Close Private Limited Company in Rs. 14,499

Company closure may cost you in lakh – MCA amended the Company strike off rules

By Agam Gupta

( 10.2K Views) June 21, 2019

If you have registered a company a long time ago and wish to close it down, then we have a piece of bad news for you! As per new amended rules, company closure is getting very costly. Let us understand the new company closure rules and also its impact.

Amended rules for Striking-off of Company

The Ministry of Corporate Affairs (MCA) has notified the (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2019 which are effective from 10^th May, 2019.

Here are the following amendments made by the government;

The Company closure filing fees have been doubled to Rs.10,000 from existing Rs.5,000/-.

All due filings of the company (balance sheet) shall be required to be filed before filing for company closure.

The amended looks pretty simple, but they have a far-reaching impact. Let us under the second amendment because the first one is pretty simple and clear.

Whether all pending filings need to be made to put Company in Closure?

Now, let’s suppose Mr. Ram incorporated a company in April, 2015, but due to some unforeseen circumstance, he could not start his business. Time passed by and Mr. Ram forgets to comply with any of the legal requirements. In June, 2019, Mr. Ram suddenly remembered his long incorporated company, and now he wish to close it down. So, let see the impact of second amendment on Mr. Ram and lets understand the pre and post-amendment scenario.

Before amendment

Before the above amendment, Mr. Ram could directly file the form STK with MCA by paying a fee of Rs.5,000/-. After verifying his form, ROC would strike off the company name. It was simple.

After amendment

Now, after amendment, Mr. Ram cannot file the form STK directly to close the company. Before that Mr. Ram needs to file all the pending forms like AOC-4 and MGT-7 for all pending financial year.

Let us understand the total calculation and late penalty fees required to be paid.

Particulars	Normal fees (Rs.)	Total Amount (Rs.)
For The Year 2016
Form AOC-4	300	300
Late penalty (upto 1^st July 2018)	12 times	3,600
Rs.100 per day from 1^st July 2018 up to current date i.e. 20 June (355 days)	100 per day	35,500
Total AOC-4 Fees for the year 2016		39,400
Form MGT-7	300	300
Late penalty (upto 1^st July 2018)	12 times	3,600
Rs.100 per day from 1^st July 2018 up to current date i.e. 20 June (355 days)	100 per day	35,500
Total Cost of MGT-7 for the year 2016		39,400
Total govt. fees and penalty cost for the year 2016		78,800
For The Year 2017
Form AOC-4	300	300
Late penalty (upto 1^st July 2018)	12 times	3,600
Rs.100 per day from 1^st July 2018 up to current date i.e. 20 June (355 days)	Rs.100 per day	35,500
Total AOC-4 Fees for the year 2016		39,400
Form MGT 7	300	300
Late penalty (upto 1^st July 2018)	12 times	3,600
Rs.100 per day from 1^st July 2018 up to current date i.e. 20 June (355 days)	Rs.100 per day	35,500
Total MGT-7 Fees for the year 2016		39,400
Total cost for the year 2017		78,800
For the Year 2018
Form AOC-4	300	300
Late penalty (upto 1^st July 2018)	NA	NA
Rs.100 per day from 30^th Sept 2018 up to current date i.e. 20 June (234 days)	Rs.100 per day	23,400
Total AOC-4 Fees for the year 2018		23,700
Form MGT-7	300	300
Late penalty (upto 1^st July 2018)	NA	NA
Rs.100 per day from 30^th Sept 2018 up to current date i.e. 20 June (234 days)	Rs.100 per day	23,400
Total MGT-7 Fees for the year 2018		23,700
Total cost for the year 2018		48,400
Grand total for all three years		2,06,000

Now, you can see the real effect of the amendment. The closure will cost this Rs. 2,06,000/- if the company’s pending filing is due for three years. Further, this cost will keep on moving up because there is no maximum limit for the penalty.

Additional cost on Company Closure

Further, apart from the above cost, a CA audit fees and other related expenses will also adds to this cost, then total closure may cost you around Rs.3 to 3.5 lakh in case it is due for three years.

Take – Urgent step

If you are having any company whose filing is due, then it is recommended to file it right now or bear the penalties because in any case, the penalties will keep on moving up.