Strike off of OPC (OPC Closure)

OPC Closure of Strike off of OPC is done as per the Provisions of Companies Act 2013. Apart of winding off of OPC, certain other statutory registration also require to be surrendered such as PAN, TAN, GST, PF etc.

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Comprehensive Guide on Strike Off or Winding Up of One Person Company (OPC) in India

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.

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.

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.

9. Additional Resources

For further reading, you may refer to the following topics:

Frequently Asked Questions (FAQs) on Strike Off of an OPC

General Information about OPC Strike Off

1. What does it mean when an OPC is “struck off”?

When an OPC is “struck off” by the Registrar of Companies (ROC), it means its name is removed from the Register of Companies, and it effectively ceases to exist as a legal entity. It’s a simpler process than winding up, designed for defunct companies.

2. Why are OPCs struck off?

OPCs are typically struck off for reasons such as: Failure to commence business within one year of incorporation. Not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining dormant status under section 455. The subscribers to the memorandum have not paid the subscription amount and the declaration to this effect has not been filed within 180 days of its incorporation. The company has failed to obtain a commencement of business certificate within one year of its incorporation. The director has not made any declaration within 180 days of its incorporation that every subscriber to the memorandum has paid the value of shares agreed to be taken by him.

3. What is the difference between “struck off” and “wound up”?

Struck Off: A summary procedure for defunct companies, involving the removal of the company’s name from the register. It’s less formal than winding up. Wound Up: A formal legal process involving the liquidation of the company’s assets and distribution of proceeds to creditors and shareholders (though an OPC has only one shareholder).

Process for Striking Off an OPC

4. What is the process for striking off an OPC?

The process generally involves: Passing a resolution for striking off at a meeting of the Board of Directors (which, in the case of an OPC, is effectively the sole director). Filing an application with the Registrar of Companies (ROC) in Form STK-2. Submitting the required documents and paying the prescribed fees. The ROC verifies the application and, if approved, strikes the OPC’s name off the register.

5. What documents are required for striking off an OPC?

Documents typically include: Application in Form STK-2. Board resolution (by the sole director). Affidavit from the director. No Objection Certificate (NOC) from relevant authorities (if required). Auditor’s certificate.

6. What is the fee for striking off an OPC?

The fee is prescribed by the Ministry of Corporate Affairs (MCA) and is subject to change.

7. How long does it take to strike off an OPC?

The process can take a few weeks to a few months, depending on the ROC’s processing time.

Other Considerations Specific to OPCs

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

The process is generally similar to striking off other companies, but the resolutions and affidavits are simpler due to the single director/shareholder structure. The sole member’s consent is crucial throughout the process.

9. What happens to the nominee director of an OPC when it is struck off?

The nominee director’s role ceases when the OPC is struck off.

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

The sole member is responsible for dealing with any assets and liabilities of the OPC, even after it is struck off.

11. What if the OPC has outstanding liabilities?

The sole member remains personally liable for the OPC’s debts, even after the company is struck off.

General Considerations for Strike Off

12. What are the implications for the director after the OPC is struck off?

The director’s powers cease, but they remain personally liable for the OPC’s debts incurred before the strike-off.

13. Can an OPC be revived after it is struck off?

Yes, an OPC can be revived by making an application to the National Company Law Tribunal (NCLT) within three years from the date of the strike-off order.

14. What happens to the bank accounts of an OPC after it is struck off?

The bank accounts are usually frozen. The sole member will need to address this with the bank after the OPC is struck off.

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