Question 1

What is the fastest legal route to close a company that has never commenced business?

Accepted Answer

A company that has not commenced business within one year of incorporation, or has not carried on any business for two immediately preceding financial years, may apply for strike-off under Section 248(1) of the Companies Act 2013 read with Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules 2016. The directors file Form STK-2 with an indemnity bond in Form STK-3, a statement of accounts in Form STK-8 (not older than 30 days from the application date), and a statement of pending litigations. The Registrar of Companies then publishes a notice under Section 248(5) before final strike-off.

Question 2

Can a company with outstanding GST or income-tax dues apply for STK-2 strike-off?

Accepted Answer

No. Section 248(2) of the Companies Act 2013 requires nil pending liabilities before STK-2 is accepted. All overdue GST returns must be filed under Section 39 of the CGST Act 2017 and outstanding tax paid. All overdue income-tax returns must be filed under Section 139 of the Income-tax Act 1961 (Section 263 of the Income-tax Act 2025 for TY 2026-27 onwards), and a No Objection must be obtained from the Income Tax Department if any refund or assessment is pending. Bank accounts must be closed and a nil-balance certificate obtained before submission.

Question 3

If the company is inactive but the promoters may want to revive it later, is there an alternative to closure?

Accepted Answer

Yes. Section 455 of the Companies Act 2013 read with the Companies (Miscellaneous) Rules 2014 allows an inactive company to obtain dormant status by filing Form MSC-1. A dormant company files only a minimal annual return in Form MSC-3 and must maintain the minimum number of directors (two for a private company), but is exempt from most ROC compliance requirements. Revival later under Section 455(5) via Form MSC-4 is simpler than fresh incorporation, making this preferable to strike-off where future use is possible.

Question 4

When is the IBC voluntary liquidation route under Section 59 required instead of STK-2?

Accepted Answer

Section 59 of the Insolvency and Bankruptcy Code 2016 read with the IBBI (Voluntary Liquidation Process) Regulations 2017 applies whenever the company has any assets or liabilities at the time of closure — STK-2 is available only where both are nil. Where creditor dues, employee arrears, or even refundable security deposits remain, promoters must pass a special resolution, appoint an IBBI-registered insolvency professional as liquidator, complete asset realisation and creditor settlement, and then file for dissolution before the NCLT. Proceeding with STK-2 despite outstanding liabilities exposes directors to personal liability under Section 248(7).

Question 5

What penalties apply if the STK-2 application contained false declarations, or if the strike-off is later challenged?

Accepted Answer

Under Section 252 of the Companies Act 2013 any aggrieved person may apply to the NCLT for restoration of the company's name within 20 years of strike-off. Directors who made false statements in Form STK-2 are liable under Section 448 of the Companies Act 2013, which carries imprisonment up to two years and a fine up to INR 5 lakh. Under Section 250 the Registrar may hold directors personally liable for all company liabilities that arose before or after strike-off. Additionally, overdue ROC filings (AOC-4, MGT-7) that were not cleared before STK-2 attract late fees under Section 403 and can cause the application to be rejected.

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