Written by the Delhi Legal Company India Entry & FDI Advisory team · Last updated August 2026 · Reviewed quarterly against MCA, IBBI and RBI notifications
Introduction
Incorporating an Indian subsidiary takes six to ten weeks. Closing one properly takes anywhere from three months to eighteen, and the difference between those two numbers is almost entirely determined by decisions taken before the closure process starts.
The pattern is consistent. A group decides in March that India is no longer strategic. Someone asks how quickly the entity can be shut. The answer depends on whether the annual filings are current, whether there are assets left on the books, whether GST and tax registrations were surrendered, and whether anyone has thought about how the remaining cash leaves the country.
Usually the answer to at least two of those is no, and what should have been a strike-off becomes a liquidation, or a six-month exit becomes an eighteen-month one.
The good news is that the fast route has become genuinely fast. C-PACE now processes strike-off applications in under two months, against delays of more than two years previously. That has changed the calculation for any group sitting on a dormant Indian entity it has been meaning to deal with.
This guide sets out the routes, what qualifies you for each, what the pre-closure cleanup actually involves, how the money gets out, and where exits get stuck.
About this guide
Delhi Legal Company works exclusively with foreign companies establishing and operating in India. Exits are the part of the lifecycle groups plan for least and where the cost of poor preparation is most visible, because every unresolved item becomes a blocker rather than an inconvenience.
Where a rule is settled we state it and cite the source. Where timelines are quoted, we give the range that practitioners actually report rather than a single optimistic figure, because processing times vary and a closure plan built on the best case is a plan that will slip.
Primary sources: the Ministry of Corporate Affairs for the Companies Act, 2013 and the Companies (Removal of Names) Rules, 2016; the Insolvency and Bankruptcy Board of India for the voluntary liquidation regulations; and the Reserve Bank of India for FEMA and closure of places of business.
1. Three questions that determine your route
Before comparing processes, answer these. They decide which route is even available to you.
Question 1: Are there assets or liabilities left?
If the balance sheet is genuinely nil on both sides — no assets, no liabilities, no disputes — strike off is available. If there are assets to realise or creditors to pay, it is not.
This is the gate that decides most cases, and it is the one groups most often assume they have cleared when they have not. A bank balance is an asset. An outstanding intercompany payable is a liability. A security deposit with a landlord is an asset. A gratuity provision is a liability.
Question 2: Are the filings current?
All pending MCA, income tax and GST filings must be cleared. No outstanding liabilities are permitted.
If the company has pending ROC filings, those must be brought up to date before applying for STK-2. Failure to clear these filings makes the company entirely ineligible for strike-off.
A dormant company that stopped filing three years ago cannot simply be struck off. It must first file everything it should have filed, including for the years in which it did nothing.
Question 3: Is this a company, or a place of business?
An Indian subsidiary is closed through the MCA. A branch, liaison or project office is closed through a completely different process. Branch, liaison and project offices close through a separate application to the designated AD Category-I bank under FEMA.
2. The routes compared
| Strike off | Voluntary liquidation | Office closure (BO/LO/PO) | |
|---|---|---|---|
| Governing law | Section 248, Companies Act, 2013 | Section 59, Insolvency and Bankruptcy Code, 2016 | FEMA framework |
| Suits | Defunct company, nil assets and liabilities | Solvent company with assets to distribute | Foreign company’s registered presence |
| Filed with | C-PACE, on Form STK-2 | NCLT, via a liquidator | Designated AD Category-I bank |
| Requires a liquidator | No | Yes, an insolvency professional | No |
| Court or tribunal order | No | Yes, NCLT dissolution order | No |
| Indicative timeline | 3–6 months | 9–15 months to 12–18 months | Several months, bank-dependent |
| Government fee | ₹10,000 | Substantially higher, plus liquidator fees | Bank charges |
| Surplus repatriation | Must be distributed before applying | Through the liquidation, after creditors | On closure, with clearance |
3. Strike off under Section 248
ROC strike-off is the faster, lower-cost route to close an Indian subsidiary, but eligibility is tightly controlled. The company must apply using Form STK-2 under the Companies (Removal of Names) Rules, 2016.
3.1 What C-PACE changed
The Centre for Processing Accelerated Corporate Exit was established to centralise and speed up strike-off processing. C-PACE handles all applications across India, and the effect on timelines has been substantial.
With the introduction of C-PACE, the government significantly accelerated strike-off processing, bringing the average timeline to under two months, compared to earlier delays of more than two years.
Reported timelines vary by source and by the state of the applicant’s records: 45 to 60 days, 60 to 110 days, and three to six months all appear. The practical planning assumption is three to six months from filing, faster where the file is clean and there are no objections.
For a group with a dormant Indian entity it has been postponing, that change matters. The exit that was not worth starting in 2021 is worth starting now.
3.2 Eligibility
The requirements are nil assets and liabilities, no business for the two preceding financial years, all annual filings current, and no pending litigation.
The alternative limb covers companies that never started: a company that has not commenced business within one year of incorporation can apply without waiting two years.
3.3 Who cannot use it
Certain companies are excluded from the strike-off route, including listed companies, companies delisted for non-compliance, companies where an inspection or investigation is ordered or pending, companies with outstanding public deposits or charges, and companies against which prosecution is pending.
Where a charge is registered against the company — a bank facility that was repaid but never had the charge satisfied — the application will fail until Form CHG-4 has been filed and the register updated. This is a common and entirely avoidable blocker.
3.4 The process
- Clear all pending filings. Annual returns and financial statements up to the year business ceased. File all overdue AOC-4 and MGT-7 returns up to the year business ceased before submitting STK-2.
- Extinguish all liabilities and dispose of all assets. The balance sheet must be nil on both sides at the date of application.
- Surrender other registrations. GST, and any sectoral licences. GST cancellation is applied for on Form GST REG-16, after clearing pending returns, reversing input tax credit and settling dues.
- Board resolution approving the application.
- Special resolution of members, or consent of at least seventy-five per cent in terms of paid-up capital.
- Prepare the affidavits and indemnity. Each director provides an affidavit and an indemnity bond in the prescribed forms.
- Statement of accounts certified by a chartered accountant, made up to a date not more than thirty days before the application.
- File Form STK-2 with C-PACE, with the government fee of ₹10,000.
- Public notice. The Registrar publishes notice inviting objections.
- Dissolution. The company is legally dissolved on publication of Form STK-7 in the Official Gazette, and the certificate of incorporation is cancelled.
3.5 The detail that catches applications
If the signature style or spelling mismatches the MCA master data, STK-2 is often sent back for resubmission.
That is a small point with a large consequence. A director whose name appears slightly differently on the DIN record and on the affidavit will cost the application weeks. Check every name and signature against the MCA master data before filing, not after.
3.6 Distribute assets before you apply
Any undistributed assets automatically vest with the Central Government. Distribute all assets before initiating company closure.
This deserves emphasis for foreign parents, because the asset in question is usually cash sitting in the Indian bank account. If it is still there when the company is dissolved, it does not come back.
The sequence therefore runs: settle liabilities, then repatriate the surplus, then confirm the nil balance sheet, then apply.
4. Compulsory strike off, and why it is worse
The Registrar can also strike a company off on its own initiative.
Compulsory strike off is initiated by the ROC where the company has not filed for two or more years. The ROC issues notice in Form STK-1 giving 30 days. Directors face disqualification under Section 164(2). This should be avoided by closing proactively before ROC action.
Two reasons a foreign group should never let this happen.
Director disqualification. Section 164(2) disqualification attaches to the individual, not just to that company, and can prevent them from being appointed as a director of any company for a period. For a group whose executives sit on multiple boards, that is a group-level problem created by an Indian entity nobody was watching.
No control over timing or cleanup. A compulsory strike off happens on the Registrar’s schedule, with liabilities unresolved and assets unaddressed — and any cash left in the company vests with the Central Government.
5. Voluntary liquidation under Section 59
Where the company is solvent but has assets to realise or creditors to pay, strike off is unavailable and voluntary liquidation is the route.
The process is governed by Section 59 of the IBC read with the IBBI (Voluntary Liquidation Process) Regulations 2017, which have been amended several times, most recently in 2025 and 2026.
5.1 The sequence
A majority of directors declare by affidavit that the company has no debt or will be able to pay its debts in full from the proceeds of assets, and that the liquidation is not intended to defraud anyone. The declaration is accompanied by audited financial statements for the previous two years and, where the company has assets, a valuation report from a registered valuer.
Voluntary liquidation can begin only when the directors issue a declaration of solvency confirming the company has not defaulted and is capable of paying all debts in full, and the shareholders pass a special resolution to liquidate and appoint an insolvency professional as liquidator.
From there:
- Declaration of solvency by a majority of directors, with the supporting financials and valuation
- Special resolution of members within the prescribed period, appointing the liquidator
- Creditor approval where the company owes debt, from creditors representing the prescribed value
- Public announcement and intimation to the Registrar and the IBBI
- Claims process — creditors submit claims, the liquidator verifies them
- Realisation of assets and settlement of claims
- Distribution of surplus to shareholders
- Final report by the liquidator
- Application to the NCLT for a dissolution order
- Dissolution order, filed with the Registrar
5.2 The February 2026 amendment
Since the IBBI amendment notified on 25 February 2026, the valuation report must follow the format specified by the IBBI, with supporting documentation.
This is a small procedural change with a practical consequence: a valuation obtained before that date, or prepared in a valuer’s own format, may need to be redone. Where a liquidation was in contemplation before February 2026 and has not yet started, check the valuation format before relying on it.
5.3 The timeline, honestly
Published estimates differ: nine to fifteen months end to end, including the NCLT dissolution order and repatriation, or twelve to eighteen months.
Both are realistic depending on complexity. The variables are how quickly assets can be realised, whether any claim is contested, how long the NCLT listing takes, and — for a foreign parent — how long the repatriation clearances take at the end.
Plan for the longer figure. A liquidation that finishes early is a pleasant surprise; one that overruns a group timetable is not.
5.4 What it costs
Materially more than a strike off. Significantly more expensive than strike off is the consistent description. The cost drivers are the liquidator’s fees, valuation, audit, legal costs and the NCLT process.
For a company with modest assets, it is often cheaper to distribute those assets first, reduce the balance sheet to nil, and use strike off. Whether that is possible depends on what the assets are and whether the liabilities can genuinely be extinguished.
6. Closing a branch, liaison or project office
An entirely different process, because there is no Indian company to dissolve.
The application is made to the designated AD Category-I bank under the FEMA framework. The bank verifies that the office has met its obligations and permits closure and remittance of the balance.
What the bank typically wants:
- A copy of the RBI or AD bank approval under which the office was established
- Auditor’s certificate on the manner of arriving at the remittable amount, and confirmation that all liabilities in India have been met or provided for
- Confirmation that no legal proceedings are pending and there is no legal impediment to remittance
- Confirmation that no income accrued from sources outside India remains unrepatriated
- Tax clearance or no-objection from the tax authority
- Confirmation from the Registrar where the foreign company had filed under the foreign company provisions
Where the foreign company had filed Form FC-1 on establishing the place of business, the corresponding closure filing with the Registrar also has to be made. That is the step most often missed, because groups treat the bank clearance as the end of the process.
A project office has its own additional requirement: the surplus on completion is remittable, but the bank will want to see the project accounts and evidence that the project is genuinely complete. Detail on each structure is on our branch office, liaison office and project office pages.
7. The pre-closure cleanup: where the real work is
Whichever route applies, most of the elapsed time is spent here rather than in the filing itself.
7.1 Bring the MCA filings current
Every annual return and set of financial statements, up to the year business ceased. For a company that stopped filing three years ago, that is three years of AOC-4 and MGT-7, each attracting additional fees.
Periodic MCA amnesty schemes reduce those fees, and one operated in 2026. A one-time MCA scheme running 15 April to 15 July 2026 allowed companies to clear overdue filings at 10% of accumulated late fees and file STK-2 at 25% of the standard fee. That window has now closed, but similar schemes recur — our note on the MCA compliance facilitation scheme covers how they work.
The lesson for a group sitting on a dormant entity: these schemes are announced with limited windows. Monitoring them, and being ready to act when one opens, materially reduces the cost of closure.
7.2 Settle the tax position
- File all outstanding income tax returns
- Resolve any open assessments, demands or appeals
- Complete TDS returns and issue outstanding certificates
- Where the company had international transactions, ensure the transfer pricing position is settled — see transfer pricing for Indian subsidiaries
- Obtain a tax clearance or no-objection where required for remittance
Obtaining a formal tax clearance certificate is generally recommended before final dissolution to prevent future disputes.
7.3 Surrender GST and other registrations
File Form GST REG-16 on the GST portal, clear all pending returns, reverse input tax credit and settle dues before submitting the cancellation application.
Also: professional tax, shops and establishment, EPFO and ESIC where employees were engaged, IEC where the company imported or exported, and any sectoral licence.
7.4 Close out employment
Full and final settlements, gratuity where applicable, provident fund transfers or withdrawals, and the associated filings — see payroll processing. An unsettled employee claim is a liability, and a liability blocks strike off.
7.5 Clear the charge register
Any charge registered against the company must be satisfied and Form CHG-4 filed. A repaid bank facility with an unsatisfied charge on the register will stop the application.
7.6 Deal with intercompany balances
This is the item unique to foreign-owned companies and the one that most often turns a strike off into a liquidation.
An intercompany payable to the parent is a liability. It must be settled, waived or converted before the balance sheet can be nil. Each of those has consequences: settlement requires cash and engages withholding, waiver may produce taxable income in the Indian company, and conversion to equity requires FEMA compliance and reporting.
Address this early. It is not a closing formality; it is a transaction.
8. Getting the money out
The reason most foreign parents are reading this section: there is cash in an Indian bank account and it needs to reach the parent.
8.1 The sequence that works
- Settle all Indian liabilities — creditors, employees, statutory dues
- Complete tax filings and obtain clearance where required
- Distribute the surplus to shareholders before applying for strike off, or through the liquidator in a liquidation
- Effect the outward remittance through the authorised dealer bank, with the tax documentation in place
- Confirm the nil balance sheet, then file
Getting this order wrong is the single most expensive mistake in an exit. Any undistributed assets automatically vest with the Central Government.
8.2 The tax character of what you receive
On a distribution in the course of winding up, the amount is generally treated as deemed dividend to the extent of the company’s accumulated profits, with the balance treated as consideration for capital gains purposes.
That split matters because the two limbs are taxed differently and engage different treaty articles. The dividend limb is subject to withholding at the domestic or treaty dividend rate. The capital gains limb depends on the treaty’s capital gains article, which under several treaties allocates taxing rights to the residence state.
Where the exit is a share sale to a third party rather than a closure, the whole amount is capital gains. Where the company simply has surplus cash and no accumulated profits, a buyback or capital reduction before closure may produce a different outcome again. Our guide to repatriating profits from India compares these.
8.3 The remittance documentation
Whatever the character of the payment, the standard remittance file applies: a Tax Residency Certificate covering the period, Form 10F filed electronically, the relevant declarations, and the prescribed remittance forms with a chartered accountant’s certificate above the threshold.
The bank will not release funds without the acknowledgement. See TDS on payments to your foreign parent for the mechanics.
8.4 Where the FDI reporting sits
The original investment was reported on FC-GPR. The exit — whether by share transfer, buyback or liquidation distribution — has its own reporting obligations, and any transfer between a resident and a non-resident is reportable on FC-TRS within the prescribed period.
Where the Indian company itself held an overseas investment, separate reporting applies. RBI Master Directions on Overseas Direct Investment cover reporting for closure, disinvestment, write-off and winding up of a joint venture or wholly owned subsidiary.
See FC-GPR, FC-TRS and RBI documentation and FEMA compliance and FDI reporting.
9. Directors’ liability does not end at dissolution
A point groups assume away.
Section 248(7) preserves the liability of directors, managers and other officers exercising any power of management, notwithstanding that the company has been dissolved. Liability continues and may be enforced as if the company had not been dissolved.
The practical implications:
- A resident director who served during a period of default remains exposed after the company is gone
- Indemnity arrangements with the parent should survive dissolution, not terminate on it
- The indemnity bonds and affidavits filed with STK-2 are given by the directors personally
- Records should be retained after dissolution, because the person who may need them no longer has a company to ask
For a nominee resident director provided as a service, this is the moment the engagement terms matter most — see the resident director requirement under Section 149(3).
10. Restoration: dissolution is not always final
Under Section 252, an aggrieved party can apply to the NCLT within 20 years of dissolution. The NCLT may order restoration if the strike off was unjust or the company was active at the time.
Twenty years is a long tail. For a foreign parent, two scenarios matter.
A creditor emerges. A supplier, employee or tax authority with an unresolved claim applies to restore the company in order to pursue it. This is why “extinguish all liabilities” means extinguish, not overlook.
The company was not actually dormant. Where a strike off was obtained on the basis that the company had not carried on business, and it had, restoration is available and the position is worse than if the closure had been done properly.
The control is accuracy in the affidavits. They are sworn statements, and they are the basis on which the Registrar acts.
11. Dormancy: the option that is not closure
Dormant company status under Section 455 is not closure, but a minimal compliance alternative.
A company may apply for dormant status where it has no significant accounting transaction, or where it is formed for a future project or to hold an asset or intellectual property. Dormant status reduces the compliance burden without dissolving the entity.
| Consider dormancy where | Choose closure where |
|---|---|
| The group may return to India within a few years | The exit is final |
| The entity holds a name, licence or IP worth preserving | There is nothing worth preserving |
| Restarting would be materially harder than maintaining | Re-incorporation would be straightforward |
| The reduced compliance cost is acceptable | Even reduced compliance is not worth it |
Note that dormancy does not remove the resident director requirement, the annual filing obligations that apply to dormant companies, or the need to keep the DIN of every director active. It reduces the burden; it does not eliminate it.
12. Where exits get stuck
In our experience, closures overrun for a short list of reasons.
| Blocker | Why it happens | Fix it by |
|---|---|---|
| Pending MCA filings | The entity went quiet before it went dormant | Filing everything, ideally during an amnesty window |
| Unsatisfied charge on the register | A repaid facility where CHG-4 was never filed | Filing CHG-4 with the lender’s confirmation |
| Intercompany payable to the parent | Nobody treated it as a liability | Settling, waiving or converting it — each with consequences |
| Open tax assessment or demand | An assessment left unresolved when operations ceased | Concluding it before applying; there is no way around this |
| GST returns not filed to date of cancellation | Returns stopped when trading stopped | Filing nil returns through to cancellation |
| Name or signature mismatch on STK-2 | Mismatch against MCA master data | Checking every name against the DIN record before filing |
| Cash still in the account at application | The repatriation was left until after filing | Repatriating first, then confirming nil |
| Employee claim unresolved | Full and final settlements not completed | Settling and documenting before applying |
| Valuation in the wrong format | The February 2026 IBBI format requirement | Confirming the format before commissioning the valuation |
13. A realistic closure timetable
13.1 Strike off, clean file
| Stage | Indicative time |
|---|---|
| Pre-closure cleanup: filings, tax, GST, employees | 1–3 months |
| Asset distribution and repatriation | 2–6 weeks |
| Board and shareholder approvals, affidavits, CA statement | 2–3 weeks |
| STK-2 filing to dissolution | 2–4 months |
| Total | 4–8 months |
Where filings are already current and the balance sheet is genuinely nil, the front end compresses substantially and the total can be three to four months.
13.2 Voluntary liquidation
| Stage | Indicative time |
|---|---|
| Pre-closure cleanup and audited financials | 1–3 months |
| Declaration of solvency, valuation, special resolution, liquidator appointment | 3–6 weeks |
| Public announcement and claims process | 2–3 months |
| Asset realisation and settlement of claims | Variable |
| Distribution and repatriation | 1–2 months |
| Final report and NCLT application to dissolution order | 3–6 months |
| Total | 9–18 months |
Sitting on a dormant Indian entity?
Every year it stays on the register costs filings, carries director exposure, and makes the eventual closure harder. C-PACE has made the fast route genuinely fast — but only for companies whose filings are current. Send us the entity’s last filed accounts and its current status and we will tell you which route it qualifies for, what has to be cleaned up first, and how long it will realistically take.
14. Choosing your route: a decision sequence
Work through these in order. Each question either closes off a route or moves you to the next.
Step 1: Is this a company or a place of business?
A branch, liaison or project office goes to the AD bank. An incorporated company goes to the MCA. If you are unsure which you have, check whether the entity has a Corporate Identity Number — a company does; a place of business does not.
Step 2: Are you certain the exit is final?
If the group may return within a few years, price dormancy against closure before proceeding. Re-incorporating means a new name reservation, fresh apostilled documents, a new DIN and DSC cycle, a new bank account and a new set of registrations — realistically six to ten weeks and the full incorporation cost. Dormancy preserves the entity at reduced but non-zero compliance cost.
Step 3: Can the balance sheet be made nil?
Not “is it nil today” but “can it be made nil before we apply”. Assets can be sold or distributed. Liabilities can be settled. Intercompany balances can be settled, waived or converted.
If the answer is yes, strike off is available and is almost always the right choice on cost and time. If the answer is no — typically because there is a disputed liability, an unrealisable asset or a creditor who will not accept settlement — you are in liquidation.
Step 4: Are the filings current, or can they be made current?
If filings are pending, that work happens first regardless of route. Cost it before committing to a timeline, and check whether an MCA amnesty window is open or expected.
Step 5: Is anything pending that blocks either route?
An open tax assessment, live litigation, an unsatisfied charge, an investigation. Each of these has to be concluded, not worked around. Identify them at the start rather than discovering them when the application is rejected.
Step 6: How does the money get out, and in what order?
Settle, distribute, remit, then confirm nil, then file. Design this sequence before starting, because it is the part with an irreversible failure mode.
15. Three exits, worked through
Scenario A — The dormant entity nobody closed
A US group incorporated an Indian subsidiary in 2019 for a project that never launched. It traded briefly, stopped in 2021, and has not filed since 2022. There is roughly ₹18 lakh in the bank and a small intercompany payable to the parent.
Route. Strike off, once the file is clean.
The work. Four years of AOC-4 and MGT-7 to file, with additional fees. Income tax returns for the same years. GST returns through to a REG-16 cancellation. The intercompany payable settled or waived — and if waived, the tax consequence in the Indian company computed. Then the ₹18 lakh distributed and remitted, before the nil balance sheet is certified.
Timeline. Four to eight months, with most of it in the cleanup rather than the filing.
Where it goes wrong. Groups in this position frequently file STK-2 with the cash still in the account, on the assumption that they will “sort out the bank later.” The dissolution vests it with the Central Government.
Scenario B — The operating subsidiary being wound down
A German group’s Indian subsidiary has forty employees, a leased office, receivables, a security deposit with the landlord, and a gratuity provision. The group has decided to exit over twelve months.
Route. Depends entirely on execution. If, over the wind-down period, the receivables are collected, the lease is surrendered and the deposit recovered, employees are settled in full, and the gratuity liability is discharged, the balance sheet can reach nil and strike off becomes available. If any of those remains open, it is liquidation.
The work. Run the wind-down as a project with the closure route as its objective. Employee settlements first, because an unresolved claim blocks everything. Lease surrender and deposit recovery next. Receivables collected or written off with the tax position documented.
Timeline. Twelve months of wind-down, then four to six months of closure — or nine to eighteen months of liquidation if the wind-down leaves items open.
The commercial point. The difference between those two outcomes is worth a substantial sum and several months, and it is determined by decisions taken during the wind-down, not at the end of it.
Scenario C — The liaison office that is closing
A Japanese manufacturer’s liaison office in Delhi has operated for six years with three staff. The group has decided to establish a subsidiary instead.
Route. Closure through the AD Category-I bank, not the MCA.
The work. Auditor’s certificate on the remittable balance and confirmation that Indian liabilities are met. Employee settlements. Tax clearance. Confirmation that no proceedings are pending. And the Registrar filing corresponding to the original Form FC-1.
The sequencing point. Where a subsidiary is being incorporated to replace the office, run the two processes with a deliberate overlap plan. The office cannot conduct business it was never permitted to conduct while the subsidiary is being set up, and the subsidiary cannot trade until it has completed its own post-incorporation steps — see forming a foreign company in India.
16. Twelve mistakes that make exits expensive
- Leaving cash in the account at the date of application. Undistributed assets vest with the Central Government.
- Assuming a dormant company can be struck off without filing. Pending ROC filings make the company entirely ineligible.
- Forgetting the intercompany payable. It is a liability, and it blocks strike off.
- Waiting for the Registrar to act. Compulsory strike off brings director disqualification under Section 164(2).
- Missing an unsatisfied charge on a facility repaid years ago.
- Not surrendering GST, leaving returns accruing after trading stopped.
- Filing STK-2 with a name mismatch against MCA master data.
- Leaving an assessment open and expecting to close around it.
- Commissioning a valuation in the wrong format after the February 2026 IBBI requirement.
- Choosing liquidation when the assets could have been distributed first and strike off used instead.
- Assuming directors’ liability ends at dissolution. Section 248(7) says otherwise.
- Closing the office but not filing the corresponding Registrar form where the foreign company had registered a place of business.
17. Closure checklist
Before you choose a route
- Balance sheet reviewed: are assets and liabilities genuinely nil, or capable of being made nil?
- Intercompany balances identified and a plan agreed for each
- MCA filing status confirmed for every year since incorporation
- Open tax assessments, demands and appeals listed
- Charges register checked for unsatisfied charges
- Litigation and employee claims identified
- Decision taken between closure and dormancy
Pre-closure cleanup
- All AOC-4 and MGT-7 filings brought current to the year business ceased
- Income tax returns filed; assessments concluded; tax clearance obtained where needed
- TDS returns filed and certificates issued
- Transfer pricing position settled where there were international transactions
- GST returns filed to date and REG-16 cancellation applied for
- EPFO, ESIC, professional tax and shops and establishment registrations surrendered
- IEC and sectoral licences surrendered
- Employee full and final settlements completed and documented
- CHG-4 filed for every satisfied charge
Money out
- All Indian liabilities settled
- Surplus distributed to shareholders before application
- Tax character of the distribution determined and withholding applied
- TRC, Form 10F and declarations in place
- Remittance forms filed and acknowledgements retained
- FC-TRS or other FDI reporting completed for the exit
- Bank account closed after the final remittance
Filing and after
- Board and special resolutions passed and minuted
- Director affidavits and indemnity bonds executed
- CA-certified statement of accounts dated within thirty days of the application
- Every name and signature checked against MCA master data
- STK-2 filed with the ₹10,000 fee, or liquidation commenced
- STK-7 Gazette publication confirmed
- Records retained after dissolution, given continuing director liability
- Indemnities in favour of directors confirmed to survive dissolution
18. Frequently asked questions
Q1. How do you close an Indian subsidiary of a foreign company?
Through one of two routes. Strike off under Section 248 of the Companies Act, 2013 suits a defunct company with nil assets and liabilities and is filed on Form STK-2 with C-PACE. Voluntary liquidation under Section 59 of the IBC suits a solvent company with assets to realise and requires a liquidator and an NCLT dissolution order. Branch, liaison and project offices close separately through the AD bank.
Q2. How long does it take to close a company in India?
Strike off typically takes three to six months through C-PACE, though the front-end cleanup can add months where filings are pending. Voluntary liquidation typically takes nine to eighteen months end to end, including the NCLT dissolution order and repatriation. Plan for the longer end of each range rather than the shortest reported figure.
Q3. What is C-PACE and what changed?
The Centre for Processing Accelerated Corporate Exit centralises strike-off processing across India. It has brought average processing to under two months, against delays of more than two years previously. For groups sitting on dormant Indian entities they have been postponing, that materially changes the case for closing now.
Q4. What are the eligibility conditions for strike off?
Nil assets and liabilities, no business carried on for the two preceding financial years, all annual filings current, and no pending litigation. A company that has not commenced business within one year of incorporation can apply without waiting two years. Listed companies, companies under investigation, and companies with outstanding charges or prosecutions are excluded.
Q5. Can we strike off a company that has not filed returns for three years?
Not until those returns are filed. Pending ROC filings make the company entirely ineligible for strike off, so every overdue AOC-4 and MGT-7 up to the year business ceased must be filed first. Periodic MCA amnesty schemes reduce the additional fees for doing this, and monitoring for such windows can materially reduce closure cost.
Q6. What happens to money left in the Indian bank account?
Any undistributed assets automatically vest with the Central Government on dissolution. The cash does not return to the parent. The correct sequence is to settle all liabilities, distribute the surplus to shareholders, complete the outward remittance, then confirm the nil balance sheet and only then apply for strike off.
Q7. What is the government fee for strike off?
₹10,000 on Form STK-2. Professional fees for the pre-closure cleanup, affidavits, the CA-certified statement of accounts and the filing itself are separate, and where several years of pending filings must be cleared first, that cleanup usually costs more than the closure.
Q8. When is voluntary liquidation required instead of strike off?
Where the company is solvent but has assets to realise or creditors to pay, so the balance sheet cannot be made nil before applying. It requires a declaration of solvency by a majority of directors, audited financials for the previous two years, a valuation report where there are assets, a special resolution appointing an insolvency professional as liquidator, and an NCLT dissolution order.
Q9. What changed in the voluntary liquidation rules in 2026?
The IBBI amendment notified on 25 February 2026 requires the valuation report to follow the format specified by the IBBI, with supporting documentation. A valuation obtained before that date or prepared in a valuer’s own format may need to be redone, so confirm the format before commissioning it.
Q10. What happens if the Registrar strikes off the company instead?
Compulsory strike off is initiated where a company has not filed for two or more years. The ROC issues notice in Form STK-1 giving 30 days, and directors face disqualification under Section 164(2). That disqualification attaches to the individual and can prevent appointment to other boards, which makes it a group-level problem created by an unmonitored Indian entity.
Q11. Does directors’ liability end when the company is dissolved?
No. Section 248(7) preserves the liability of directors, managers and other officers exercising powers of management notwithstanding dissolution, and it may be enforced as if the company had not been dissolved. Indemnity arrangements should therefore survive dissolution, and records should be retained afterwards.
Q12. Can a struck-off company be restored?
Yes. Under Section 252, an aggrieved party can apply to the NCLT within 20 years of dissolution, and the tribunal may order restoration if the strike off was unjust or the company was active at the time. This is why liabilities must genuinely be extinguished rather than overlooked, and why the affidavits filed must be accurate.
Q13. How is the money we get back taxed?
On a distribution in the course of winding up, the amount is generally treated as deemed dividend to the extent of accumulated profits, with the balance treated as consideration for capital gains. The two limbs are taxed differently and engage different treaty articles, so the split should be computed before the distribution rather than after.
Q14. Do we need tax clearance before repatriating?
A formal tax clearance is generally recommended before final dissolution to prevent future disputes, and for branch, liaison and project office closures the AD bank will typically require tax clearance or a no-objection as part of the closure documentation. Open assessments and demands need to be concluded rather than worked around.
Q15. What about our intercompany balance with the parent?
An intercompany payable is a liability and blocks strike off. It must be settled, waived or converted to equity before the balance sheet can be nil. Each option has consequences: settlement requires cash and engages withholding, waiver may produce taxable income in the Indian company, and conversion requires FEMA compliance and reporting. Address it early, as a transaction.
Q16. How do we close a branch or liaison office?
Through an application to the designated AD Category-I bank under FEMA, supported by the original approval, an auditor’s certificate on the remittable amount and confirmation that Indian liabilities have been met, confirmation that no proceedings are pending, and tax clearance. Where Form FC-1 was filed on establishing the place of business, the corresponding closure filing with the Registrar must also be made.
Q17. Should we keep the company dormant instead of closing it?
Dormant status under Section 455 reduces compliance without dissolving the entity, and suits a group that may return to India within a few years or that holds a name, licence or IP worth preserving. It does not remove the resident director requirement, the filings applicable to dormant companies, or the need to keep directors’ DINs active.
Q18. What is the most common reason an exit overruns?
Pending filings, followed closely by unresolved intercompany balances. Both are knowable a year in advance and both are cheap to fix early. A company that keeps its filings current while dormant can close in three to four months; one that stopped filing three years ago will spend most of the exit catching up before it can even apply.