What is the procedure of closing private limited company?
Running a business comes with its own challenges. Due to several reasons business owners decided to quit the business. If you thinking to wind up your business and looking for the ways, you have come to the right place. In this blog, we are going to tell you the four possible ways through which you can close your private limited effortlessly.
Sell the company:
To sell of the private limited company is also a kind of voluntary winding up. It can be done by selling shares of the company. Technically speaking, it is not a right way to wind up the private limited, the shares and responsibilities of the company are transferred to another person or entity.
Compulsory winding up:
Any company registered under the companies act 2013, which did a fraudulent act or unlawful act or even if the company contributed to any kind of action in some fraudulent or unlawful activities then such company would be wound up mandatory by tribunal.
The petition will be filled by the company or trade creditors of the company, contributors of the company, the central government and by the registrar of companies.
All the documents accompanied by petition should be audited by a practicing CA and the opinion is given by the auditor of financial statement must be qualified.
The petition should be advertised in a daily journal at least 14 days and the language of the advertisement should be in the regional language and in English. The advertisement must be carried out after every 6 weeks.
Form 11 necessary for the order of winding up of the company.
Submit the complete audited the books of account up the date of the order.
Provide the date, time and place for the company liquidator.
Surrender the assets and the documents of the assets.
If the tribunal finds the account are in order and all required compliance have been satisfied, the tribunal would passed the order for dissolving a company within a period of 60 days of receiving the application. After the order has been passed by the tribunal, the register will then issue a notice to the official Gazette setting that such company is dissolved.
Voluntary winding up: Voluntary winding up of a private limited company requires long procedural compliance to follow. There are certain mandatory requirements which have to be completed to close down a company voluntary.
As per the companies act 2013, the Board of Resolution is required to wind up the company voluntarily. However, the majority of directors must agree for winding up.
Also, a special resolution is necessary to winding up the company ¾ of the total shareholders must cast their vote in approval of winding up a business.
The approval of the trade creditors is also necessary to wind up the company. Trade creditors has to give their approval that they don’t have any obligation if the company gets wound up.
The company has to make decision of solvency and the same must be accepted by the trade creditors of the company. Company’s credibility in declaration of the solvency needs to be shown by the company.
All the above process shall be presented and filled in the respective form and even after the company gets wound up then also company’s name shall be forbidden in 2 years to be taken by any other company.
Defunct company winding up:
As per the companies act 2013, a defunct company is a company which has gained the position of Dormant company. The government provides some relief to such companies because there are no financial transactions that are carried out by the defunct company.
The companies act 2013, laid down the procedure of winding up a defunct company. A defunct company can be wound up with a fast-track procedure which requires submission of the STK Form-2. Hence, Form STK-2 is required to wind up a defunct company and there is no additional procedure for that . The form STK-2 needs to be filled by the registrar of the company and same needs to be dully signature by the directors of the companies.
For the purpose of this scheme, a defunct company refers to a company which has-
No assets and no liability.
Which has no commenced any business activity after its incorporation.
Has not been carrying on any business activities since last one year prior to making an application.
Disadvantages of incorporating private limited company:
Registration of the private limited is a very long process and take a longer period of time to incorporation.
A private limited company requires a range of compliance post incorporation. It requires to hold the board meeting, general meeting, gets the account audited and file annual return.
A major disadvantage of private limited company is that it requires a minimum 2 members to acts director and shareholder.
A private limited company cannot trade their share in IPO. It is one of the biggest advantages when it comes to revenue of the company.
If a company owner or director is decided to discontinue the company, they may consider for the closing option. Most easiest way to dissolve the company is that by taking the help of the legal consultancy, who will help you in winding up the company throughout the process. Unilex Business Consultant is round the clock available for you to close the company in just three steps-
Close business in 3 Easy Steps
1. Answer Quick Questions
Spare less than 15 minutes to fill in our Questionnaires
Provide basic details & documents required for closure
Make payment through secured payment gateways
2. Experts are Here to Help
Assigned Relationship Manager
Drafting of necessary resolutions
Drafting of affidavit & indemnity bond
Preparation of other necessary documents
Filing of Strike-off application with MCA
3. Closure application is filed
All it takes is 20 working days