Strike Off of a Company — How to Close an Inactive Company Legally

Why This Matters

Not every company that is incorporated goes on to do business. Plans change, partners move on, or a venture simply does not take off. The problem is that an inactive company does not just quietly disappear — as long as it stays on the register, it keeps attracting annual compliance obligations, and missing those leads to penalties and even director disqualification.

The clean, legal way to close down such a company is the Strike Off process under Section 248 of the Companies Act, 2013. This blog explains when you can use it, who cannot, the documents required, and the step-by-step procedure.

What Is Strike Off?

Strike off means getting the company's name removed from the Register of Companies maintained by the Registrar of Companies (ROC). Once struck off, the company is dissolved and ceases to exist as a legal entity. There are two routes — the ROC can strike off a company on its own (suo moto), or a company can voluntarily apply for it. This blog focuses on voluntary strike off, which is what most businesses use.

Legal Reference: Section 248, Companies Act, 2013 | Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016

When Can a Company Apply for Voluntary Strike Off?

A company can apply to have its name struck off in situations such as:

•          It has failed to commence business within one year of its incorporation, OR

•          It has not been carrying on any business or operation for the two immediately preceding financial years and has not applied for dormant company status.

Before applying, the company must extinguish all its liabilities — meaning it should have no outstanding debts or obligations at the time of application.

Legal Reference: Section 248(2), Companies Act, 2013

Who Cannot Apply

Certain companies are not allowed to use the strike off route. These include companies that, in the previous three months, have:

•          Changed their name or shifted their registered office from one state to another

•          Made a disposal for value of property or rights held by the company (other than in the normal course of trading)

•          Engaged in any activity except what is necessary for making the strike off application

In addition, companies that are listed, companies under investigation or inspection, companies with pending prosecutions, companies with outstanding public deposits, and companies with charges pending satisfaction generally cannot apply. Section 8 (non-profit) companies are also excluded.

Legal Reference: Section 249, Companies Act, 2013 and the 2016 Rules

The Strike Off Process — Step by Step
Step 1 — Hold a Board Meeting

The directors meet to approve the proposal for strike off, authorise a director to make the application, and call a general meeting of shareholders.

Step 2 — Clear All Liabilities

The company must settle and extinguish all its liabilities before proceeding. Bank accounts in the company's name should be closed, and a closure confirmation kept on record.

Step 3 — Pass a Special Resolution

At the general meeting, the shareholders pass a special resolution approving the strike off — or alternatively, consent is obtained from members holding at least 75% of the paid-up share capital.

Step 4 — Prepare the Documents and File Form STK-2

The application for strike off is made to the ROC in Form STK-2, along with the prescribed attachments (listed below). This is the central form in the entire process.

Legal Reference: Section 248(2) read with the 2016 Rules

Step 5 — ROC Issues Public Notice

On receiving the application, the ROC publishes a public notice (in Form STK-6) inviting objections from anyone who may have a concern, and intimates relevant regulatory authorities. This gives the public an opportunity to object before the company is dissolved.

Step 6 — Strike Off and Dissolution

If no valid objection is received and the ROC is satisfied, it strikes the company's name off the register and publishes a final notice in the Official Gazette (Form STK-7). From the date of this notice, the company stands dissolved.

Forms at a Glance

•          STK-2 — Application for strike off (filed by the company)

•          STK-3 — Indemnity Bond (by directors)

•          STK-4 — Affidavit (by directors)

•          STK-8 — Statement of Accounts format

•          STK-6 / STK-7 — Public notice and final dissolution notice (issued by the ROC)

Important — Liability Does Not Vanish

A common misconception is that once a company is struck off, the directors are free of all responsibility. That is not correct. Even after strike off, the liability of every director, officer, and member continues and can be enforced as if the company had not been dissolved. Strike off closes the company; it does not erase obligations that existed before it.

Legal Reference: Section 250, Companies Act, 2013

To Wrap Up

If a company is no longer in use, the worst thing to do is to simply abandon it — that path leads to mounting penalties and director disqualification. Strike off under Section 248 is the proper, legal way to close it down. The process is document-heavy and the eligibility conditions are specific, so it pays to get the paperwork right the first time. A practising Company Secretary can confirm whether the company is eligible and handle the filing end to end.