How do I close or wind up a company / LLP in India?

Eligibility for Section 248 strike off: company hasn't commenced business within 1 year of incorporation; OR company hasn't carried on business or operation for 2+ years; AND has filed all required documents up to date; AND no pending statutory dues; AND no litigations against company; AND no security holders' grievances.

Application via Form STK-2 is filed by company or any director with board resolution plus shareholders' special resolution, affidavit by all directors, indemnity bond, statement of accounts (not older than 30 days); fee ₹10,000. ROC's process: publishes notice in Official Gazette, on MCA website, plus newspaper publication (1 English, 1 regional); objection period 30 days; if no objections, ROC strikes off; company is dissolved.

Post-strike off: company ceases to exist; director's disqualification possible for 5 years if reasons are not bona fide; asset transfer to government (after creditors paid). Revival under Section 252 by aggrieved person within 20 years of dissolution — NCLT can revive. Useful if struck off in error or rights affected.

For LLPs (Form 24 plus Rule 37): LLP not commenced or not carrying business for 1+ year; application by majority partners; statement of accounts; affidavit; NOC from partners; fee ₹500; process is similar with Gazette plus publication plus 30 days objection.

ROC suo motu strike off (Section 248(1)) applies to shell companies and non-filers; notice to the company followed by time to file response or pending documents; if not responded, struck off; director disqualification is automatic for 5 years.

Pre-application checklist: file all pending annual returns (Form AOC-4, MGT-7); pay all penalties; GST cancellation; tax clearances; close bank accounts; settle employee dues; pay creditors; asset disposal or distribution. Documents to retain: books of accounts (8 years post strike off); statutory registers; tax records. Timeline: 3-6 months. Cost: ₹10,000 filing plus ₹5,000-₹50,000 professional fees.

Section 59 IBC, 2016 covers solvent corporate persons (companies plus LLPs) as a voluntary decision by members. Declaration of solvency is by majority directors on affidavit with statement of company's affairs, auditor's report on assets and liabilities, confirming that the company can pay debts.

Members' approval: special resolution within 4 weeks of declaration approves voluntary liquidation and appoints an Insolvency Professional as Liquidator. Creditors' approval: if the company has debt, creditors representing 2/3rds in value approve within 7 days; not needed if no debt.

Public announcement is by the Liquidator within 5 days of appointment in Form A with newspaper publication and stakeholder notification. Claim collection: stakeholders submit claims within 30 days; Liquidator verifies; list of stakeholders prepared. Asset realisation: Liquidator sells assets, collects receivables, settles outstanding contracts.

Distribution order: costs of liquidation first; workmen's dues plus secured creditors; unsecured creditors; statutory dues; equity shareholders last. Final report submitted by the Liquidator to NCLT. NCLT order for dissolution: Liquidator applies; NCLT order; filed with ROC; company dissolved.

Liquidator's fee ₹5,00,000 varies by complexity. Cost ₹5-50 lakh+ for typical companies. Timeline 12-18 months. Tax implications: income tax final return plus capital gains on asset distribution; GST final return plus cancellation; TDS compliance; Section 115QA buyback considerations.

Choice between strike off and IBC voluntary winding up: strike off for defunct entities with no significant assets, simple; IBC voluntary for solvent entities wanting clean closure with creditor satisfaction. Strike off is cheaper and faster; IBC voluntary is more formal and comprehensive.

Triggered by inability to pay debts, insolvency, or just and equitable grounds (Section 271). Petition before NCLT is filed by operational creditor (payment default ≥₹1 crore, raised from ₹1 lakh in 2020), financial creditor (₹1 crore default), corporate debtor itself, or resolution professional.

CIRP (Corporate Insolvency Resolution Process) first: moratorium imposed (Section 14); Interim Resolution Professional appointed; Committee of Creditors formed; resolution plan invited; 180 days plus 90 day extension for resolution. Resolution outcomes: resolution plan approved → company revived; resolution plan rejected → liquidation; time-bound process.

Liquidation phase: Liquidator appointed; asset realisation; waterfall distribution (Section 53) runs in order — costs of insolvency resolution plus liquidation; workmen's dues (24 months) plus secured creditors who relinquished security; wages and salaries of employees (12 months); financial debts to unsecured creditors; government dues plus remaining secured creditors; remaining debts; preference shareholders; equity shareholders or partners. Dissolution order follows.

Resolution Professional (RP) or Liquidator is from an Insolvency Professional Agency, plays specialised role, holds fiduciary duties, commands high remuneration. Personal guarantor insolvency: personal insolvency of guarantors triggered; concurrent with corporate insolvency; separate resolution process.

Just and equitable grounds (Section 271 Companies Act): deadlock between shareholders or directors; loss of substratum (business no longer feasible); fraudulent purpose; minority shareholder oppression; loss of confidence in management. Pre-IBC winding up petitions under Sections 433-484 Companies Act 1956 (now repealed) were transferred to NCLT and decided per old law if instituted before.

Cross-border insolvency: draft bill under consultation; UNCITRAL Model Law approach; recognition of foreign proceedings. Notable rulings: Innoventive Industries v. ICICI Bank on IBC objectives; Swiss Ribbons v. Union of India on constitutional validity of IBC; K. Sashidhar v. Indian Overseas Bank on resolution plan approval. Costs are substantial — RP fees ₹50,000-₹5 lakh per month; CoC consultant; legal costs; ₹15-50 lakh+ for medium companies.

Statutory filings must be current: annual return (MGT-7) up to date; financial statements (AOC-4) up to date; Director KYC (DIR-3 KYC) for all directors; income tax returns filed; GST returns filed; TDS returns filed; all ROC fees paid (including late fees).

Tax clearances include income tax final return plus Tax Clearance Certificate (for compulsory winding up); GST final return (GSTR-10); professional tax; PF and ESI dues; customs duty pending. Employee dues: full and final settlement of all employees; gratuity, leave encashment, EPF, ESI; notice or pay-in-lieu; Industrial Disputes Act compliance for retrenchment. Creditor settlement: trade creditors; banks and financial creditors; statutory creditors; contingent liabilities; NOC from major creditors.

Asset disposal: sell assets at fair value; distribute to shareholders; capital gains tax considerations; stock liquidation; recovery of receivables. Litigation closure: settle pending suits; withdraw or dismiss; document terms. Contracts termination: vendor contracts; leases (surrender or termination); licences; subscriptions; government contracts.

Bank account closure: settle balances; close current accounts; demat closure; forex account closure. Statutory registrations cancellation: GST cancellation (GST REG-16); trade licence; FSSAI; drug licence; IEC; MSME or Udyam; Shops Act; Pollution NOC; IPR portfolio (assign or surrender).

Records preservation: books of accounts 8 years; statutory registers permanent; tax records 6-8 years; employee records 7 years. Director's responsibilities post-closure include personal liability for unpaid statutory dues; disqualification if company struck off without due process; Section 164 disqualification (5 years for non-filing); fines under Companies Act.

Specific industry considerations: RBI or NBFC — RBI approval needed; SEBI — listed company delisting first; IRDAI — separate process for insurance companies; telecom — DoT clearances. Foreign-funded company or FDI received: FEMA compliance; Form FC-TRS for share transfer; RBI reporting; repatriation of foreign investor's funds; tax planning critical.

Partnership firm dissolution is under the Indian Partnership Act, 1932. By agreement per partnership deed. By notice: at-will partnership; any partner notice. By events: death of partner, insolvency, completion of venture. By court order: misconduct, breach, just and equitable.

Dissolution procedure: notice to all partners; settlement of accounts — losses paid out of profits, then capital, then partners individually; assets used for debts, advances to partners, capital; surplus distributed per partnership ratio. Public notice via newspaper publication is essential to avoid liability for future acts of partners. Cancel registration if registered. Bank account closure.

For registered firms: Form B with Registrar of Firms; update partnership register. Tax implications: final return; capital gains on asset distribution; tax clearance certificate; GST cancellation. Sole proprietorship closure has no formal dissolution process. Simply stop operating. Settle existing obligations. Cancel registrations: GST cancellation; Shops Act; trade licence; Udyam registration; bank account closure. Tax compliance: final return; pay all dues; cancel TAN if separate.

Statutory dues: pay all dues; particular attention to GST, TDS, PF, ESI. Employee settlement even for small firms with full and final settlement. Contracts: terminate or assign. Premises: lease termination or surrender. Asset disposal: liquidate; transfer to personal use (taxable).

Records retention: books of accounts 8 years (Section 44AA Income Tax Act); GST records 6 years; TDS records 7 years; PF records permanent for own staff. Post-closure liabilities: sole proprietor personally liable for all firm debts; tax assessments can come for past years; pending litigations continue against proprietor; personal insolvency under IBC if necessary.

Restarting: many sole proprietors and partnerships restart with new structure (LLP, Pvt Ltd); plan accordingly. Documents retention period strategy: permanent for incorporation and board resolutions; long-term for financial records; medium for operational records; short for routine correspondence; digital archiving with regular backups. Engage a specialised CA / CS / corporate lawyer for complex closures.