Sometimes a situation arise in the business and it seems more difficult to carry on the business due to its bad financial health, market shrinkage, product quality degradation, inability to compete with the brands and technology etc. In such a situation it is better to wrap up the business instead of trying to survive as survival may result in adding extra cost and unnecessary financial burden on the Company.
The closure of a company under the Companies Act 2013 in India can be done through various methods, depending on the circumstances but the easiest, fastest and cost effective method to close a Company is to opt for Fast track exit scheme and striking off a Company.
A company can apply for strike off under Section 248 of the Companies Act 2013 if it meets the prescribed criteria. The criteria include:
If the Registrar of Companies (RoC) is satisfied with the application, the company’s name is struck off from the register and it ceases to exist.
Documents required for Striking Off:
Closure of LLP
Sometimes a situation arise in business that it may not seems easy to carry on the business or Limited Liability Partnership (LLP), which has not started business activity since its incorporation or which has terminated/stopped carrying on its business for a period of one year or more, can apply to the Registrar for its closure and also for removal of its name from the Register of the LLPs.
Under the Limited Liability Partnership (LLP) Act 2008 in India, an LLP can be closed through the process of winding-up. There are two methods of winding-up an LLP:
Voluntary Winding-Up: This method is initiated by the partners of the LLP when they decide to close the LLP voluntarily.
Compulsory Winding-Up: This method is initiated by the National Company Law Tribunal (NCLT) under certain circumstances. The NCLT may order the winding-up of an LLP if:
The LLP has acted against the interests of sovereignty and integrity of India.
The LLP has not commenced its business within one year of incorporation.
The LLP has not carried on any business for two consecutive years.
The number of partners of the LLP has fallen below the statutory minimum.
The affairs of the LLP are being conducted in a fraudulent manner.
In compulsory winding-up, the NCLT appoints an Official Liquidator to wind up the affairs of the LLP, realize its assets, settle its liabilities, and distribute any remaining assets among the partners.
During the winding-up process, the LLP must comply with various legal requirements, including filing necessary documents, settling liabilities, and notifying the Registrar of LLPs about the closure.
