If any person wants to start its business as a company whether a private limited registration or public limited company, then it can be registered through the registrar of companies (ROC) under the Ministry of corporate affairs (MCA), and if the owner wants to close it then, it can be closed only after the approval of ROC. There is a proper procedure mentioned under the companies act which everyone has to follow to close the company. But before going to the procedure let's discuss the reason for the closure of the company:
- The liabilities of the company are higher than the assets and the company is unable to pay off its liabilities.
- The members agree to close the company and pass the special resolution for its closure.
- The company has operated its business activity which is against the interest of the nation, public, society, state, etc.
- The court of the tribunal has passed the order to close the company
- The company is registered for fraud, illegal activity or conducting their business fraudulently then the registrar can close the company, etc.
An application for closure shall be filed only if the company has completed at least one year and no business is commenced by the company. Before the closure of the company the approval of the shareholder is necessary, at least 75% of the shareholders must give their consent to close the company. There are two ways of company closure one voluntary closing and the other one is compulsory winding up. Under voluntary closing, the company file the closure application by itself after the approval of the shareholders of the company and under compulsory winding up the registrar close the company by itself if the company fails to furnish the annual compliances returns or documents to the registrar for 5 consecutive financial years. If the company get closed by the registrar then the DIN of the directors will get blocked for 5 years means they will get disqualified to be the director in any company for the next five years, neither they can register a new company as a director.
Documents required for closure of company:
- Latest audited balance sheet and profit & loss a/c
- Certificate of incorporation
- PAN of the company
- Memorandum of association
- Article of association
- List of creditors
- Shareholder’s consent
- Affidavit
- Indemnity bond
- Auditors certification
- Digital Signature of the existing director
- Conduct Board Meeting: The very first step to close the company is conducting a board meeting, in this meeting all the directors will discuss and take their consent for company closure and authorize a person for the completion of the closing procedure.
- Holding & conduction general meeting: After the director’s consent, the shareholder's consent is also required, and the company has to hold the general meeting and take the consent of the shareholders in the form of a special resolution for company closure
- Preparation of documents: After taking consent of the directors and shareholders in their respective meetings the documents for company closure shall be prepared and the same shall be signed by the director of the company.
- Submission of relevant forms: Once all documentations are completed all the relevant form shall be filed to the registrar for company closure and if the registrar is satisfied with the application he will close the company and remove the name of the company from its register of companies.
Also Read:- Limited Liability Partnership Registration - LLP Registration
