Winding up of a Company
There are circumstances when companies are unable to continue its operations and want to close the company or LLP. In such situations, either the company opts to wind up its operations or, they opt for reconstruction of their business by way of merger, amalgamation, etc. In the case of winding up of a company in India or LLP, there are following options:
- Winding up of a company & LLP under normal procedure and Fast Track procedure
Also, Winding up of a company under fast track process is also refer to as strike off of the company. In following cases, winding up under fast track process or strike off of company takes place:
- Where a company has failed to commence business or operations within one year of its operations. Or
- When the Company is not carrying on any business activities or operations for 2 immediately preceding financial years.
Following Companies are not allowed to file application for strike off
- Listed companies
- Vanishing Companies
- In case where inspection or investigation is ordered against company
- When any prosecution is pending in court against the company
- Companies where application regarding compounding of offence is pending before the competent authority.
- Those Companies which have accepted public deposit
- Companies having charges for satisfaction
- Section 8 companies (Not for profit organization)
- Where any prosecution is pending under Sec 206/207 of Companies Act,2013
There are some restrictions on making application u/s 248 of Companies Act for striking off
An application under Section 248 on behalf of a company shall not be made if, at any time in the previous three months, the company:
- It has changed its name or shifted its registered office from one State to another
- Company has made a disposal for value of property for the purpose of disposal of gain in the ordinary course of trading
- Engaged in any other activity except its primary activity.
- Made an application for compromise or arrangement and the matter has not been finally concluded
- Where Company is being wound up
Following documents shall be required to file application in form STK-2
- An Indemnity Bond duly notarized by each director in form STK-1
- Statement of Account, not more than 30 days before application certified by practicing CA.
- An affidavit duly notarized in a form STK-4 by every director
- Copy of Board resolution
- Copy of Special resolution/consent from shareholders
- Self-attested ID & address proofs of all directors
Following Forms are required to file with the ROC
- MGT-14 (for public companies only)-not required to file if consent from members having 75% or more concerning paid up capital
- Form STK-2
Note: If the person is foreign nationals or non-resident Indian, all the documents required shall be notarized/apostilled / consularized
Winding up of LLPJust like companies, LLPs can also be would up either under normal procedure or under fast track mode
Following are the prior conditions to be fulfilled for closure of LLP under fast track mode or strike off of LLP
- LLP is not carrying on any business or operation for one year or more.
- All filings have been done up to date (including partnership agreement).
- Latest Income Tax Return has been filed.
- Nothing relating to secured loan exist, or charge has been registered.
- No form is pending for approval or payment of fee against the LLP
Following Documents are required for striking off of LLP (Form 24 LLP)
- Detailed application
- Copy of authority/BR to make the application
- Consent of all partners
- All creditors consent
- Copies of the undertaking/ indemnity bond signed by all partners for striking off name
- Statement of Assets and Liabilities duly certified as true and correct by auditor/Chartered accountant in practice
- Acknowledgment copy of latest Income tax return
- Any other information can be provided as an optional attachment
Total time involved in fast track procedure is normally 60 to 80 working days.