Table of Contents

OPC Strike Off & Closure in India: Procedures, Modes & Key Considerations

1. Introduction

A One Person Company (OPC) is incorporated under the Companies Act, 2013 and registered with the Registrar of Companies (ROC). While OPCs enjoy several benefits, there may be circumstances where an OPC needs to be closed. This guide provides an in-depth understanding of the process, requirements, and procedures for winding up or striking off an OPC in India.

2. Reasons for Strike Off or Winding Up of OPC

Several circumstances can lead to the closure of an OPC. The most common reasons include:

2.1 Inability to Commence Business

An OPC may be incorporated with a specific business objective but may not start operations due to unforeseen circumstances. If an OPC remains inactive for a significant period (e.g., one year), it may opt for closure.

2.2 Completion of Business Objective

Some OPCs are created for specific projects or objectives. Once the objective is fulfilled, and no further operations are required, the company may be closed.

2.3 Persistent Losses

If an OPC incurs continuous losses and its business is no longer viable, the owner may decide to close the company to avoid additional financial liabilities.

2.4 Death of Sole Director

Since an OPC is run by a single individual, its continuity depends on the director. If the sole director passes away, the nominee may choose to wind up the company.

2.5 Insolvency or Inability to Pay Debts

An OPC that becomes insolvent or unable to meet its financial obligations may be subject to compulsory winding up by a tribunal or voluntary closure.

2.6 Non-Compliance with Regulatory Requirements

Failure to comply with the provisions of the Companies Act, such as annual filings, tax returns, and other regulatory obligations, may result in penalties, disqualification of directors, or even strike-off initiated by the ROC.

2.7 Violation of Laws

If an OPC engages in activities against the sovereignty and integrity of India, state security, or fraudulent practices, it may face forced closure by regulatory authorities.

3. Modes of Closing an OPC

There are two primary ways to close an OPC:

3.1 Voluntary Strike Off

The sole director of the OPC may voluntarily apply for the closure of the company by submitting an application for strike-off to the ROC.

3.2 Compulsory Winding Up

A competent court or tribunal may order the winding up of an OPC due to insolvency, non-compliance, fraudulent activities, or any other justified reason.

4. Procedure for Voluntary Strike Off of OPC

The process of voluntarily closing an OPC involves the following steps:

4.1 Board Resolution

The sole director must pass a resolution approving the strike-off process and obtain consent from the nominee director.

4.2 Settlement of Liabilities

Before applying for strike-off, the OPC must clear all outstanding liabilities, including taxes, loans, and any statutory dues.

4.3 Filing of Form STK-2

The OPC must file Form STK-2 with the ROC, along with the following documents:

• Copy of board resolution authorizing the strike-off

• Affidavit and indemnity bond from the director

• Statement of accounts (not older than 30 days)

• Income tax return acknowledgment

4.4 Verification and Approval by ROC

The ROC will review the application and, if satisfied, publish a public notice (STK-7) inviting objections. If no objections are received within 30 days, the company’s name will be struck off from the Register of Companies. Key points to note here is finalization of books of accounts before filing application in form STK-2 and filing of audited financials till the date of closure is required by ROC to finally close the OPC. Further declaration from the director / shareholder is required pertaining to no dues and liability is pending on behalf of OPC.

5. Procedure for Compulsory Winding Up of OPC

In cases where an OPC faces insolvency, fraud charges, or regulatory non-compliance, a tribunal may order its winding up. The steps involved are:

5.1 Petition for Winding Up

A petition is filed before the National Company Law Tribunal (NCLT) by creditors, regulatory authorities, or the government.

5.2 Appointment of Liquidator

If the tribunal finds merit in the petition, it appoints a liquidator to manage the closure process, including settling liabilities and disposing of assets.

5.3 Liquidation Process

The liquidator sells off company assets, settles outstanding debts, and distributes any remaining funds among stakeholders. Here the books of account will be accessed and reviewed by the Liquidator and if liquidator deems fit, may call for meeting with creditors / lender / debtors of the Company.

5.4 Final Order for Dissolution

Upon completion of the liquidation process, the NCLT issues an order for the company’s dissolution, and its name is removed from the Register of Companies.

6. Consequences of OPC Strike Off

Once an OPC is struck off:

• The company ceases to exist as a legal entity.

• It cannot enter into contracts or undertake business transactions.

• The director is relieved of compliance obligations but remains liable for past fraudulent activities (if any).

7. Key Considerations Before Closing an OPC

• Ensure all tax liabilities and statutory dues are cleared.

• Inform stakeholders, including clients and suppliers, about the closure.

• File all pending compliance documents to avoid penalties.

8. Conclusion

Closing an OPC requires a systematic approach to ensure compliance with legal and regulatory requirements. Whether opting for voluntary closure or facing compulsory winding up, it is essential to follow the proper procedure to avoid legal consequences. Seeking professional guidance can simplify the process and ensure a smooth transition.

For professional assistance, reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091 to ensure all statutory obligations are met on time.

frequently asked questions (faq's) related to Strike Off of an OPC

Q What does it mean when an OPC is "struck off"?+

Q Why are OPCs struck off?+

Q What is the difference between "struck off" and "wound up"?+

Q What is the process for striking off an OPC?+

Q What documents are required for striking off an OPC?+

Q What is the fee for striking off an OPC?+

Q How long does it take to strike off an OPC?+

Q Since an OPC has only one director/shareholder, are any special considerations involved in the strike-off process?+

Q What happens to the nominee director of an OPC when it is struck off?+

Q What happens to the assets and liabilities of an OPC after it is struck off?+

Q What if the OPC has outstanding liabilities?+

Q What are the implications for the director after the OPC is struck off?+

Q Can an OPC be revived after it is struck off?+

Q What happens to the bank accounts of an OPC after it is struck off?+

Q How do I find out if an OPC is struck off?+

Q What is the procedure for winding up an OPC?+

Q What are the tax implications of striking off an OPC?+

Q How can I avoid my OPC being struck off?+

Q What are the consequences of not complying with the strike-off process?+

Q Can an OPC be revived after it has been struck off?+

Q What happens to the OPC's PAN after it is struck off?+

Q What is the role of a professional in the strike-off process?+

Q What are the common challenges faced in striking off an OPC?+

Q Where can I find legal advice regarding the striking off of an OPC?+