How to Close a Private Limited Company or LLP — Form STK-2 & Form 24 Explained
An inactive company or LLP doesn't quietly disappear on its own — it keeps accumulating compliance obligations (and penalties) until it's formally closed. If you're not using an entity anymore, closing it properly is almost always cheaper than leaving it dormant.
Why "just stop filing" doesn't work
Annual filings are due every year regardless of whether the business is actually operating. Skip them, and the daily penalty (₹100 per day per form, with no cap) keeps accruing whether or not anyone's paying attention — and directors risk disqualification from holding directorships elsewhere if the default continues for multiple years.
For a Private Limited Company: Form STK-2
Also known as the fast track exit route, this is designed for companies with no assets, no liabilities, and no pending litigation — essentially companies that either never really started operating, or have genuinely wound down their affairs already.
For an LLP: Form 24
The equivalent route for LLPs. It requires consent from all partners and confirmation that the LLP has either never carried on business, or has ceased operations and settled all its liabilities.
Step-by-step process
- Eligibility check — no pending litigation, no active liabilities or assets, and inactive for the required period (or never having commenced business)
- Resolution & consent — a board resolution (company) or consent of all partners (LLP) approving the closure
- Dues settled, accounts closed — all liabilities cleared, bank accounts closed, and any pending annual filings brought up to date or specifically addressed in the application
- STK-2 / Form 24 filed — submitted with affidavits, an indemnity bond from every director or partner, and a recent statement of accounts
- Public notice period — the Registrar publishes a notice giving any objectors time to respond, before approving the final strike-off
Documents you'll need
- Board resolution (company) or partner consent (LLP) for closure
- Indemnity bond and affidavit from every director or partner
- Statement of accounts, not older than 30 days from filing
- Closed bank account proof
- Latest filed compliance forms, or an explanation for any pending ones
Strike-off vs. liquidation — they're not the same thing
Strike-off is a simplified administrative closure, meant for entities that genuinely have nothing left to settle. If there are assets to distribute, disputes to resolve, or creditors who haven't been paid, that's a formal liquidation/winding-up process instead — a heavier process for a heavier situation.
The bottom line: an unused company or LLP is not a "do nothing and it goes away" situation. Closing it formally, even if it takes a few months, is what actually stops the compliance clock.