How to Close a Private Limited Company in Chennai: A Step-by-Step Guide

Closing a Private Limited Company (Pvt Ltd) in Chennai requires following a structured legal process. The process depends on the company’s financial status, liabilities, and compliance history. This guide outlines the necessary steps to ensure a smooth and legally compliant closure.

Methods of Closing a Private Limited Company

There are two primary ways to close a private limited company in Chennai:

1. Voluntary Strike Off – If the company has no liabilities and has been inactive for a certain period.
2. Compulsory Winding Up – Ordered by the tribunal due to financial distress or regulatory non-compliance.

Step-by-Step Process for Closing a Private Limited Company

Step 1: Hold a Board Meeting

• Pass a board resolution approving the company’s closure.
• Authorise a director to initiate the closure process.

Step 2: Clear All Liabilities

• Settle outstanding debts, loans, and statutory dues (GST, Income Tax, etc.).
• Obtain a No Objection Certificate (NOC) from creditors (if applicable).

Step 3: Obtain Shareholders’ Approval

• Convene an Extraordinary General Meeting (EGM).
• Pass a special resolution (at least 75% shareholder approval required).

Step 4: File Application for Closure

For Voluntary Strike Off (Fast Track Exit)

• File Form STK-2 with the Registrar of Companies (ROC), along with:
• Board Resolution
• Special resolution copy
• Indemnity bond and affidavit from directors
• Statement of accounts (not older than 30 days)
• Company’s PAN card and certificate of incorporation

For Compulsory Winding Up

• File a winding-up petition before the National Company Law Tribunal (NCLT).
• Submit financial documents and liquidation details.
• Appoint a liquidator to manage asset distribution.

Step 5: Public Notice by ROC

• Once the application is submitted, the ROC issues a public notice for objections.
• If no objections arise, the ROC proceeds with a company strike-off.

Step 6: Company Closure Confirmation

• The ROC removes the company’s name from the register.
• A formal dissolution certificate is issued as proof of closure.

Key Considerations for Company Closure

• The company must have zero liabilities at the time of closure.
• Any pending legal disputes can delay the process.
• Directors and shareholders should maintain proper documentation for future reference.

Timeframe and Costs

• Voluntary Strike Off: 3-6 months
• Compulsory Winding Up: 12-24 months
• Cost Estimate: ₹10,000 – ₹50,000 (depending on professional fees and legal formalities)

Conclusion

Closing a Private Limited Company in Chennai requires careful planning and adherence to legal procedures. Consulting a professional (CA or CS) can simplify the process and prevent unnecessary delays. To avoid legal complications in the future, ensure all statutory compliances are met before initiating the closure.