Closing a company is not as simple as walking away and letting it go dormant. Until it is formally dissolved, a registered company keeps accruing annual filing duties and SECP fees, and its directors stay exposed. The good news: the Companies Act 2017 gives you clear, legal routes to wind up and exit cleanly. This guide walks through each one, when to use it, and what it costs.
The three legal routes to close a company
Section 293 of the Companies Act 2017 recognises winding up by the court, voluntary winding up and winding up under the court's supervision. Alongside these sits the registrar's power to strike off a defunct company. In practice, most owners choose between three realistic paths:
| Route | Best for | Cost & speed |
|---|---|---|
| Easy exit (striking off) | Defunct company, no assets, no liabilities, no disputes | Cheapest · fastest |
| Voluntary winding up | Company with assets, creditors or members to settle, no court dispute | Moderate · several months |
| Winding up by court | Insolvency, deadlock, fraud, or "just and equitable" grounds | Highest · slowest |
Picking the right route depends almost entirely on two questions: does the company still owe money, and is anyone in dispute? Get those answers straight before you file anything.
Easy exit: striking off the register
For a company that has simply stopped trading, the Companies (Easy Exit) Regulations 2014 - read with section 426 of the Act - are the quickest way out. A private or unlisted public company that has ceased to operate and has no known assets and liabilities may apply directly to the registrar to strike its name off the register, instead of filing a court petition. SECP now runs this through an online portal, which has streamlined the paperwork considerably.
Once the registrar is satisfied, a notice is published in the Official Gazette. If no cause is shown against it, the company is dissolved 90 days after that notice.
Not everyone qualifies. Easy exit is barred for foreign companies, subsidiaries of listed companies, trade organisations, companies with outstanding liabilities, and companies facing any pending investigation, inquiry or inspection. Clear these first or use a formal winding up.
Members' voluntary winding up (solvent company)
If the company holds assets but is solvent - able to pay its debts in full - the correct route is a members' voluntary winding up. It turns on one document: the declaration of solvency. Before the winding up resolution, the directors make a statutory declaration that, having enquired into the company's affairs, they believe it can pay its debts within a stated period.
The members then pass a special resolution (a three-quarters majority, on at least 21 days' notice) to wind up and to appoint a liquidator. The liquidator realises the assets, settles the creditors, and distributes any surplus to members in proportion to their shareholding before the company is finally dissolved.
Creditors' voluntary winding up (insolvent company)
Where the directors cannot honestly sign a declaration of solvency - the company cannot pay its debts - it becomes a creditors' voluntary winding up. The members still pass the special resolution, but the creditors are brought in to protect their interests.
A meeting of creditors is called on 21 days' notice (sent by post and advertised in the Official Gazette), held around the same time as the members' meeting. The creditors have a decisive say in appointing the liquidator, who then realises assets and pays creditors in the statutory order of priority. This route demands careful handling - getting the notices, timing and priorities wrong can expose directors personally.
Winding up by the court
Court (compulsory) winding up is the route of last resort, regulated under sections 293, 301 and related provisions. A company may be wound up by the court where it is insolvent, where there is fraud or deadlock, or on the broad "just and equitable" ground under section 301. It usually begins with a petition from a creditor, contributory or the SECP, and the process is court-driven from start to finish - the slowest and most expensive option, and rarely one you choose voluntarily.
The voluntary winding up process, step by step
For a solvent company taking the members' voluntary route, the sequence looks like this:
| # | Step | Typical timing |
|---|---|---|
| 1 | Directors sign the declaration of solvency; settle or provide for debts | Week 1-2 |
| 2 | Issue 21 days' notice for the general meeting with the draft special resolution | Week 2-3 |
| 3 | Pass the special resolution (3/4 majority) and appoint the liquidator | Week 5 |
| 4 | File the resolution and appointment with SECP; notify creditors | Week 5-6 |
| 5 | Liquidator realises assets, pays creditors, distributes surplus to members | Weeks 6-16 |
| 6 | Final meeting and accounts; registrar dissolves the company | Month 4-6 |
An easy exit is shorter - most straightforward striking-off cases run roughly three to five months once you factor in the mandatory 90-day Gazette window. You will typically need the board and members' resolutions, up-to-date annual returns and Form A / Form 29 filings, tax clearance from the FBR, and a statement that the company has no assets or liabilities. Our guide to drafting board resolutions covers the wording SECP expects.
What it costs and what to budget
Government fees for striking off and winding up are set in the Seventh Schedule to the Companies Act and are revised periodically, so treat the figures below as indicative planning ranges rather than fixed quotes:
| Cost item | Applies to | Notes |
|---|---|---|
| SECP filing / striking-off fee | All routes | Per Seventh Schedule; varies by route and authorised capital |
| Outstanding annual filing fees | Companies behind on returns | Must be cleared before dissolution |
| Liquidator's remuneration | Voluntary / court winding up | Not charged in a simple easy exit |
| Professional / legal fees | All routes | Depends on complexity and disputes |
| Gazette publication | Striking off & winding up | Statutory notice cost |
Because exact fees shift with each Finance Act and depend on your company's capital and filing history, the safest move is a quick review of your specific position. Our corporate formation and dissolution team can price your exit and confirm the right route before you spend a rupee on filings.
Frequently asked questions
Can I just stop filing and let the company lapse?
No. An inactive company keeps accruing annual fees under the Companies Act until it is formally struck off or wound up, and directors remain liable for defaults. Dissolve it properly.
Which route is cheapest?
Easy exit (striking off) is the cheapest and fastest, but only if the company is defunct with no assets, no liabilities and no pending action against it.
Do I need FBR tax clearance to close a company?
Yes, tax affairs must be settled. You will generally need the company's NTN status regularised and returns filed before SECP will complete dissolution.
What happens to company assets on winding up?
The liquidator sells the assets, pays creditors in the order of priority, and distributes any surplus to members in proportion to their shareholding.
How long does the whole process take?
Easy exit is roughly three to five months including the 90-day Gazette notice. A full voluntary winding up commonly takes four to six months or more.
Can an LLP or partnership be wound up the same way?
No. LLPs follow the LLP Act 2017 and partnerships the Partnership Act 1932 - the dissolution mechanics differ. Speak to us for the right procedure for your structure.