Can a company with a pending income tax assessment apply for strike off?

No. A pending tax assessment, demand, or litigation is a material contingent liability. The ROC will not accept the STK-2 application if the company has unresolved tax proceedings. You need to either resolve the assessment or obtain a formal no-objection from the Income Tax Department before proceeding. In practice, this is the most common reason STK-2 applications are rejected or stalled.

Can founders be held personally liable for company debts during a wind-down?

In a normal private limited company structure, personal liability is limited. However, personal liability can arise if: a director has given a personal guarantee on a company loan; the director is found liable for fraudulent trading or wrongful trading under Sections 66 or 67 of the IBC; or statutory dues (PF, TDS) remain unpaid and the department pursues the director personally under the relevant statute.

What is the difference between dissolution and winding up?

Winding up refers to the process of realising assets, settling liabilities, and distributing surplus. Dissolution is the final legal act that ends the company's existence. Under voluntary liquidation, dissolution happens when the NCLT passes the dissolution order. Under strike off, dissolution happens when the ROC removes the company name from the register.

Does a startup need investor consent to opt for voluntary liquidation?

If there are preference shareholders (which most VC-backed startups have), they are creditors in the statutory waterfall and must be settled before equity. Beyond that, your SHA may have specific provisions requiring investor consent for any winding up or dissolution event. Check the protective provisions, liquidation preference clauses, and drag-along rights in your SHA before initiating the process.

How long does voluntary liquidation take under the IBC?

The IBBI regulations (as amended in 2022) require the liquidator to complete the process within 270 days of the liquidation commencement date. In practice, if assets are complex or there are creditor disputes, NCLT extensions are common and the process can stretch beyond that. Simple, asset-light companies with no creditor disputes can close within 6 to 9 months. Where the process is not concluded within 270 days, the liquidator must hold a meeting of contributories and submit a status report to IBBI explaining the delay.

What happens to company books and records after dissolution?

Under Section 128 of the Companies Act 2013, books of account must be preserved for 8 years from the date of the relevant financial year. Even after dissolution, directors or the liquidator should retain records for this period. In a voluntary liquidation, the liquidator is typically responsible for ensuring records are preserved and accessible.

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Home > Legal > Winding Up a Company in India: Strike Off and Liquidation Explained

Winding Up a Company in India: Strike Off and Liquidation Explained

Written By

Jitesh Agarwal

Published on

April 24,
2026

Last updated on

April 24, 2026
19:05

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https://dev.treelife.in/legal/winding-up-a-company-in-india-strike-off-and-liquidation-explained/

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Winding Up a Company in India: Strike Off and Liquidation Explained

Written By

Published on

April 24,
2026

Last updated on

April 24, 2026
19:05

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Startup

Investor

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Winding Up a Company in India: Strike Off and Liquidation Explained

Written By

Published on

April 24,2026

Last updated on

April 24, 202619:05

Share

Closing a company? Get the process right from day one.

Let's Talk

April 24,
2026

April 24, 2026
19:05