Pending Annual Returns Before Closing Your Company

Last updated 22 May 2026

Why the ROC insists on a clean compliance record

The STK-2 application for voluntary strike off under Section 248(2) of the Companies Act 2013 is processed through the MCA21 portal. When an application is submitted, the system runs an automated check against the company's filing history. If any annual return (AOC-4 for financial statements or MGT-7 for the annual return proper) is outstanding for any financial year, the application is flagged and returned with a deficiency notice. The Registrar of Companies does not manually review such applications — the rejection is system-driven.

This requirement is not arbitrary. The strike off process is designed for companies that have genuinely ceased operations and have no pending obligations. A company with unfiled returns may have unreported assets, undisclosed liabilities, or pending tax obligations. The ROC's position is that the public record must be complete before a company is removed from the register.

Which returns must be filed before STK-2

Two MCA filings are checked during the STK-2 validation: AOC-4 (filing of financial statements, including the balance sheet and profit and loss account) and MGT-7 / MGT-7A (the annual return). Both must be filed for every financial year from the year of incorporation up to the year in which the company ceased to have any transactions or assets — often called the last active year.

For companies that have never commenced operations, even a nil balance sheet must be filed. "We had no activity" is not accepted as a reason to skip filing. The Ministry of Corporate Affairs has taken a consistent position that dormant companies must either file annual returns or obtain dormant company status under Section 455 before they can be closed.

Income tax returns (ITR-6) are a separate requirement. While the MCA21 system does not directly check income tax compliance, the STK-2 application itself requires a declaration that income tax dues have been paid and returns have been filed. A false declaration creates personal liability for the directors.

Penalties for late filing — and why they add up fast

Since the Companies (Amendment) Act 2019 removed the concept of an upper cap on late filing fees for certain forms, the penalty for late filing of AOC-4 and MGT-7 is Rs 100 per day per form, with no maximum limit. A company that is 3 years overdue on both forms faces a penalty running into several lakhs of rupees before professional fees are even considered.

For example: a company incorporated in April 2021 that has not filed AOC-4 or MGT-7 for FY 2021-22, 2022-23, and 2023-24 would owe penalties from the due date of each form. AOC-4 for a private limited company is due 30 days after the AGM; MGT-7 is due 60 days after the AGM. With an AGM deemed to have been held within 6 months of the financial year end, the clock starts around October/November each year. Three years of non-filing on two forms can easily produce a penalty of Rs 2–4 lakh or more by the time the company applies for closure.

The Companies Fresh Start Scheme (CFSS) — past relief and current position

The MCA has periodically offered relief through schemes like the Companies Fresh Start Scheme (CFSS 2020) and the LLP Settlement Scheme, which allowed companies and LLPs to file overdue returns with significantly reduced additional fees during a limited window. CFSS 2020, for instance, waived all additional fees and provided immunity from prosecution for overdue filings made between April and September 2020.

As of 2026, no active CFSS or similar condonation scheme is in operation. Companies must file at the standard penalty rate of Rs 100 per day per form. However, the MCA has historically introduced such schemes periodically — particularly following periods of economic disruption — so it is worth checking the MCA website or consulting a CA to see if any relief window is currently active before paying the full penalty.

Director disqualification under Section 164(2) — a separate but related risk

Section 164(2) of the Companies Act 2013 provides that a director who has been on the board of a company that has not filed annual returns or financial statements for three consecutive financial years is disqualified from being appointed or continuing as a director of any company for five years from the date of disqualification. The ROC publishes disqualified director lists periodically.

This means that a director of a company with three or more years of overdue filings may already be disqualified — and a disqualified director cannot sign the STK-2 application or the accompanying affidavit. In such cases, the company must first get its filings in order (which the director can still do, since the filing act itself is permitted), and then determine whether any remaining director is qualified to sign the STK-2 documents.

How to check your compliance status before starting the closure process

The fastest way to check your filing status is through the MCA21 portal. Log in to the company's registered email on the MCA portal, go to the company's master data, and review the filing history. Outstanding forms will show as pending or overdue. Alternatively, your CA can pull a compliance status report from the MCA21 system. This check should be the first step in any closure process — it determines the actual cost and timeline before you commit to proceeding.

Practical steps to clear overdue ROC filings before closure

Once you have a list of overdue forms, the process is straightforward but must be done in the correct order. First, prepare financial statements for each overdue year — even if the balance sheet is nil, an auditor must certify it. Second, hold (or pass a circular resolution as a substitute for) the Annual General Meeting for each year, approving the accounts. Third, file AOC-4 and MGT-7 for each year in chronological order, paying the applicable additional fee each time. The MCA21 system calculates the fee automatically based on the date of filing.

After all filings are complete and fees are paid, wait for the MCA21 system to update the company's compliance status. This typically takes 24–48 hours after successful filing. Only then should you proceed with the STK-2 application. Filing STK-2 before the compliance status refreshes can still result in a rejection even if the filings were completed the previous day.

This article is for general information only. For your specific situation, consult a practicing CA.