Closing a company in India: routes, rules and your records

How to close a company in India

Voluntary strike-off is used when the company has not started business within a year, or has been inactive for two financial years and has not applied to be dormant. Liabilities are extinguished. The members pass a special resolution, or holders of 75 percent of the paid-up share capital consent. Form STK-2 includes a statement of accounts not more than 30 days old. Insolvency winding-up is used when the company is already being wound up under the Companies Act or the Insolvency and Bankruptcy Code. Form STK-2 is not allowed for that company. A listed company and a section 8 company are also refused.

Dissolution and liquidation routes

The registry

The Registrar of Companies. A voluntary strike-off is Form STK-2, filed with a notarized affidavit and a notarized indemnity bond from each director and a chartered accountant's certificate on a statement of assets and liabilities made up to a day not more than 30 days before the application. The Registrar then publishes Form STK-6 in the official gazette, a newspaper, and on the website. If no objection arrives, Form STK-7 is published 30 days later. Resubmission is allowed twice, with 15 days each time.

Employees: consultation and notice

Section 25F of the Industrial Disputes Act. A workman in continuous service for at least one year is not retrenched until one month's written notice stating the reasons has expired, or wages for that notice are paid, compensation equal to fifteen days' average pay for every completed year of continuous service or any part over six months is paid, and notice is served on the appropriate government. Where there is no agreement, section 25G says the employer ordinarily retrenches the last person employed in that category of workmen, if the workman is a citizen of India, unless reasons are recorded for choosing someone else.

For staff who worked in a US state, read final paycheck and WARN rules by state.

Data protection when the company closes

The Digital Personal Data Protection Act. Personal data means any data about an individual who is identifiable by or in relation to such data. Section 18 establishes the Data Protection Board of India, from a date the Central Government notifies, as a body corporate. On a personal-data breach or a complaint that a data fiduciary broke its duties, the Board inquires and may impose a penalty.

The Data Protection Board of India. The Ministry says the Government has established the Board under section 18 of the Digital Personal Data Protection Act as a body corporate and an independent adjudicatory authority. It inquires into personal data breaches and non-compliance, issues directions, and may impose monetary penalties. The Board has a Chairperson and four other Members.

Records to keep

Section 128 of the Companies Act. Books of account for at least eight financial years immediately before a financial year, together with the vouchers for any entry, are kept in good order. If the company has existed for less than eight years, the books and vouchers for all of those earlier years are kept. Where an investigation has been ordered under Chapter XIV, the Central Government may direct that the books be kept for a longer period. A director may inspect the books at the registered office during business hours, and the officers give the assistance the company can reasonably be expected to give.

What this means for a data license

You give the data partner the right to use your records, with personal details removed, for AI research. Personal details are removed before anything leaves your company. Customer and staff details are never shared. You approve each system before anything is shared. To train and test AI that helps people do their jobs. Never for marketing, and never sold as contact lists. You keep ownership of your data, and full use of it in your business. You agree not to license the same records to anyone else. You sign an NDA and the licensing agreement, directly with the data partner, not with Vetrix. The partner is a US-based AI data company. We tell you the data partner's name before you sign. Read what is shared and what is removed, and read the license terms, before you decide.

You need at least 30 staff at peak, or 25 if most of your staff are in the US, and at least 2 years of records.

Related

• Closing a company by country

  Dissolution or liquidation route, registry, employee notice, and data-protection authority by country.

• Winding down

  Order of operations to wind down a company, from approval through taxes and dissolution.

• Ireland

  The Companies Registration Office is the registry. One route is Voluntary strike-off.

• Israel

  The Companies Registrar is the registry. One route is Voluntary liquidation.

• Netherlands

  The trade register is the registry. One route is Turbo liquidation.

• What's shared

  Which records can be licensed, which details never leave, and what you approve.

• Systems

  What common business tools do to company data after you cancel, including each vendor deletion window.

Sources

1. Ministry of Corporate Affairs. C-PACE frequently asked questions.
2. Ministry of Electronics and Information Technology. Digital Personal Data Protection Act, 2023.
3. Ministry of Electronics and Information Technology. Window advertisement, Data Protection Board of India.
4. Ministry of Labour and Employment. Industrial Disputes Act, sections 25F and 25G, as set out in an official award.
5. India Code. Companies Act, 2013, section 128.