Difference between MOA and AOA

Jun 11, 2025
Private Limited Company vs. Limited Liability Partnerships

When you’re starting a company in India, there’s plenty to get excited about — building your product, hiring your first team, and raising funding. But before any of that, you need to get the legal basics right.

Two documents form the backbone of your company’s legal identity: the Memorandum of Association (MOA) and the Articles of Association (AOA).

Together, they define both the company’s scope of operations and its internal governance structure. The MOA outlines the company's objectives and external boundaries. The AOA governs how the company will function internally, covering rules for management, decision-making, and shareholder rights.

In this blog, we’ll explain the distinct roles, key benefits, and structural differences between MOA and AOA so you can establish your company on the right legal footing and avoid common compliance pitfalls.

Table of Contents

Key Difference Between MOA and AOA

Here’s a simple comparison to clarify how the MOA and AOA differ:

Aspect Memorandum of Association (MOA) Articles of Association (AOA)
Purpose Defines the company’s external scope and objectives Governs internal management and operations
Legal Basis Required under Section 4 of the Companies Act Required under Section 5 of the Companies Act
Authority Determines the powers of the company Defines the powers of directors and members
Content Focus Name, purpose, liability, capital, location Rules on governance, meetings, shares and directors
Amendments Requires court and shareholder approval Can be altered more easily by shareholders
Applicability Governs the company’s interactions with third parties Governs internal relations within the company

What is a Memorandum of Association (MOA)?

The Memorandum of Association (MOA) acts as a company's legal charter. It defines your company's scope of operations and its relationship with the outside world. Think of it as the “birth certificate” of your business; without it, your company cannot legally exist.

Key points about the MOA:

  • It outlines the company's name, registered office, objectives, share capital, and liability.
  • It is a mandatory document required for incorporation under the Companies Act, 2013.
  • It must be signed by all initial shareholders (also known as subscribers) and filed with the Registrar of Companies (ROC).
  • The MOA becomes a public document, accessible via the Ministry of Corporate Affairs (MCA) portal.

In short, the MOA defines what your company is legally allowed to do.

Here is a complete guide on MOA with templates. 

Benefits of MOA

A well-drafted MOA benefits a company in several ways:

  • Establishes Legal Identity: It acts as the legal document that brings the company into existence.
  • Defines Scope of Business: It sets clear boundaries for what the company can and cannot do.
  • Protects Shareholder Rights: Investors can see the company’s stated objectives before deciding to invest.
  • Builds Credibility: A publicly available MOA adds transparency and helps build trust with stakeholders.
  • Ensures Regulatory Compliance: It ensures the company remains within the ambit of applicable laws and regulations.

Main Clauses of MOA

The MOA typically contains the following six main clauses:

  1. Name Clause: States the legal name of the company.
  2. Registered Office Clause: Specifies the location of the company's registered office.
  3. Object Clause: Defines the company’s business objectives (main and ancillary).
  4. Liability Clause: Clarifies whether shareholder liability is limited or unlimited.
  5. Capital Clause: Details the company’s share capital structure.
  6. Subscriber Clause: Lists the names of the initial shareholders and their shareholdings.

What are Articles of Association (AOA)?

The Articles of Association (AOA) outline the internal rules and governance structure of the company. While the MOA defines your company’s external identity, the AOA governs its internal workings.

Key points about the AOA:

  • It specifies how the company will be managed and run day-to-day.
  • It outlines the rights and responsibilities of shareholders and directors.
  • It is customised for each company and signed by the initial shareholders.
  • It is submitted along with the MOA to the ROC during incorporation.
  • The AOA is legally binding on both the company and its members.

In simple terms, the AOA serves as the “rulebook” for how your company will operate.

Read More: Articles of Association Template - INC 34 Form Download

Benefits of AOA

A good AOA brings several operational advantages:

  • Establishes Governance Rules: It provides a clear framework for managing internal operations.
  • Defines Director Roles: It outlines powers, duties, appointment, and removal of directors.
  • Facilitates Decision-Making: It guides how decisions are made at the Board and shareholder levels.
  • Prevents Internal Conflicts: It sets clear expectations around rights and responsibilities, helping to resolve disputes.
  • Supports Operational Efficiency: By providing detailed procedures for meetings, share transfers, and other processes.

Contents of an AOA

A typical AOA contains the following key components:

  • Meeting Procedures: Guidelines for conducting Board and shareholder meetings.
  • Share-Related Rules: Terms for share issuance, transfer, conversion, and forfeiture.
  • Director Responsibilities: Appointment, removal, powers, duties, and compensation of directors.
  • Audit and Accounts: Procedures for maintaining accounts and conducting audits.
  • Conflict Resolution: Rules for resolving disputes among members or between members and the company.
  • Winding Up: Processes to be followed if the company is dissolved.

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Conclusion

Both the Memorandum of Association (MOA) and Articles of Association (AOA) are essential legal documents for every company in India. While the MOA defines the company's legal identity and permitted scope, the AOA lays down the internal rules for managing the company.

So take the time to draft them carefully (with professional advice!) and align them with your vision for the company. A strong MOA and AOA will give you the legal clarity and operational confidence to scale your business smoothly.

Frequently Asked Questions

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Private Limited Company
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  • Service-based businesses
  • Businesses looking to issue shares
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Limited Liability Partnership
(LLP)

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  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

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  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What are the key differences between MOA and AOA?

The Memorandum of Association (MOA) defines a company's external scope — its identity, objectives, and powers.
The Articles of Association (AOA) govern the company’s internal operations — the rules for directors, shareholders, meetings, and day-to-day management.

Which is more powerful, MOA or AOA?

The MOA has more legal authority because it defines the very purpose and scope of the company. A company cannot act beyond its MOA — such acts would be considered ultra vires (beyond its powers) and are invalid.

The AOA operates within the framework of the MOA and cannot override it. So while both are essential, the MOA holds more legal weight in defining what the company is permitted to do.

How to alter/update MOA and AOA?

Both the MOA and AOA can be altered, but the process requires shareholder approval and compliance with the Companies Act, 2013.

To alter MOA:

  1. Pass a special resolution at a shareholders' meeting.
  2. File Form MGT-14 with the Registrar of Companies (ROC).
  3. In some cases (e.g., change in name, registered office state), approval from the Central Government or ROC is also required.

To alter AOA:

  1. Pass a special resolution at a shareholders' meeting.
  2. File Form MGT-14 with the ROC.
  3. The altered AOA must comply with the Companies Act and cannot conflict with the MOA.

How to find the MOA of a company?

You can access the MOA of any registered company in India via the Ministry of Corporate Affairs (MCA) portal:

  1. Visit www.mca.gov.in
  2. Use the "View Public Documents" service.
  3. Search for the company using its CIN (Corporate Identification Number) or name.
  4. Download the MOA (and AOA) if available- a small government fee may apply.

How to get the MOA of a Private Limited Company?

The process is the same as above, even for Private Limited Companies:

  1. Go to the MCA portal and use the "View Public Documents" feature.
  2. Enter the company's details (name or CIN).
  3. View/download the available filings, including the MOA and AOA.

Alternatively, if you are a director or shareholder of the private company, you can also request a copy of the MOA directly from the company’s registered office as per your rights under the Companies Act.

Related Posts

Filing LLP Form 24: How to Close Your LLP in India

Filing LLP Form 24: How to Close Your LLP in India

A Limited Liability Partnership (LLP) combines the benefits of a partnership and a company, making it an attractive choice for entrepreneurs. It offers key advantages such as:

  • Separate Legal Entity: An LLP has its own legal identity, distinct from its partners.
  • Limited Liability: The liability of partners is limited to their agreed contribution.
  • Tax Benefits: LLPs enjoy certain tax advantages compared to companies.

Despite these benefits, there may come a time when an LLP needs to be closed. This blog explains the step-by-step process of LLP closure.

Table of Contents

Closure of LLP - Overview

The Limited Liability Partnership (LLP) closure process is a significant decision that can arise from various circumstances. Whether driven by voluntary factors, such as a mutual decision by the partners to discontinue operations, or involuntary factors, like non-compliance with statutory requirements, understanding the reasons and methods of closure is crucial.

The decision to close an LLP often stems from the following reasons:

  1. Voluntary Closure:
    Partners may mutually agree to cease operations due to business inactivity, an unprofitable venture, or a strategic shift in focus. This proactive decision is usually taken when all stakeholders conclude that continuing operations no longer align with their goals.
  2. Involuntary Closure:
    Sometimes, an LLP faces closure due to external circumstances such as non-compliance with legal or regulatory obligations, accumulation of penalties, or other statutory violations. In such cases, authorities may initiate the process of striking off the LLP from the official records.

Method or Procedure of Closing an LLP

Closing a Limited Liability Partnership (LLP) in India can be carried out through two primary methods: Voluntary Winding Up and Striking Off. Each method has its unique set of requirements, advantages, and limitations. Choosing the right approach depends on the LLP’s operational and financial status. Let’s look into the details of these two LLP closing procedures:

1. Voluntary Winding Up

Voluntary winding up is a process initiated by the partners when they collectively decide to dissolve the LLP. This method is typically chosen when the partners agree to cease operations due to inactivity, unprofitability, or a strategic decision to exit.

Advantages of Voluntary Winding Up:

  • Controlled and Planned Process
  • Avoids Penalties for Non-Compliance

Disadvantages of Voluntary Winding Up:

  • Time-Consuming
  • Settlement of Liabilities Required

2. Striking Off

Striking off is a simpler and faster method for closing an LLP. It is suitable for LLPs that have been inactive for a significant period and have no outstanding liabilities. This process involves applying to the RoC to remove the LLP’s name from the register.

Advantages of Striking Off:

  • Simplified and Less Expensive
  • Suitable for Dormant LLPs

Disadvantages of Striking Off:

  • Not Applicable for LLPs with Liabilities
  • Limited Scope for Active LLPs

Step-by-Step Procedure to Close an LLP

A brief overview of the process for closure of LLP in India:

1. Passing a Resolution for Winding Up

The first step is for the partners to pass a resolution for voluntary winding up. A majority of partners must agree, and the resolution must be filed with the ROC within 30 days.

2. Appointing a Liquidator

The partners must appoint a liquidator to oversee the winding-up process. The liquidator’s role includes realising the LLP’s assets and settling its liabilities.

3. Realising Assets and Paying Off Liabilities

The liquidator identifies and sells the LLP’s assets to clear all outstanding liabilities. Surplus funds, if any, are distributed among the partners.

4. Filing the Necessary Forms with the ROC

The LLP must file forms such as Form 24 and other requisite filings with the ROC to notify the authorities about the closure.

5. Obtaining the Final Order of Dissolution

After reviewing all filings and confirming the settlement of liabilities, the ROC issues a final order of dissolution, formally closing the LLP.

Filing LLP Form 24: Step-by-Step Process

Closing a Limited Liability Partnership (LLP) in India requires filing LLP Form 24 with the Ministry of Corporate Affairs (MCA). Below is a simplified step-by-step process to help you navigate this procedure:

1. Cease Business Operations

Before applying for closure, ensure that the LLP has either never commenced business or has stopped all commercial activities. If your LLP is still active, suspend all operations before proceeding.

2. Settle Liabilities and Close Bank Accounts

LLP Form 24 can only be filed if the LLP has no outstanding creditors and all bank accounts are closed. Obtain a closure letter from the bank as proof.

3. Draft Partner Affidavits

All designated partners must prepare an affidavit declaring:

  • The LLP has ceased operations from a specific date or never started.
  • The LLP has no liabilities, and partners agree to indemnify any future claims.

4. Prepare Supporting Documents

Attach the following documents to LLP Form 24:

  • Copy of the latest Income Tax Return (if filed). If no returns were filed, this is not required for non-operational LLPs.
  • A statement of accounts showing nil assets and liabilities, certified by a Chartered Accountant, dated no more than 30 days before filing.

5. Resolve Pending Filings

Ensure that:

  • The LLP Agreement is filed, if not already done.
  • Any overdue Form 8 and Form 11 are submitted up to the date of cessation of business.

6. File LLP Form 24 with MCA

Submit the completed LLP Form 24 with all attachments to the MCA. Once reviewed, a notice of striking off will be published on the MCA website if no objections are raised.

Documents Required to Close the LLP

Here is a list of LLP closure documents required during the process:

  • Board Resolution for Winding Up: Document signed by all partners approving the winding-up process.
  • Liquidator’s Consent: Written consent from the appointed liquidator.
  • No-Objection Certificate from Creditors: If applicable, creditors must provide a no-objection certificate.
  • Final Accounts and Balance Sheet: Statement of accounts showing all liabilities cleared.
  • Tax Clearance Certificates: Certificate from the tax authorities confirming no pending dues.

 Conditions for LLP Closure

Certain conditions must be met before initiating the LLP closure process:

  • Settlement of Debts and Liabilities: All outstanding debts and liabilities must be cleared.
  • Statutory Filings: All statutory filings and compliance requirements must be up-to-date.
  • Approvals: Necessary approvals from all partners and creditors (if applicable) must be obtained.

Advantages and Disadvantages of LLP

Like any business entity, an LLP has its own advantages and disadvantages that should be carefully considered before choosing this structure.

Advantages of an LLP

  1. Limited Liability: The liability of partners is limited to their agreed contribution to the business, protecting personal assets in case of business debts or losses.
  2. Separate Legal Entity: An LLP is a separate legal entity from its partners, meaning it can own assets, enter into contracts, and sue or be sued independently.
  3. Flexibility in Management: There is no strict separation between ownership and management, allowing partners to manage the business as per their agreement.
  4. No Minimum Capital Requirement: Unlike private limited companies, LLPs do not have a minimum capital requirement, making them more accessible to small businesses and startups.
  5. Ease of Compliance: LLPs have fewer compliance requirements compared to companies, such as no mandatory board meetings or annual general meetings.
  6. Unlimited Number of Partners: An LLP can have any number of partners, offering greater flexibility in expanding ownership.
  7. Low Registration Cost: Setting up an LLP is more affordable than incorporating a private limited company.

Disadvantages of an LLP

  1. Limited Recognition: LLPs are not as widely recognised as private limited companies, which may affect investor confidence or business collaborations.
  2. Restrictions on Fundraising: LLPs cannot raise funds through equity, making them less suitable for businesses looking to attract venture capital or private equity investment.
  3. Limited Scope for Public Trust: LLPs are not listed on stock exchanges, so they may lack the transparency that comes with publicly traded companies, leading to lower public trust.
  4. Difficulty in Expansion: LLPs are not ideal for businesses aiming for rapid scalability, as the inability to issue shares limits their access to growth capital.

An LLP is an excellent choice for small businesses, professionals, and startups looking for a flexible, cost-effective business structure with limited liability. However, it may not be suitable for companies that require significant funding or aspire to scale rapidly. 

Frequently Asked Questions

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

How do I close my LLP account?

To close your LLP account, follow these steps:

  1. Settle liabilities
  2. Pass a resolution
  3. File necessary documents
  4. Notify creditors & obtain consent (if any)
  5. Get Registrar’s approval

What is the process of leaving an LLP?

If an individual partner wants to leave an LLP, the process is as follows:

  1. Review the LLP Agreement
  2. Notify Other Partners
  3. Execute a Deed of Retirement
  4. File Form 3 and Form 4
  5. Update Bank and Other Records

Can an LLP be restored after its winding up?

Yes, an LLP can be restored after it has been struck off, but only under specific circumstances. The process is:

  1. Apply to the National Company Law Tribunal (NCLT) for restoration within three years of the LLP being struck off.
  2. Provide valid reasons for seeking restoration, such as business resumption or wrongful closure.
  3. Ensure all pending annual returns, financial statements, and fees are filed with the RoC.
  4. If the tribunal is satisfied, it will issue an order to restore the LLP. The RoC will then update its records accordingly.

What complications of non-compliance you may need to face during the LLP winding-up process?

Non-compliance can lead to several challenges when winding up an LLP:

  1. Heavy penalties
  2. Legal issues
  3. Delay in the winding-up process
  4. Blacklisting & disqualification

How long does an LLP winding-up process take?

The duration of the winding-up process depends on the method and circumstances:

  • Voluntary Winding Up typically takes 4 to 6 months, depending on the completion of filings, approvals, and liability settlements.

Striking Off can be completed within 3 to 4 months if the LLP has no liabilities or pending compliance issues.

Nipun Jain

Nipun Jain is a seasoned startup leader with 13+ years of experience across zero-to-one journeys, leading enterprise sales, partnerships, and strategy at high-growth startups. He currently heads Razorpay Rize, where he's building India's most loved startup enablement program and launched Rize Incorporation to simplify company registration for founders.

Previously, he founded Natty Niños and scaled it before exiting in 2021, then led enterprise growth at Pickrr Technologies, contributing to its $200M acquisition by Shiprocket. A builder at heart, Nipun loves numbers, stories and simplifying complex processes.

Read more
Promoting Innovations in Individuals, Startups and MSMEs (PRISM)

Promoting Innovations in Individuals, Startups and MSMEs (PRISM)

Promoting Innovations in Individuals, Startups, and MSMEs (PRISM) is a program that offers grants, technical support, and mentorship to individual innovators, including students, guiding them through each stage of incubating their ideas into new enterprises.

Description Who is it for? Benefits
To provide grants, technical advice, and mentorship to individual innovators, guiding them through the various stages of incubating their ideas until they transform into viable enterprises For Innovators in the technology area Upto INR 2,00,000 or 90% of the approved project cost for prototype or model development
The essentials of US Incorporations - documents, eligibility and process.

This grant-aid support is implemented in phases:

  • Phase-1
    Category 1: For Proof of concept/prototype/models
    Category 2: For fabrication of working model/ process know-how/testing & trail/ patenting/ technology transfer, etc.
  • Phase-2
    For scaling up technology-based innovations, including patenting/design registration/trademark registry/ technology transfer to develop a marketable product/process towards enterprise creation.

Table of Contents

Eligibility

  • For PRISM Phase-1:
    Any Indian citizen, including student innovators, can avail support to develop their novel ideas into demonstrable models/prototypes.
  • For PRISM Phase-2:
    PRISM innovators who have demonstrated success or innovators who have proven their concepts with assistance from other government institutions or agencies.

Eligible Sectors for the Scheme

The proposals are encouraged to focus on sectors such as

  • Green Technology
  • Clean Energy
  • Industrial Smart Materials
  • Waste to Wealth
  • Affordable Healthcare
  • Water & Sewage Management
  • Other technology or knowledge-intensive areas.

Application procedure for Startups

  • Submit your project proposal following the prescribed format to the nearest TePP Outreach cum Cluster Innovation Centres (TOCICs). Here’s a list of TOCICs in India.
  • Once received, TOCIC coordinators will review proposals for completeness and forward them further.
  • Domain Knowledge Experts associated with TOCIC will then assess the proposals.
  • Evaluated proposals are forwarded to DSIR for further action and reviewed by the PRISM Advisory and Screening Committee (PASC) for recommendation.
  • Upon Department approval, "Terms & Conditions" must be signed before grants-in-aid release.
  • Initial fund release is based on project milestones and PASC recommendations. Subsequent releases depend on project progress evaluated by the Project Review Committee (PRC).
  • TOCIC and network partners, along with technical experts, will monitor approved projects.
  • TOCIC will provide project status reports to DSIR every 3 months, while PRCs will review project progress at least once every 9 months.
  • Upon successful project completion, the DSIR will accept the project completion report based on PRC recommendation.

Benefits of the PRISM Scheme

The PRISM Scheme includes various phases designed to support innovators in different stages of their project development. Each phase may involve different levels of support, resources, and guidance tailored to the specific needs of innovators.

  • For Phase-1:
    Category 1: Maximum support within this category is capped at INR 2,00,000 or 90% of the approved project cost, whichever is less.
    Category 2: Maximum support is limited to 20.00 lakh or 90% of the total project cost, whichever is lower.
  • For Phase-2:
    For projects with costs ranging from INR 5 Lakhs to INR 35 Lakhs, maximum support of either INR 20 Lakhs or 90% of the total project cost (whichever is lower) is provided.

Please note: If the project beneficiaries abandon the project, innovators must reimburse the funding disbursed, along with a 12% interest rate, to the DSIR.

Frequently Asked Questions

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Register your Business starting at just 1,499 + Govt. Fee

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Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What is the objective of the PRISM Scheme?

The PRISM Scheme aims to encourage innovation, research, and development activities among individuals, startups, and MSMEs by providing financial support and fostering a conducive ecosystem for growth and experimentation.

Can individuals or only organizations apply for the PRISM Scheme?

Both individuals and organizations, including startups and MSMEs, are eligible to apply for the PRISM Scheme as long as they meet the eligibility criteria outlined by the scheme.

Are there any specific criteria for project selection under the PRISM Scheme?

Projects are selected based on criteria such as innovation quotient, technical feasibility, market potential, scalability, and socio-economic impact.

Do projects funded under the PRISM Scheme get evaluated later?

Projects funded under the PRISM Scheme are subject to regular monitoring and evaluation to ensure compliance with project milestones, utilization of funds, and achievement of desired outcomes.

Form STK-2 for Winding Up of Companies: Procedure, Fees & Documents

Form STK-2 for Winding Up of Companies: Procedure, Fees & Documents

The Ministry of Corporate Affairs (MCA) has simplified the process of closing down non-operational companies by introducing Form STK-2. This form is filed for striking off or winding up a company by removing its name from the register of companies maintained by the Registrar of Companies (ROC).

Available for filing on the MCA portal, Form STK-2 is one of the most commonly used methods of company closure, especially for startups or businesses that are no longer in operation and wish to avoid ongoing compliance costs.

In this blog, we will cover everything you need to know about Form STK-2, including its purpose, eligibility, required documents, filing process, and key consequences.

Table of Contents

What is Form STK-2, and When is it Used?

Form STK-2 is prescribed under Section 248(2) of the Companies Act, 2013, allowing a company to apply for voluntary strike-off. It is used by companies that are:

  • Not carrying on any business for the last two consecutive financial years, or
  • Have not sought the status of a dormant company, and
  • Do not have any outstanding liabilities.

For example, consider a startup that launched operations but never scaled up. Instead of continuing to maintain compliance (like audits, annual filings, and tax submissions) with no business activity, the founders can choose to file Form STK-2 and officially close the company.

What are the Benefits of Filing STK-2?

Filing Form STK-2 provides several benefits:

  • Quick and cost-effective closure compared to liquidation.
  • Savings on audits and compliance costs that continue even if the company has no operations.
  • Faster process – usually completed within a few months.
  • Protection of directors and shareholders from future penalties or liabilities.

This makes STK-2 a practical option for small companies and startups that wish to wind up smoothly.

What are the Eligibility Criteria to File STK-2?

Not every company is eligible to file STK-2. The key criteria are:

  • Applicable to Private Limited Companies, One Person Companies (OPC), and Unlisted Public Companies.
  • The company should have no pending liabilities and must clear all dues before applying.
  • The business must not have carried on any activity for at least two consecutive years.
  • Board and special resolutions (approved by at least 75% of shareholders) are mandatory.

Companies that are listed, under inspection, or involved in ongoing litigation are not eligible for strike-off.

What Documents Are Required for STK-2?

The following documents must be attached while filing STK-2:

  • Board resolution and special resolution approving strike-off.
  • Affidavit by directors (Form STK-4) declaring no pending liabilities.
  • Indemnity bond by directors (Form STK-3), ensuring liability coverage.
  • The company's latest audited financial statements.
  • Directors’ PAN, Aadhaar, and digital signatures (DSC).
  • Incorporation documents like Certificate of Incorporation, MoA, and AoA.

How to File the STK-2 Form? Step-by-Step Guide

Here’s a step-by-step guide to filing Form STK-2:

  1. Board Approval: Conduct a board meeting and pass a resolution for closure.
  2. Shareholder Consent: Obtain a special resolution with 75% shareholder approval.
  3. Clear Liabilities: Pay off loans, creditors, and statutory dues.
  4. Prepare Documents: Collect Forms STK-2, STK-3, STK-4, audited accounts, MoA, AoA, and ID proofs.
  5. Online Filing: File Form STK-2 on the MCA portal along with attachments.
  6. Pay Government Fee: ₹10,000 is payable at the time of filing.
  7. ROC Review: The Registrar verifies documents and issues a public notice.
  8. Strike-Off Approval: Once satisfied, the ROC strikes the company name from the register.

Voluntarily Removing Company Name using Form STK-2

Companies can voluntarily apply for strike-off by:

  • Clearing all debts and liabilities.
  • Passing a special resolution with the approval of at least 75% members.
  • Seeking NOC/approval from regulatory bodies (if the company is under their regulation).

Effect of Removing Name from Register of Companies

Once the company’s name is removed under Section 248:

  • The company is dissolved and ceases to exist legally.
  • The Certificate of Incorporation is cancelled.
  • The company cannot carry on any business operations.

However, directors, managers, and shareholders remain liable for any past dues, fraud, or pending obligations as if the company had not been dissolved.

Closing of Company by Filing Form STK-2

The closure process through STK-2 involves:

  • ROC verification of pending liabilities.
  • Publication of a public notice inviting objections.
  • Striking off the company’s name from the register.
  • Publishing the strike-off notification in the Official Gazette.

Once published, the company is considered officially dissolved.

What are the Consequences of Not Filing STK-2?

Failing to close an inactive company can lead to several consequences:

  • Director disqualification under the Companies Act.
  • Heavy penalties and fines for non-filing of annual returns and financial statements.
  • Government-initiated strike-off without the company’s consent.
  • Restrictions on starting new companies for disqualified directors.
  • Continued obligations for tax filings and ROC compliance despite no business activity.

What Challenges Can You Face While Filing STK-2?

Some common challenges include:

  • Delays in obtaining tax or GST clearance.
  • Errors in affidavits or indemnity bonds.
  • Issues with expired DSCs of directors.
  • Non-cooperation from shareholders or directors.
  • ROC objections due to mismatched or incomplete details.

What is the Cost Involved in STK-2?

The cost of filing Form STK-2 includes:

  • Government fee
  • Professional charges
  • Notary and affidavit charges
  • DSC renewal costs, if applicable
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Sarthak Goyal

Sarthak Goyal is a Chartered Accountant with 10+ years of experience in business process consulting, internal audits, risk management, and Virtual CFO services. He cleared his CA at 21, began his career in a PSU, and went on to establish a successful ₹8 Cr+ e-commerce venture.

He has since advised ₹200–1000 Cr+ companies on streamlining operations, setting up audit frameworks, and financial monitoring. A community builder for finance professionals and an amateur writer, Sarthak blends deep finance expertise with an entrepreneurial spirit and a passion for continuous learning.

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