Company Strike Off vs Winding Up — Differences, Process (2026)

When a business is no longer needed, the company must be closed formally. There are 2 main ways: strike off (fast-track, simple) or winding up (formal, for defaulting companies). In this guide, we compare the two and explain the process.

When to Close a Company?

• Business is no longer operational
• No revenue / no transactions for 2+ years
• No intention to revive the business
• Merger / acquisition (target company is closed)
• No assets / liabilities (clean closure)
• Avoid compliance burden + annual cost

Strike Off (Section 248) — Fast Track

Strike off is a fast-track closure for defunct companies. The Registrar removes the company's name from the register. Under Section 248(2) a company can apply in Form STK-2 if it did not start business within one year of incorporation, or has not carried on business for the two immediately preceding financial years, after extinguishing all liabilities and with no pending ROC filings.

Liquidation or Winding Up — Formal

Winding up is a formal closure process for companies that still have assets, creditors or disputes. A solvent company usually uses voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016; winding up by the Tribunal is under Sections 271 and 272 of the Companies Act, 2013. The company's assets are realised, liabilities are paid, and the company is dissolved. Used when: company has assets / liabilities to settle, or there are pending legal disputes, or creditors want to wind up.

Comparison

Strike Off Process (Section 248)

Step 1: Settle All Liabilities

Pay all dues: bank loans, vendor payments, employee salaries, taxes, GST, TDS, PF, ESI. Transfer / sell any remaining assets, and get any charge on the MCA register satisfied (CHG-4).

Step 2: File Pending Returns

File all pending ROC returns (AOC-4, MGT-7), ITR, GST, TDS. Pay any pending fees + penalties.

Step 3: Board + EGM Resolution

The board approves the application, and members pass a special resolution (file MGT-14) or members holding 75% of the paid-up capital give written consent.

Step 4: Apply to ROC

File Form STK-2 and pay the ₹10,000 government fee. Since 1 May 2023 STK-2 is processed centrally by the Registrar at C-PACE. Attach: indemnity bond from every director (STK-3), affidavit from every director (STK-4), statement of accounts made up to a date not more than 30 days before filing (STK-8), and the resolution or consent.

Step 5: ROC Approval

The Registrar examines the application and may ask for additional documents. It then publishes a public notice in Form STK-6, including in the Official Gazette, inviting objections within 30 days. If none holds, it strikes off the name and publishes the notice in the Official Gazette; the company is dissolved from that date.

Before Filing: GST and Income Tax

Apply for GST cancellation before STK-2 is filed, then file the final return in GSTR-10 within three months of the date of cancellation or the date of the cancellation order, whichever is later. File the company's income-tax returns up to the last year of operation.

Winding Up Process (Section 271)

Step 1: Board + EGM Resolution

For winding up by the Tribunal, members pass a special resolution (three-fourths majority) that the company be wound up by the Tribunal under Section 271(a). A solvent company choosing voluntary liquidation instead follows the IBC route, with a declaration of solvency and a liquidator.

Step 2: File Petition to NCLT

File winding up petition to the NCLT. Include: reasons, financial position, list of creditors + shareholders.

Step 3: NCLT Hearing

NCLT hears the petition and may appoint a provisional liquidator.

Step 4: Liquidator Appointment

NCLT appoints a Company Liquidator. The liquidator takes over the company's assets + records.

Step 5: Asset Realisation

Liquidator sells the company's assets, recovers dues, and prepares a list of creditors + amounts owed.

Step 6: Distribution

Liquidator pays creditors (secured first, then unsecured) + shareholders (residual). Final accounts prepared.

Step 7: NCLT Order + Dissolution

NCLT passes a dissolution order. Company is dissolved. Liquidator files final return with the ROC.

Cost

Penalty for Not Closing

• Annual compliance cost continues every year
• Director KYC once every three financial years (DIN deactivated and ₹5,000 fee if missed)
• ROC can strike off the company on its own under Section 248(1)
• Directors can be disqualified under Section 164(2) for three years of missed financial statements or annual returns
• Bank accounts of a company struck off by the Registrar can be frozen
• Winding up by NCLT (creditor-initiated)

Frequently Asked Questions