The procedure of closing One Person Company (OPC) is known as Strike off or company closure. Company closure is performed according to recent provisions of Companies (Removal of Names of Companies) Rules, 2016 that is administered by section 248 of Companies Act, 2013. If your company remains inoperative, it is recommended to close the One Person Company.
Filing of a company closure is done under Form STK 2 (previous form was FTE) with the government prescribed fees of Rs. 5000 and some essential documents. However it is important to remember the circumstances where closure can be filed. A Company closure can be filed according to the following steps :
Paying off all Liabilities - The first step is to repaying all the liabilities of the company and asking for written No Objection Certificate (NOC) from them. If you have not started the business/functions, then this clause is not applicable.
Require 75% Consent - This condition is not applicable for One Person Company (OPC) in India as in the case of OPC, all the 100% shares are owned by the individual and therefore he requires no approval from any other individual.
Making Application - The next step is to make application and file the same with Registrar of Companies through form STK – 2.
If you are not running a company and not even following the law then you can file OPC Company closure to prevent any default. It is recommended for a defunct company, dummy company and non operative companies to file for company closure to prevent late penalties.
This kind of dissolution can be performed by organizing a meeting accepted by at least 2/3 of the creditors taking part in the meeting. Then the management board must submit to the Commercial Register a request (in writing or online form through the company registration website), the minutes of the general meeting and the members' dissolution resolution. Winding up is a more detailed procedure that is automatically applied when the company possesses assets and liabilities. In the case of winding up, a liquidator is to be appointed to handle the matters of the wound up company.
Removal or striking off an OPC through the Fast track exit scheme - When a company acquires the status of a dormant company i.e. it is inoperative as a company since its incorporation or in the past 1 year, it becomes a defunct Company that can be wound up with a fast-track process through STK-2 form. It should not have any assets or liabilities. This can be filed by Registrar of Companies or by the company itself. Strike off can be done by the Registrar consistent with the needs of the Act.
The Following documents must be required to close One Person Company :
Application for striking off the name of OPC - To close a company through usual process, a copy of application for striking off the name of the company is necessary to file in form STK-2 with the Registrar of Companies. Before in Companies Act, 1956 companies were closing through the FTE (Fast Track Exit) process with the striking off application filed in form FTE with the prescribed government fees.
Board Resolution for closing - Board resolution with a majority of 2/3rd of the members is necessary to make an application to strike off the name of the company. The board members need to be in favour of the closure of the company. Through the board meeting, the director of the company should be authorised to perform the indemnity bond and affidavits.
Declaration with Board Resolution - A declaration needs to be submitted with the board resolution which includes that the OPC has not any debts or if OPC has debts then company can pay these debts by selling company's assets within 1 year.
Approval of Directors
Director can offer his approval by signing the consent letter. It is a written documents through which director reveals his approval. Director's approval letter must be added with the application for closure of the company.
Permission of creditors
If company have creditors then their consent is also essential to be attached with the application form. In the case of no creditor, company must state that the company does not have any creditors.
Affidavit of Director
Appropriately attested affidavit in the recommended form STK-4 from every director of the company is necessary since a supporting document that announces that company is not continuing any business and does not include any dues. If any damage caused to any individual because of the strike off the name of the company then director will pay off such loss.
An indemnity bond is a supporting document given with the application in the form STK-5 appropriately signed by the directors of the company. This bond assures the losses of the individual as a result of closure of the company.
Statement of Assets and Liability
An audited copy of statement of assets and liabilities must be filed with the application in the form STK-2. It reveals the assets and liabilities of the company that demonstrates that company includes adequate provision to release the due amount.
Statement of Accounts
Statement of accounts also provided with the application to strike off which also certify that the company involves adequate assets for paying off the damages of the people and unpaid amount.
No Penalty - Once the closure is started, there is no need of the company to be worried about being in a state for paying the penalty fee for the causes that are not addressed.
Free from Compliance - There is no need to be compliant since the company would be closed.
Suitable Business - If the business that you have chosen is not running and yielding profits, then its resources can be used into a better one.
5 Easy Steps -
1 Simple form should be completed
Verification of documents
Application for striking off OPC
Processing of Application
The Company is under Strike off process
A closure of One Person Company can be filed when the company is inoperative and wants to cease its liabilities and compliances. It must repay all its liabilities and get a No Objection Certificate (NOC) from the creditors before filing the closure application. A meeting must be organized where the director and members decide about the closure by signing a special resolution or consent of 75% members about paid up share capital.
The Registrar of Companies can strike off the company name from the registers of companies if he finds legitimate cause to do such :
A Company cannot commence its business within 1 year of its incorporation
A company is not performing any business or operation for 2 immediately preceding financial years and has not made any application within such tenure to acquire the status of a dormant company.
A Company closure can be filed under Form STK 2 with the prescribed government fees of Rs. 5000 and some essential documents. Filing for One Person Company closure can be done according to the following steps :
First step includes paying all liabilities and obtain a No Objection Certificate for the closure
2/3rd majority consent of the creditors
Once, filing the application with the Ministry of Corporate Affairs is done, it takes about 90 days to strike off the Company from records of Ministry of Corporate Affairs.
Registrar of Companies will publish list of companies which are struck off in the official gazette. Under fast track exit system, the Company will be considered closed since the date of publication of the notice in official gazette.
The closing documents must be filed within 30 days since the date of signing of the assets and liabilities statement.
It is necessary to inform the Registrar regarding the closure of Private Limited Company to update the Ministry of Corporate Affairs information. It makes company free from all its legal compliances.
Winding up of the company may be :
by the order of the Court by appointing an official liquidator in order to check the procedure of winding up.
Closure of the OPC is done voluntarily and is accomplished through the fast track exit system.
Dissolution is started by the Court to cease the legal existence of the Company.
Fast Track Exit is a system launched by the Ministry of Corporate Affairs (MCA) for inoperative companies to wind up and obtain their names struck off from the MCA record with minor formalities.
A closure is the best alternative if company is not running since :
It can save the cost of yearly compliance
There is not any risk of compliance
No risk regarding enhanced penalties and prosecutions
No risk involved to be into default