Public Limited Company Closure
The Process of closing a Public Limited Company is known as Strike off or company closure. Company closure is done under newly notified rules Companies (Removal of Names of Companies) Rules, 2016 which governed by section 248 of Companies Act, 2013. If you are not running your company, we recommend you to close your Public Limited Company.
Since a company has its own separate existence, meeting regulatory compliances and existing apart from its directors and shareholders, it also has its own method of ceasing to exist, rather than an inoperative company simply ceasing to exist. A company whose shares may be traded freely amongst the public is referred to as a Public Limited Company, and it may be listed/unlisted on stock exchanges. It requires at least 3 directors for its operation. A Public Company may shut down if the Company needs to undergo liquidation in order to pay off creditors, or if the members of the Company wish to close it.
Did not commence your business or no business at all now ? Get your company name removed from the MCA database with TAXAJ.
It usually takes 7 to 10 working days.
👉 Company Name removal from MCA database
👉 Conduct Board Meeting to pass special resolution to strike off the name of the Company
👉 Conduct Extraordinary General Meeting of the Shareholders to pass special resolution for name approval
👉 File MGT14 after EGM (with 30 days of passing of special resolution)
👉 Certify statement of accounts by CA (Statement should not be older than 30 days from the date of application)
👉 File e-form STK-2 along with prescribed attachments
👉 Public Notice issued by ROC for name removal
👉 Excludes preparation of financial reports and annual ROC returns of company till its operations (if any)
👉 Excludes company & tax audit
👉 Excludes DIR-3 KYC of Directors and Digital Signature of Directors
- Company with no operations
- Company without any third party transactions
- Company with no employees
- Company with no registration under GST, VAT and other tax departments
- Purchase of Plan
- Expert Assigned
- Preparation of name removal Documents
- Filing with ROC
Name, Contact Number and Email Id of all the Stakeholders.
Directors Identification Number, if already.
Self Attested PAN, Aadhar & Passport size photo of all the Stakeholders.
PAN, TAN, COI, Share Certificates of the Company.
NOC from commercial departments
Letter of account closure from bank
Previous Year's Audited Financials & Tax Reports
Eligibility for Closing Public Ltd Company
Eligibility for Closing Public Ltd Company
Voluntarily closing a Public Limited Company:
This is possible if,
- Creditors’ Voluntary Liquidation – The Company and its shareholders chose to liquidate the Company because it can’t pay debts
- Members’ Voluntary Liquidation – There Company can pay its debts but the members want to close it
Compulsory closing of Public Limited Company:
This happens in the following scenarios,
- The Company is unable to pay its debts
- Tribunal orders the Company to be shut down or is of the opinion that the Company is equitable and must be shut down
- When the Company has not filed financial statements or annual return in the preceding five consecutive years
- The Company has acted against the sovereignty and integrity of the state and India, friendly relations with foreign states, public order, decency or morality
- If the Company has been conducted in fraudulent manners or is guilty of fraud or misconduct
Closing a Public Ltd Company
Winding Up Public Limited Company
A Public Limited Company, legally known as PLC, is a publicly held company. It is a limited company whose shares can be traded with the public. PLC can be listed or not listed in the stock exchanges. PLC requires a minimum of 3 Directors as a prerequisite.
A Public Limited Company may be closed either voluntarily by the shareholders or compulsorily by the judiciary.
TAXAJ provides thorough services during this difficult transition of closing Public limited company in India.
Why Close a Public Ltd Company?
Public Companies are generally closed for the following reasons -
- Only the director of an officially closed Public Company is no longer bound to the regulatory compliances required for the same;
- A closed Public Company no longer incurs any fines or penalty, and cannot cause a debarment of its director from moving forward and starting a new company or LLP;
- Closing is a simple procedure for inoperative Public Company's and a required step in order to extinguish any liabilities.
Process for Closing a Public Ltd Company
Process for Closing a Public Ltd Company
The dissolution of a Public Limited Company consists of three main stages:
- Dissolution Resolution:
To dissolve a Company, at least 2/3rd of the shareholders must adopt the resolution. The management must submit an application to the Register of Companies along with resolution of dissolution, the minutes of the general meeting
- Liquidation:
The dissolution resolution and submission of application is followed by liquidation, in a series a steps.
- Appointment of liquidator is either members of management or a separate liquidator appointed by the judicial. The liquidator submits the application of dissolution to the Registrar.
- Publication of a notice regarding liquidation of Public Limited Company is sent out, specifying the creditors.
- Submit annual report and opening balance sheet to the Registrar upon liquidation.
- If the assets of the public limited company being liquidated are not sufficient to satisfy all of the requirements of the creditors, the liquidators must file a bankruptcy petition. If a creditor known to the public limited company has not presented a demand and the demand cannot be satisfied due to reasons independent of the public limited company, the funds belonging to the creditor shall be deposited in escrow if possible.
- Preparation of final balance sheets of Public Limited Company and distribution of remaining assets according to the plan prepared by the liquidators is the final step of liquidation. The assets may be distributed after six months have passed since the dissolution of the Public Limited Company was entered into the Commercial Register and the liquidation notice published and after two months have passed since the shareholders were notified of the presentation of the final balance sheet and asset distribution plan.
- Deletion from Commercial Register: After the Public Limited Company has been liquidated as required, the company management board will have to submit an application to the Register for the deletion of the company from the Commercial Register. This can be done after a minimum of six months of the entry of the dissolution of the public limited company into the Register and providing notification thereof along with a final balance sheet and asset distribution plan to the application for deletion from the Register.
Liquidation of a Public Limited Company is a fairly time-consuming process that lasts at least six months. The activities of a dissolved Public Limited Company can be continued, or a merger, division or transformation of the Company may also be conducted. To do so, the liquidators must submit to the Commercial Register an application for continuing the company’s activities.
WHO CAN NOT FILE ANY APPLICATION WITH ROC FOR REMOVAL OF THEIR NAMES UNDER SECTION 248 VIA STK-2 MODE?
WHO CAN NOT FILE ANY APPLICATION WITH ROC FOR REMOVAL OF THEIR NAMES UNDER SECTION 248 VIA STK-2 MODE?
An application under sub-section (2) of section 248 on behalf of a company shall not be made if, at any time in the previous three months, the company
(a) has changed its name or shifted its registered office from one State to another;
(b) has made a disposal for value of property or rights held by it, immediately before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business;
(c) has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement;
(d) has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
(e) is being wound up under Chapter XX, whether voluntarily or by the Tribunal.
Moreover, Following categories of companies shall not be removed from the register of companies under section 248 read with rule 3 and 4 of companies (Removal of name of companies from register of companies) Rules 2016, namely:-
(i) listed companies;
(ii) companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;
(iii) vanishing companies;
(iv) companies where inspection or investigation is ordered and being carried out or actions on such order are yet to be taken up or were completed but prosecutions arising out of such inspection or investigation are pending in the Court;
(v) companies where notices under section 234 of the Companies Act, 1956 (1 of 1956) or section 206 or section 207 of the Act have been issued by the Registrar or Inspector and reply thereto is pending or report under section 208 has not yet been submitted or follow up of instructions on report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the Court;
(vi) companies against which any prosecution for an offence is pending in any court;
(vii) companies whose application for compounding is pending before the competent authority for compounding the offences committed by the company or any of its officers in default;
(viii) companies, which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
(ix) companies having charges which are pending for satisfaction; and
(x) companies registered under section 25 of the Companies Act, 1956 or section 8 of the Act.
