Tax & Compliance·5 min read
Fast Track Exit: How to Legally Close a Private Limited Company
Strike off a defunct Pvt Ltd via FTE/STK-2 instead of letting ROC penalties stack—only if you have zero assets, zero liabilities, and clean filings.
December 10, 2023
What you'll take away
- FTE suits companies inactive 2+ years or never commenced business within 1 year.
- File STK-2 with indemnity bond and statement of accounts.
- All directors must consent; clear tax and ROC defaults first.
- Pelago evaluates strike-off vs voluntary liquidation before you apply.
Why dormant companies hurt founders
Inactive Pvt Ltd still needs annual ROC filings and tax returns. Penalties accumulate; directors risk disqualification under Section 164.
Closing cleanly preserves your ability to start the next company without MCA flags.
Fast Track Exit (FTE) eligibility
- Not commenced business within 1 year of incorporation, OR
- No business activity for 2 preceding financial years and no assets/liabilities.
- All shareholders agree; company not under litigation.
- GST, income tax, and ROC filings should be current or regularised first.
Founder tip: 'Zero business' still requires filed NIL returns—strike-off with defaults gets rejected.
Stuck with a zero-revenue company?
Strike-off eligibility review + STK-2 filing.
Review company closureSTK-2 application pack
- Board resolution and shareholder affidavit.
- Indemnity bond from directors.
- Statement of accounts certified by CA (zero assets/liabilities).
- Publish notice if required; ROC publishes in gazette for objections.
Timeline often 3–6 months including objection window.
When FTE is not enough
Companies with creditors, active litigation, or assets need voluntary liquidation under IBC rules—more expensive but proper.
Do not transfer assets out then apply strike-off—that is fraud.
Post-strike-off
PAN becomes inactive; bank account must close. Directors should keep STK-2 acknowledgement for future MCA queries.
Pelago audits eligibility before filing so you do not waste months on rejected applications.