A company that has stopped trading does not stop having obligations. Annual filings continue to fall due, penalties continue to accrue, and the directors continue to carry the consequences of non-filing — including disqualification that attaches to them personally and travels to every other board they sit on. Dormancy is not a defence to company compliance; the obligations run until the company leaves the register.
Voluntary strike off is the route out. It is cheaper and faster than winding up, and for a company with no assets, no liabilities and no litigation it is usually the right answer.
It is also more restricted than most promoters expect, and it does not do everything they assume it does.
Strike off is not winding up
The distinction matters because the two are frequently conflated.
Winding up is a process in which a liquidator realises assets, settles claims in order of priority, and distributes the surplus. It is supervised, it takes time, and it is the appropriate route where there are assets to realise or creditors to settle.
Strike off is an administrative removal of the company’s name from the register. There is no liquidator and no realisation. It presupposes that the company has already extinguished all its liabilities before applying.
That presupposition is the gate. A company with an outstanding creditor cannot properly use this route, and an application that says otherwise is a false declaration made on affidavit.
Who may apply
Section 248(2) allows a company, after extinguishing all its liabilities, to apply for removal of its name from the register where it has passed:
- a special resolution, or
- obtained the consent of seventy-five per cent of members in terms of paid-up share capital.
The grounds on which removal may be sought mirror those on which the Registrar may act under section 248(1) — including that the company has failed to commence business within one year of incorporation, or is not carrying on any business or operation for two immediately preceding financial years and has not applied for dormant company status.
Where the company is regulated — by the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority or another sectoral regulator — approval of that regulator is required alongside the application.
The restrictions in section 249
This is the part most often discovered too late. Section 249 bars an application where, at any time in the previous three months, the company has:
- changed its name, or shifted its registered office from one State to another;
- disposed of for value any property or rights held by it immediately before cessation of trade or otherwise carrying on business, other than in the ordinary course of trading or carrying on business;
- engaged in any activity other than that necessary or expedient for making the application, or concluding its affairs, or complying with a statutory requirement;
- made an application to the Tribunal for sanctioning a compromise or arrangement, and the matter has not been finally concluded; or
- is being wound up, whether by the Tribunal or voluntarily.
The property disposal restriction is the one that trips companies up. A dormant company that sells its last asset — a vehicle, a piece of equipment, an investment — and then applies to be struck off has started a three-month clock without realising it. The sequence should be reversed: dispose of assets, wait out the three months, then apply.
An application filed in contravention of section 249 is liable to be treated as void, and the section provides for a penalty.
Companies that cannot use this route
The Rules exclude certain categories of company altogether, including:
- listed companies;
- companies delisted for non-compliance with listing regulations or other statutory requirements;
- vanishing companies;
- companies under inspection or investigation, or against which prosecution arising from inspection is pending;
- companies where an order under section 234 or a compromise or arrangement is pending;
- companies against which any prosecution for an offence is pending in any court;
- companies that have accepted public deposits which are outstanding or have defaulted in repayment;
- companies having charges pending for satisfaction;
- companies registered under section 8.
The two that arise most in practice are pending charges and outstanding statutory dues or proceedings. A charge that was repaid but never satisfied on the register will stop the application, and satisfying it first takes time.
The application
The application is made in Form STK-2, filed with the Registrar. The government fee is presently ₹10,000.
Applications are processed through the Centre for Processing Accelerated Corporate Exit, in non-automatic mode — which means the application is examined rather than approved on filing, and deficiencies come back for correction.
The usual attachments:
| Document | What it is |
| Form STK-3 | Indemnity bond executed by every director, indemnifying against losses and claims arising after striking off |
| Form STK-4 | Affidavit by each director as to the company’s affairs |
| Form STK-8 | Statement of accounts showing assets and liabilities, certified by a chartered accountant, made up to a date not more than thirty days before the application |
| Special resolution or consent | Certified copy, or the consent of 75 per cent of members by paid-up capital |
| Statement on pending litigation | Details of any litigation involving the company |
| Regulatory approval | Where the company is regulated by a sectoral regulator |
Three practical points. The statement of accounts must be recent — a stale statement is a common reason for rejection, and the thirty-day window means the accounts are usually prepared last, immediately before filing. Every director must execute the indemnity bond and affidavit, which requires locating directors who may have disengaged years ago. And the annual filings should be brought up to date before applying, because an application from a company with years of missed returns invites scrutiny rather than avoiding it. Our note on annual ROC filing covers what that involves.
What happens after filing
The Registrar examines the application, and where satisfied, publishes a notice in Form STK-7 and in the Official Gazette, giving the public an opportunity to object.
On expiry of the period and where no cause to the contrary is shown, the company’s name is struck off the register and it stands dissolved.
The timeline from filing to dissolution is typically several months, and it extends where the application comes back for clarification.
What strike off does not end
This is the part that promoters most frequently misunderstand, and it is worth stating directly.
Director and member liability continues. Section 248(7) provides that the liability, if any, of every director, manager or other officer exercising any power of management, and of every member of the company dissolved under section 248, continues and may be enforced as if the company had not been dissolved.
Strike off removes the company from the register. It does not extinguish the obligations of the people who ran it.
A false application carries personal liability. Section 251 provides that where an application is made with the object of evading liabilities, or deceiving creditors or defrauding persons, the persons in charge of the management are jointly and severally liable to any person who sustained loss, and liable for action for fraud. This is the provision behind the indemnity bond, and it is the reason a strike off application with an undisclosed creditor is a serious step rather than an administrative one.
Tax and other proceedings are not automatically closed. Liabilities under the Income-tax Act, GST and other statutes follow their own provisions. Striking off a company does not answer a notice.
Past non-compliance is not cured. Disqualification already incurred under the Companies Act does not fall away because the company has been struck off. Our note on director disqualification sets out how that operates.
The alternative worth considering
Where the intention is to pause rather than to close, dormant company status under section 455 is the better instrument.
A company formed for a future project, or to hold an asset or intellectual property, and having no significant accounting transaction, may apply to be recorded as dormant. It remains on the register, retains its name and its ability to resume, and carries a reduced compliance burden.
Promoters frequently strike off a company they later need, and incorporating again means a new entity with no history, or an application to restore. Where there is any realistic prospect of resuming, dormant status is worth examining first — see our note on obligations under the Companies Act for the surrounding framework.
If a company is struck off wrongly
Restoration is available. An appeal lies to the National Company Law Tribunal under section 252 against an order of the Registrar striking off a company, within three years from the date of the order.
Separately, a company, member, creditor or workman who feels aggrieved by a company having been struck off may apply to the Tribunal before the expiry of twenty years from the publication of the notice, and the Tribunal may order restoration where it is satisfied that the company was, at the time of striking off, carrying on business or in operation, or that it is otherwise just to restore it.
Restoration is a proceeding, not a form. It requires an application, evidence that the company was operating or that restoration is just, and usually the regularisation of the filings that were missed. It is considerably more expensive than keeping the filings current would have been — which is the broader point that runs through corporate law compliance generally.
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