A company is called private limited when all its shares are in private hands. Pvt Ltd Company is owned by a group of promoters. Once in a while things does not work and companies fail to maintain compliance could result in fines and/or disqualification of the Directors from incorporating another Company. Therefore, if a private limited company has become inactive and there are no transactions in the company, then it is best to wind up the Company.
Winding up the affairs of a company either by its members or by its creditors, without any interference of court it is called voluntary winding up of a company. Section 484 of the Act, 1956 lays down the following circumstances under which a Company may wound up voluntarily:
1. By passing Ordinary Resolution: When the period fixed for the duration of the Company by its Article has expired or the event, if any, on the occurrence of which the Article provides that the Company is to be dissolve, the Company may wound up voluntarily by passing a Ordinary resolution in the General Meeting.
2. By passing Special Resolution: The members of the company may, at any time by passing a Special Resolution, wound up the affairs of the Company voluntarily. No reasons need to be given when majority of the members decided to wind up the Company.
Winding up of a company is much less costly compared to maintaining compliance for a dormant company.
Closing a company can be processed online. It takes only 5-6 days for closing a company.
In India closing a company is way easier than maintaining a company with no activities.
A company that doesn't file its compliance on time incurs fines and penalty including debarment of the Directors from starting another Company. Hence, it is better to officially wind up a company that is inactive and avoid potential fines or liabilities in the future.