping up all pending dues, completing legal formalities, and making sure the company stops operations without any future liabilities.

How to check company closure status?

The status of closure of a company can be ascertained from the website of the Ministry of Corporate Affairs using the name of the company or Corporate Identification Number.

What is the fee for company closure?

The total cost for the closure of an Indian company is ₹ 20,999, which is inclusive of all government, professional, and document processing charges but does not include GST

What are the benefits of winding up?

Winding up will provide legal closure, settlement of liabilities, avoidance of future penalties, and removal of ongoing compliance obligations.

What is the process of company closure?

Closure of the company involves passing resolutions, meeting liabilities, filing of applications to the Registrar of Companies or Tribunal and completing the winding-up or strike off liquidation, resulting in dissolution.

What is the difference between strike off and winding up?

Strike off a company is a simplified closure procedure for inactive companies. Winding Up of a Company: It entails the liquidation of company assets and legal procedures.

What are the directors’ responsibilities before closing a company?

The directors must make sure that the statutory compliances are fulfilled, the liabilities are paid off, the accounts are true, and the approval has been sought properly.

How to close a company?

A company can be struck off through strike off liquidation, voluntary winding up, compulsory winding up, and the required legal formality is fulfilled.