Strike Off, Dormant or Winding Up: Choosing a Company Exit

Quick answer

There are four ways out of a company, and you do not choose freely between them — the eligibility tests choose for you. Voluntary strike off under section 248(2) suits a company with no liabilities left. Registrar strike off under section 248(1) is what happens to you if you do nothing. Dormant status under section 455 pauses a company you want to keep. Winding up is for anything with assets, liabilities or disputes still to resolve.

The single most common failure is not choosing wrong. It is filing the right form while disqualified by section 249, a three-month lookback that most closure guides do not mention at all.

Who this is for

You are a director or shareholder of a private limited company that has stopped trading, never really started, or is being kept alive out of inertia. You want to stop the filings and the fees without creating a bigger problem than the one you are solving.

This covers companies under the Companies Act, 2013. LLPs are on a different statute and a different form — there is a short section on them at the end, and our LLP closure service covers the mechanics. It is not a guide to insolvency: if the company cannot pay its debts, the Insolvency and Bankruptcy Code, 2016 is a separate route with its own professionals, and you should take advice rather than read an article.

The four routes side by side

Route 1: voluntary strike off (STK-2)

This is the route most people mean by "closing the company", and for a genuinely empty company it is the right one.

Section 248(2) lets a company apply to have its name removed after extinguishing all its liabilities, by a special resolution or the consent of seventy-five per cent of members in terms of paid-up share capital. The application is form STK-2, made under rule 4(1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

Two operational details from MCA's own instruction kit are worth knowing before you start. The fee is ₹10,000, and the kit shows no additional or delay fee against the form — unusual for an MCA form, and it means that being late to close does not make the closing itself more expensive. And the form is now filed to the Centre for Processing Accelerated Corporate Exit (C-PACE) rather than your home Registrar, and processed in non-STP mode, meaning a person reviews it.

Before striking a company off, the Registrar must satisfy himself under section 248(6) that sufficient provision has been made for realising all amounts due to the company and for discharging its liabilities, and he may take undertakings from the directors. On publication of the notice in the Official Gazette under section 248(5), the company stands dissolved.

The section 249 trap

Here is the rule that disqualifies more applications than any other, and it is almost never mentioned.

Section 249(1): an application under section 248(2) shall not be made if, at any time in the previous three months, the company has —

• (a) changed its name, or shifted its registered office from one State to another;
• (b) made a disposal for value of property or rights held by it immediately before it ceased trading, other than in the ordinary course of that trading;
• (c) engaged in any other activity except one necessary or expedient for making the application, deciding whether to do so, concluding the affairs of the company, or complying with a statutory requirement;
• (d) made an application to the Tribunal for the sanctioning of a compromise or arrangement that has not been finally concluded; or
• (e) is being wound up under Chapter XX or under the Insolvency and Bankruptcy Code, 2016.

Section 249(2): filing in violation is punishable with a fine which may extend to ₹1,00,000. Section 249(3): the application shall be withdrawn by the company or rejected by the Registrar as soon as the breach is brought to his notice.

Read clause (b) and clause (c) together and the practical effect is stark: tidying the company up immediately before applying is exactly what disqualifies you. Selling the last remaining laptop, machine or piece of intellectual property is a disposal for value. Moving the registered office out of a director's old flat to another State is expressly listed. Doing "one last job" to clear an invoice is an activity outside the permitted list.

There is no way to cure this with better paperwork. The fix is time: stop, wait out the three months from the last such act, then apply. Building that wait into the plan at the start costs nothing. Discovering it after filing costs the fee, the delay and possibly the fine.

When strike off is not available at all

• A section 8 company. Section 248(3): "Nothing in sub-section (2) shall apply to a company registered under section 8." A section 8 company has no voluntary strike-off route.
• A company with liabilities. The section requires them to be extinguished, not small, not disputed, not "probably fine".
• A company that has not filed. Pending annual returns and financial statements have to be regularised first, which is usually the real cost — see the fees section below.

Route 2: Registrar strike off — the one that happens to you

Section 248(1) lets the Registrar begin removal himself, on any of four grounds:

• (a) the company has failed to commence its business within one year of incorporation;
• (c) the company is not carrying on any business or operation for two immediately preceding financial years and has not applied for dormant status under section 455;
• (d) the subscribers have not paid the subscription they undertook at incorporation, and the declaration under section 10A(1) has not been filed within 180 days of incorporation;
• (e) the company is not carrying on business or operations, as revealed after physical verification of the registered office under section 12(9).

(Clause (b) was omitted in 2015; the lettering in the Act still skips it.)

The Registrar sends notice to the company and all its directors, and you have thirty days to respond with representations and documents.

Ground (c) is the one that catches dormant-in-practice companies, and note how it is drafted: two years of inactivity and no dormant-status application. Applying under section 455 is what takes you out of the firing line. Doing nothing is what puts you in it.

Being struck off this way reaches the same end point — dissolution — but you lose all control of the timing, and you arrive there having accrued whatever penalties and disqualifications the intervening years produced. Which brings us to the real cost of doing nothing.

What abandonment actually costs

Two clocks run while a company sits unfiled.

The filing clock. AOC-4 and MGT-7 keep falling due every year regardless of activity, and delay on those two forms carries an additional fee of ₹100 per day per form with no upper cap — it is per form, so a company late on both accrues ₹200 a day. Separately, sections 137(3) and 92(5) impose penalties starting at ₹10,000 on the company and on officers, capped at ₹2,00,000 and ₹50,000 respectively. The fee and the penalty are different liabilities and a company can owe both. The ROC annual filing checklist sets out the whole mechanism.

The disqualification clock. Section 164(2)(a): a person who is or has been a director of a company that has not filed financial statements or annual returns for any continuous period of three financial years is not eligible to be re-appointed in that company, or appointed in any other company, for five years. The trigger is the company's default, not the individual's fault, and it follows the director to every other board they sit on. For a founder with more than one company, this is by a wide margin the most expensive consequence of leaving a dead company unfiled.

Route 3: dormant status (MSC-1) — when you want to keep the company

Strike off and winding up both end the company. Dormant status does not, and that is the entire point of it.

Section 455(1) allows a company formed and registered for a future project, or to hold an asset or intellectual property, and having no significant accounting transaction, or an inactive company, to apply to the Registrar for dormant status. Both terms are defined in the section's own Explanation:

• "Inactive company" — a company that has not been carrying on any business or operation, or has not made any significant accounting transaction, or has not filed financial statements and annual returns, during the last two financial years.
• "Significant accounting transaction" — any transaction other than (a) payment of fees to the Registrar; (b) payments made to fulfil the requirements of the Act or any other law; (c) allotment of shares to fulfil the requirements of the Act; and (d) payments for the maintenance of its office and records.

That second definition is more generous than it first looks. Paying your ROC fees, paying a statutory levy, and paying to keep the registered office and records going are all carved out — so a genuinely mothballed company does not lose dormant eligibility merely by keeping its own lights on.

Dormant status is applied for in Form MSC-1, under section 455 read with rule 3 of the Companies (Miscellaneous) Rules, 2014, and is processed in non-STP mode. The fee runs by authorised share capital:

MCA's own fee table words the top band ambiguously, so we have stated the three bands that are unambiguous and described the top of the schedule as rising to ₹20,000, which is true on any reading. Price the exact band on MCA's fee service before you commit.

Two further points from the section itself. Under section 455(5) a dormant company still has to maintain a minimum number of directors, file the prescribed documents and pay an annual fee to retain the status — dormancy is a lighter compliance regime, not the absence of one — and it may become active again on application. Under section 455(6) the Registrar strikes off a dormant company that fails to comply with the section, so dormancy is not a permanent parking space either.

And a sting worth knowing: under section 455(4), where a company has not filed financial statements or annual returns for two consecutive financial years, the Registrar shall issue a notice and enter that company in the register of dormant companies. Dormancy can arrive uninvited.

Choose dormant status when you want the name, the CIN, the incorporation date or a held asset to survive; when a project is genuinely deferred rather than dead; or when you might trade again. Do not choose it to avoid closing a company that is actually finished — you will pay an annual fee indefinitely for a company you do not want. Our dormant company filing page covers the MSC-1 and MSC-3 cycle.

Route 4: winding up

If the company has assets to realise, liabilities to settle, or disputes to resolve, none of the routes above are open, and winding up under Chapter XX is what remains. It is a formal, supervised process: a liquidator is appointed, assets are realised, claims are admitted and paid in statutory order, and any surplus goes to members.

It is materially slower and more expensive than strike off, and it involves professionals whose fees are the dominant cost. That is not a reason to avoid it — it is a reason not to pretend a company with liabilities qualifies for strike off. Filing STK-2 for a company with outstanding creditors does not extinguish those creditors; section 248(7) keeps every director, manager, officer and member liable after dissolution, and the proviso to section 248(6) keeps the company's assets available for its liabilities anyway. Our winding up page covers the process.

What survives dissolution

This is the section most closure content omits, and it changes how you should think about the whole decision.

• Section 248(7): the liability of every director, manager or other officer who was exercising any power of management, and of every member, continues and may be enforced as if the company had not been dissolved.
• Proviso to section 248(6): notwithstanding any undertakings given, the assets of the company remain available for the payment or discharge of all its liabilities and obligations even after the order removing its name.
• Section 250: on dissolution the company ceases to operate as a company and its certificate of incorporation is deemed cancelled — except for the purpose of realising amounts due to the company and discharging its liabilities.

Dissolution is an administrative closure of the register entry. It is not a discharge of debt and it is not a shield. A company that owed money before it was struck off still owed it afterwards, and the people who ran it are still reachable. That is precisely why section 248(2) requires liabilities to be extinguished first, and why "just strike it off" is bad advice for anything other than an empty shell.

Restoration is possible in limited circumstances on application to the Tribunal, but it is a proceeding, not a form. Closing correctly is far cheaper than being restored.

What it costs, in order

For most companies the government fee on the closing form is the small number. The pending filings are the large one.

A company three years behind on both annual forms is looking at a per-day additional fee that dwarfs the ₹10,000 STK-2 fee many times over. Work out the pending-filing cost before you decide the route, because it is the number that actually determines whether closing now or closing later is cheaper — and it only ever goes up.

One time-limited relief, stated with its dates

The Companies Compliance Facilitation Scheme, 2026 (General Circular 01/2026 dated 24 February 2026, extended to 31 August 2026 by General Circular 03/2026 dated 8 July 2026) is directly relevant to this decision while it lasts. Within the window:

• pending annual filings attract only 10% of the total additional fees otherwise payable;
• dormant status via MSC-1 at one-half of the normal filing fee;
• strike off via STK-2 at 25% of the applicable filing fee — ₹2,500 rather than ₹10,000.

It is not available to companies against which a final striking-off notice under section 248 has already been initiated, companies that have themselves already applied for striking off, companies that applied for dormant status before the scheme began, companies dissolved under a scheme of amalgamation, or vanishing companies.

After 31 August 2026 all three concessions end, and paragraph 6 of the scheme records that at its conclusion the Registrars shall take action against companies that did not avail it. If you are reading this after that date, treat the concessions as expired and check MCA's circulars page for whatever has replaced it, if anything.

A short decision path

1. Are there liabilities outstanding? Yes → winding up. There is no shortcut, and dissolution would not extinguish them anyway.
2. Do you want the company to survive? Yes → dormant status under section 455, if you meet the "no significant accounting transaction" test.
3. Is it a section 8 company? Yes → voluntary strike off is unavailable under section 248(3). Take advice on the alternatives.
4. In the last three months, has the company changed its name, shifted its registered office interstate, sold anything of value, or done any work beyond winding up its own affairs? Yes → wait. Apply once three clear months have passed since the last such act.
5. Otherwise → regularise the pending filings, pass the special resolution or obtain 75% consent by paid-up capital, extinguish anything outstanding, and file STK-2.

If it is an LLP, not a company

An LLP does not use STK-2. It uses Form 24, and the pending Form 8 and Form 11 filings have to be regularised before the application will proceed.

The penalty regime is different in a way that matters to the arithmetic. Sections 34(5) and 35(2) of the LLP Act, 2008 charge ₹100 per day, but — unlike the company position on AOC-4 and MGT-7 — that penalty is capped, at ₹1,00,000 for the LLP and ₹50,000 for the designated partners. Separately, MCA charges an additional filing fee that is a multiple of the normal fee banded by delay, not a per-day charge, and lighter for a small LLP. Two different charges, and a great deal of published material conflates them. The LLP annual compliance guide sets out both properly.

Where to start

Work out the pending-filing cost first, then the eligibility, then the form. In that order, because the first number often changes which route makes sense and the second frequently rules out the route people assumed they were taking.

If you would rather have the tests run for you, our strike off and company closure services begin with exactly that assessment — including the section 249 lookback — before anything is filed.

Sources and currency

Applies to: Position as at 20 August 2026. India — Companies Act, 2013 and the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

Sections 248, 249, 250 and 455 were read from the consolidated bare Act on India Code, and the STK-2 and MSC-1 positions from MCA's own instruction kits, on 2026-08-20. The Companies Compliance Facilitation Scheme, 2026 referred to below closes on 31 August 2026 and every mention of it here carries that date deliberately. Confirm the current position on the MCA portal before you act.

• Companies Act, 2013 — consolidated bare Act (India Code): s.248 removal of name, s.249 restrictions on applying, s.250 effect of dissolution, s.455 dormant company, s.164(2)(a) disqualification
• MCA instruction kit — Form STK-2 (s.248(2) r/w rule 4(1); ₹10,000 fee; non-STP; filed to C-PACE)
• MCA instruction kit — Form MSC-1 (s.455 r/w rule 3 of the Companies (Miscellaneous) Rules, 2014; fee table by authorised capital)
• LLP Act, 2008 — consolidated bare Act (India Code): s.34 and s.35 penalties and caps
• MCA General Circulars — Companies Compliance Facilitation Scheme, 2026 and its extension to 31 August 2026