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<b>FAQs:</b> Why closing down can be tougher than starting up

The Stayzilla episode raises questions over the regulations around closure of a business

Photo: Shutterstock
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Photo: Shutterstock

Sudipto Dey
Which laws govern closing down a start-up business?

The applicable law will depend on the nature of the start-up. If incorporated as a company, it will be governed by the Companies Act, 2013. If set up as a limited liability partnership (LLP), it will be covered by the LLP Act, 2008. 

The definition of start-up provided by the Ministry of Commerce includes only a company and LLP, not a sole proprietorship firm. There are two primary reasons for shutting down a start-up. Either it has not been able to generate the business it hoped for and is not able to secure

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