Skip to main content

How to close a private limited company

 How to close a private limited company

Running a business is very challenging. A situation may arise wherein things go out of hand and the business owner may have to shut down his business. If your company is registered as a Private Limited Company and you’re facing continuous losses, it is better to wind up your company. A Private Limited Company can be shut due to both voluntary and involuntary circumstances.

The process involved in the closure of a Private Limited Company

Selling the company

Selling a private limited company is also a kind of voluntary winding up. It is done by selling the shares of a Pvt Ltd company. Technically, it does not mean the actual winding up but, the transfer of shares to another person. The majority of the shareholders will be discharged from their responsibilities.

Compulsory winding up

Any company registered under The Companies Act, which has committed an unlawful act, a fraudulent act, or even contributed to the fraudulent activity will be compulsorily wound up by the tribunal.

  • All the documents should be audited by a practicing CA
  • The petition should be advertised for 14 days in the regional language and in English under Form 6.
  • Filing of Form 11 for the order of winding up the company
  • The updated book of accounts has to be submitted
  • Mention date, time, and place for company liquidator
  • If all the required compliances have been satisfied, the tribunal will pass the order to dissolve the company in 60 days. Once the company is dissolved, the registrar issues a notice to the official gazette stating that the company is dissolved.

Voluntary winding up a company

Winding up a company voluntarily is long procedure compliance to follow. There are mandatory requirements to close down a private limited company.

  • A board meeting with the majority of members agreeing upon the winding up of the company is required.
  • A special resolution is required where 3/4th of the shareholders present must vote in favor of winding the company.
  • Consent of the trade creditors is required.
  • A declaration of solvency needs to be made by the company and the same has to be accepted by the trade creditors.
  • A report of assets, liabilities, capitals, etc has to be made by the liquidator appointed.
  • The company’s name will be prohibited for 2 years even after winding up of the company.

Defunct Company Winding-up

According to The Companies Act, 2013, a company that has gained a dormant status is defunct. These companies do not have any financial transactions and therefore, the government has provided certain relief to these companies. A defunct company is wound up through the fast-track procedure on submission of the STK-2 Form. The form has to be filled with the Registrar of Companies and the same has to be signed by the Director of the company as well.

A defunct company refers to a company that has:

  • No assets and liabilities
  • No commencement of business activities since the incorporation
  • No business activities for one year before making an application under the Fast Track Exit Scheme

Comments

Post a Comment

Popular posts from this blog

What to Include in a Master Service Agreements

Image
  Details that need to be included on a Master Service Agreement To obtain a well-drafted master service agreement, there are a few details that need to be mentioned in the agreement. Here is a list of the details that has to be mentioned. Confidentiality The service provider has to ensure that all the data provided by the customer is kept confidential. If the court requests the seller to uncover private data, the service provider will inform the customer and allow the customer to provide a defensive statement to the court. Payment terms The service providers and the customers usually negotiate on the terms related to payment. The instalment completely relies on the dealing power of the customer. Some customers can even prolong this for a span of 6 months. The term mentioned in the master service agreement This demonstrates a term during which both the parties will be in contract with each other. In most cases, both the parties forget about the term of agreement and only concentrat...
Read more

Advantages of Company Registration / Subsidiary company in India

Image
  A  foreign subsidiary company  is a partially or wholly-owned company that is a part of a larger corporation. The larger corporation must be headquartered in another country. The foreign subsidiary company works according to the laws of the country in which they are located. We have listed 9 important advantages if your registering a foreign company . Control Establishing a subsidiary company in India gives the  parent  company   operational and strategic control over the company. This becomes a very vital benefit for the parent company. Synergies  Synergies are combining two services together to get a combined or greater effect. Establishing subsidiary companies provide the benefit of synergies where a common financial system is used, sharing the cost incurred between the parent company and subsidiary. Brand name The brand name is retained as both the parent company and the subsidiary bear the same name. This leads to better growth opportunities for...
Read more

How to register a private limited company in India?

  From local businesses to corporates,  private limited company  is one of the most preferred business entities. The  financial liabilities  of the shareholders are limited to their shares. A private limited company will continue to exist even in case of death or departure of a member.  A private limited company can be incorporated with a minimum of two and a maximum of two hundred members. It is governed by the Ministry of Corporate Affairs, Companies Act, 2013 and the Companies Incorporation Rules, 2014.  If anyone wants to register their company as a  private limited company , they are required to follow the rules stipulated by the Companies Act, 2013.  Basic requirements for private limited company registration Documents required (with self-attestation) By  Directors  & Shareholders Latest passport size photo. Copy of Pan card of Directors  Copy of Aadhaar Card Copy of Voter Identity card/ driving licence/passport of th...
Read more