Closure of Subsidiary Company in India
Table of Contents:-
A foreign-owned subsidiary in India may need to be closed because of business restructuring, cessation of operations, group consolidation, commercial considerations or changes in the parent company’s India strategy.
The appropriate method for closure depends on the financial and operational position of the Indian subsidiary. A company with no liabilities and no ongoing business may be eligible for strike-off under the Companies Act, 2013, whereas a solvent company requiring a formal liquidation process may consider voluntary liquidation under the Insolvency and Bankruptcy Code, 2016.
This guide explains the principal options for closure of a subsidiary company in India, including eligibility for strike-off, filing of Form STK-2, documentation, timelines and situations where voluntary liquidation may be more appropriate.
Ways to Close a Subsidiary Company in India
There are broadly two commonly considered routes for closing an Indian subsidiary:
Strike-Off under the Companies Act
Strike-off is generally suitable where the company has ceased business, has no significant assets or liabilities and satisfies the eligibility conditions prescribed under the Companies Act and applicable rules.
The application is made to the Registrar of Companies through Form STK-2.
Voluntary Liquidation under the IBC
Where a solvent company requires a formal liquidation process, voluntary liquidation may be undertaken under Section 59 of the Insolvency and Bankruptcy Code, subject to the prescribed conditions and procedures.
This route generally involves appointment of a liquidator, settlement of claims, realisation and distribution of assets, and completion of the liquidation process.
Eligibility for Strike-Off of Subsidiary Company
Before filing for strike-off, the company should review whether it satisfies the applicable eligibility conditions under the Companies Act and Companies (Removal of Names of Companies from the Register of Companies) Rules.
The company should generally ensure that:
- business operations have ceased or the company is otherwise eligible to apply;
- assets and liabilities have been appropriately settled;
- statutory filings required before closure have been completed;
- there are no unresolved regulatory or legal issues preventing closure; and
- prescribed restrictions on filing a strike-off application do not apply.
A detailed eligibility review should be performed before filing Form STK-2.
Procedure for Voluntary Strike-Off
Review Eligibility and Outstanding Compliance
The company should first review its financial statements, assets, liabilities, pending litigation, statutory filings, tax position and regulatory obligations.
Any outstanding liabilities should generally be settled before the strike-off application is filed.
Board Approval
The Board of Directors should consider and approve the proposed closure and authorise the necessary actions for filing the strike-off application.
Shareholder Approval, Where Required
The company should obtain the prescribed shareholder approval for the strike-off application in accordance with the applicable provisions of the Companies Act and related rules.
Where a special resolution is passed and filing of Form MGT-14 is applicable, the same should be filed within the prescribed timeline.
Preparation of Closure Documents
The company should prepare the prescribed affidavits, indemnity bonds, financial statements and other supporting documents required for the strike-off application.
Filing of Form STK-2
The application for removal of the company’s name from the Register of Companies is filed with the Registrar of Companies in Form STK-2 along with the prescribed documents and government fee.
Verification by Registrar of Companies
The ROC reviews the application and supporting documents and may seek clarification or additional information where necessary.
Public Notice and Strike-Off
Subject to satisfaction of the applicable requirements, the ROC issues the prescribed public notice and completes the process for removal of the company’s name from the register.
One important correction: remove the current sentence saying ROC strikes off the company after publishing notice “as per the norms under Insolvency and Bankruptcy Code (IBC), 2016.” That mixes the strike-off route with IBC liquidation.
Documents Required for Closure of Subsidiary Company
The exact documents may vary depending on the facts of the case and the applicable closure route. For a strike-off application, documents generally include:
- Board resolution approving the closure process;
- shareholder approval or special resolution, where applicable;
- Form STK-3 – Indemnity Bond from the directors;
- Form STK-4 – Affidavit from the directors;
- statement of accounts prepared up to the prescribed date and certified by a Chartered Accountant;
- statement regarding pending litigation, if any;
- copies of prescribed resolutions and authorisations;
- identity and address documents of directors, where required;
- regulatory approval or NOC, where applicable; and
- other supporting documents prescribed for Form STK-2.
Your existing page already contains STK-3, STK-4, statement of assets/liabilities and regulatory NOC concepts, so this is a cleaner rewrite rather than a completely new topic.
Additional Considerations for Foreign-Owned Subsidiaries
Closing a foreign-owned Indian subsidiary may involve additional cross-border and regulatory considerations beyond ROC strike-off.
These may include:
FEMA and RBI Compliance
The company should review whether all foreign investment reporting obligations, such as FC-GPR, FC-TRS and FLA reporting, have been completed as applicable before closure.
Repatriation of Funds
Where funds are to be remitted to the foreign shareholder, the company should examine the applicable FEMA, banking and tax requirements relating to the filing of form 145 and 146.
Tax Closure
The company should review pending income tax returns, TDS filings, tax assessments, refunds and other tax matters before initiating closure.
GST Cancellation
Where the subsidiary is registered under GST, cancellation of GST registration and completion of applicable return or compliance requirements should be addressed.
Bank Account Closure
The company’s bank accounts should be appropriately settled and closed after completing the required financial and regulatory transactions.
How Long Does It Take to Close a Subsidiary Company in India?
The time required for closure depends on the route selected, completeness of documents, statutory compliance status and whether any objections or regulatory queries arise.
A straightforward strike-off case may take several months from preparation and filing through publication of notices and final removal of the company’s name.
The process may take longer where:
- ROC raises queries;
- statutory filings are pending;
- tax proceedings or litigation remain unresolved;
- liabilities have not been settled; or
- regulatory approvals are required.
Voluntary Liquidation of Subsidiary Company
A solvent subsidiary that does not qualify for or does not wish to use the strike-off route may consider voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016, subject to satisfaction of the prescribed conditions.
Voluntary liquidation is a formal process and generally involves:
- declaration regarding solvency;
- approval by members;
- appointment of a liquidator;
- public announcement inviting claims;
- verification and settlement of claims;
- realisation of assets;
- distribution of proceeds;
- preparation of the final report; and
- application for dissolution in accordance with the applicable framework.
Your present page already contains public announcement, claims and liquidation bank-account material.
We should keep the concept but make it much shorter and cleaner.
Frequently Asked Questions
Can a foreign-owned subsidiary be closed through Form STK-2?
Yes, subject to satisfaction of the eligibility requirements for strike-off and completion of applicable statutory and regulatory compliances.
Is Form MGT-14 always required for closure?
The requirement depends on the manner in which shareholder approval is obtained and the applicable Companies Act provisions. The specific filing requirement should be checked based on the facts of the company.
Can a subsidiary be closed if it has outstanding liabilities?
Outstanding liabilities should generally be settled before a strike-off application is filed. A company with unresolved liabilities may need to consider another appropriate closure route.
What happens to foreign investment compliance before closure?
A foreign-owned subsidiary should review and complete applicable FEMA and RBI reporting requirements before closure and before remitting any remaining funds to foreign shareholders.
What is the difference between strike-off and voluntary liquidation?
Strike-off is generally a simpler removal process for eligible companies with no continuing business or material liabilities. Voluntary liquidation is a formal liquidation process involving a liquidator, claims, asset realisation and dissolution.
Related Services
- Wholly Owned Subsidiary in India
- Foreign Subsidiary Compliance in India
- India Market Entry Consulting
- FEMA/FDI service
- Tax and Regulatory Service
Prepared By:
EzyBiz India Consulting LLP – India Market Entry, FEMA & Cross-Border Advisory Team
Last Updated:
22 August 2026
Disclaimer:
The information contained in this article is for general informational purposes only and should not be considered legal, tax, insolvency or regulatory advice. The appropriate closure route and applicable requirements may vary depending on the company’s financial position, liabilities, ownership structure, regulatory status and specific facts. Professional advice should be obtained before initiating closure proceedings.
Get end-to-end assistance with India market entry strategy, entity setup, regulatory approvals and post-entry compliance.
Planning to Establish or Expand Your Business in India?
