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CLOSING PROCEDURE OF PRIVATE LIMITED COMPANY

Running a business company comes with its own challenges. Sometimes when startup ideas do not work out a business company may have to be shut down. There can be several reasons to close the limited company in rajasthan. These are the 4 ways in which a private limited company can be winding up in Rajasthan. 

  1. Sell the Company

To sell off a Private Limited Company in Rajasthan is also a kind of voluntary close the limited company. It can be done by transferring shares of the limited company (selling the majority shareholding of the company). Technically speaking it is not an actual winding up of a limited company in India but the company stakes are transferred to another person or entity and the majority company shareholders are discharged of their stocks and responsibilities. 

  1. Compulsory Winding Up

Any private limited company registered in jaipur under the Companies Act, 2013 which did an unlawful activities, fraudulent act or even if they contributed any action in some fraudulent or unlawful activities then such company would be wound up compulsorily by the Tribunal .

Procedure of Closing a Company in India

  1. Petition will be filed

The petition will be filed by the following:

  • The Company or

  • The Trade Creditors of the Company or

  • Any contributory or Contributors to the company or

  • The Central or State Government or

  • By the Registrar of the Companies

  1. Petition shall be accompanied together with the Statement of Affairs of the Company

All the legal documents accompanied by petition should be audited by a practicing Chartered Accountant (CA) and the opinion given by the Auditor on the Financial Statement must be unqualified.

  1. Advertisement for at least 14 days

The Petition should be Advertised in a daily journal at least for 14 days and the language of the advertisement should be in the Regional language (Regional Language of the area) and in English. The Advertisement must be carried out under Form 6

  1. Proceedings of the Tribunal

Form 11 will be required for the order of winding up the company in India.

  • Submit the complete audited books of accounts up to the date of the order.

  • Provide the date, time and place for the Company Liquidator

  • Surrender the assets and the documents of the assets.

If the tribunal finds the accounts are in order and all the required legal compliance have been satisfied, the tribunal would pass the order for dissolving the company within a period sixty days of receiving the application. After the order has been passed by the tribunal, the company registrar will then issue a notice to the Official Gazette stating that such company is dissolved.

Voluntary Winding Up

Winding up a limited company in India voluntarily requires long procedural legal compliance to follow. There are certain mandatory requirements which have to be completed to close down a limited company voluntarily.

Procedure for voluntary winding up a company: -

  • As per the Companies Act 2013, BD (Board Resolution) is required to wind up the limited company voluntarily. However, the majority directors must agree for winding up the limited company in rajasthan.

  • Also, a Special Resolution is required to wind up the limited company in India where 3/4th the total company Shareholders must cast their vote in favour of winding up a limited company in India.

  • The consent of the company Trade Creditors is also required to wind up the limited company. Company’s Trade Creditors have to give their approval that they don’t have any obligation if the limited company gets wound up.

  • The limited Company has to make a Declaration of Solvency and the same must be accepted by the trade creditors of the limited company. The Company must show the Company’s credibility in Declaration of Solvency.

  • The liquidator so appointed will make a report of the assets, liabilities, reserves, capital etc.

All the above-mentioned wind up procedures shall be presented and filed in a prescribed form and even after the limited company gets wound up then also the company's name shall be prohibited for 2 years to be taken by any other applicant.

Defunct Company Winding Up

As per the Companies Act, 2013, a Defunct Company in India is a limited company which has gained the status of a Dormant Company. The government provides certain relief to such defunct or dormant limited companies in India because there are no financial transactions undertaken by dormant companies.

The Companies Act, 2013 laid down the procedure for winding up a Defunct Company. A Defunct or Dormant limited Company can be wind up with a fast-track procedure which requires submission of the STK-2 form. Hence, Form STK-2 is required in order to wind up a Defunct Company and there is no additional procedure for that. The form STK-2 needs to be filled with the Registrar of Companies(ROC) and the same needs to be duly signed by the director of the company authorized by its board to do so.

For the purpose of this scheme, a defunct company refers to a company which has:

  • No asset and no liability, and

  • Which has not commenced any business activity after its incorporation or

  • Has not been carrying on any business activities since last one year prior to making an application under FTE (Fast Track Exit Scheme).


How much does it cost to close a company in rajasthan?

This is usually the most expensive way to close a limited company in India. The liquidator’s fee is based on the complexity of the company process and the amount of work required. Typically, you should expect to pay around ₹5000 to ₹100000. If company’s assets do not cover these fees, the director may be personally liable for the costs.

What is the Fast Track Exit scheme?

The Ministry of Corporate Affair(MCA) has introduced a scheme called fast Track Exit Scheme. The fast Track Exit Scheme is for faster disposal of the companies. It gives an opportunity to the defunct companies to strike off from the register under the Companies Act, 2013.

Are directors personally liable for limited company debts?

Usually, if you are a limited company director (or acting as a director), you are not personally liable for paying the limited company's debts. This means that if the limited company does not pay its debts and a creditor takes court action, only the company assets are at risk. 

What happens when a majority shareholder dies?

When a company shareholder dies the right to his interest in the company shares will pass to whoever inherits them under his will or intestacy. The deceased company shareholder's rights will be administered by his or her executors (if there is a will) or administrators of the estate if the shareholder has died intestate.

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