PRIVATE LIMITED COMPANY
Private Limited Company is one of the most famous types of business structure in India. Most of the startups always start by registering themselves under private limited company as under this the directors have limited liability to creditors. That is even when the company faces huge losses, they are covered by companies assets.
However, at times when company doesn't do good in market or when it fails to reach the customer satisfaction the company reaches a point where they have to wind off. At times it becomes difficult for companies to catch up with the compliance's and they fail to form a stable company, thereby closing the private limited company or dissolving it. In any of the case if the company directors or owners decide that they should discontinue the business, then they should consider for ways of closure.
There are 2 ways for closure which are as follows:-
1) Winding up
Winding up is usually considered by private limited company directors or owners when they are currently operating in market but they are creating marginally less than estimated profit or when they are running in loss. Winding up a company is a time consuming process. This process requires approval from all directors, members and also creditors. Moreover, the company would also need to appoint a liquidator who would look after company’s affairs during the whole process of winding up.
2) Striking off
Striking off is usually considered by private limited company directors or owners when they have relatively no or less outside liabilities and are in complete loss or when they have no reserve or asset to bring into use. Striking-off is also known as fast-track exit. The primary condition for striking off is that the company has no assets or either any liability and has complied with all relevant provisions.
The most easy and feasible way for closure of a company is striking-off its name from the Companies Register. Striking-off of Private Limited Company is usually done when it is inoperative for a certain duration. As in striking off, the company's name is removed from the register, hence, it is not existing in the eyes of the law for proceedings.