CLOSURE OF NIDHI COMPANY

Closing of Nidhi Company can be executing due to multiple reasons arising from external to internal causes. Closing of Nidhi Company states that the company would not be functional anymore. It is mandatory to follow the proper compliance and procedure defined for closing Nidhi Company.

The process of closing of Nidhi Company is known as Strike Off or Company Closure. Closing of Nidhi Company is executed under newly notified rules, 2016 these rules are governed by section 248 of Companies Act, 2013.

It is legally recommended that if no business activity is being carried and the compliances are not being performed by the Nidhi Company then it is better to close the Nidhi Company.

Below are some mandatory documents required for closing the Nidhi Company:

1. Indemnity Bond duly notarized by Directors in STK 3 Form

2. Latest Statement of Accounts of the company

3. Statement of Accounts contains details of assets & liabilities of the nidhi company Audited by Chartered Accountant

4. Affidavit by every company in STK 4 Form

5. Special Resolution with the consent of 75% Members

6. Pan card of the company

7. Certificate of Bank Account Closure

Below mentioned are few advantages for closing down a non-operating Nidhi Company:

1. Once a Nidhi Company has filed the application for closing its business, then the company needs not to keep track over its compliances.

2. After the closing process is preceded, company should don’t have to worried about the penalty fee for undressed causes.

3. After submitting the company closure application, there is no requirement for keeping and maintaining the company’s documents.

4. Once the company gets closed, it saves the cost of yearly compliance filing.

5. After Nidhi Company Registration, company has to mandatorily file certain compliances. In this case, if company fails in filing the annual documents and returns to registrar of companies, company along with its director are held liable for non-compliance. However, once the company is under the winding process, annual filing is not necessary until and unless specify by the registrar of companies.

• DEFUNCT COMPANY

  A defunct company is a company who has no asset and no liability and failed to commence its business within one year of incorporation. The Ministry of Corporate Affairs has introduced strike-off mode to allow the defunct companies to get their names removed from the register of Register of Companies. Section 560, of the Companies Act, 1956, deals with strike off provisions of a defunct company. Any defunct company desiring to strike off its name from the register of Registrar of company can apply for strike off its name from the register maintained by Registrar of company as per Guidelines issued vide General Circular No. 36/2011 dated 7.6.2011. Similarly, ROC also has the power to strike off any defunct company after satisfying to have reasonable cause. But before passing any order in regards to strike off, an opportunity of being heard will be provided to the defunct company as per the procedure u/s 560.

• VOLUNTARY WINDING UP

  The following steps of winding up which are summarized below (except Voluntary winding up):

  1. Issuing a written demand for debt payments to the proposed company

  2. Submit a winding up petition to the court and the company

  3. Court hearing for the petition

  4. Issuing of winding up order by the court

  5. Meeting of creditors and other relevant parties

  6. Appointment of a liquidator

  7. Comprehension and distribution of company’s assets to the creditors

  8. Realize of duties for liquidator

  9. Dissolution of the company

• OVERVIEW OF WINDING UP OF NIDHI COMPANY

  Voluntary winding up which may be:

  1. Member’s Voluntary winding up

  2. Creditor’s Voluntary winding up

  In case of voluntary winding up, the whole process is done without court supervision. When the winding up is complete, the relevant documents are filed before the court for getting the order of dissolution. A Voluntary winding up can be proceeding by members or creditors. The conditions in which company may be wound up voluntarily are:

  1. When the fixed period for the duration of the company in its articles has expired

  2. When an event on the occurrence of which the company is to be dissolved as per its articles happen.

  3. The company resolves by special resolution at the general meeting to be voluntary winding up.

• SELLING OF NIDHI COMPANY

  The other way to close the Nidhi Company is selling it off to any interested buyers. The process is similar to Voluntary Closure; however, it includes the rights of control and the ownership of the present members of the company is offered to the new interested buyers. All the properties and legal documents of the company will be transferred to the person who is buying the Nidhi Company.

Passing a resolution with consent of the at least 75% consent of the shareholders and members of the company, also company need to authorized any director to take care of all the responsibility regarding the company closure process.

Also take consent of the creditors of the company, for voluntary winding up of the company

The notice of this board resolution is to be submitted to the related registrar of companies within the 10 days of its approval from the creditors. A declaration is also needed to be submitted which contain the information that the nidhi company has no debts, or if there are some debts, these will be paid off through sales of its assets within one year.

Filing the application for striking off the company in Form STK-2 with the concerned registrar of companies, along with the attachment of Board Resolution in favor of winding up, in case, STK-2 Form can be file in the case when the nidhi company has been inactive for one year after its incorporation, within the 30 days from the date of signing the statement of assets and liabilities of the closing company.

Lastly, if the registrar of companies is satisfied with the application and no objections were raised, then the registrar will declare the status of company as strike off.