September 27, 2018

Detailed Procedure for Striking-off a Company under Companies Act 2013

Striking off implies removal of name of company by ROC from register of companies. Section 248 to 252 of companies Act, 2013 contains provisions for Striking defunct companies off from the register, which is an alternative to winding up of a Company.

Applicable Rule: Companies (Removal of Names of Companies from Register of Companies) Rules, 2016

Contents:

1. Modes of Strike Off

2. Grounds of Strike Off

3. Strike off by ROC under Section 248(1) of the Companies Act 2013

4. Strike off by Company on its own under Section 248(2) of the Companies Act 2013

          (i).   Holding of Board Meeting

          (ii).   Extinguishment of all the Liabilities

(iii).   Holding of General Meeting

          (iv).   Approval of Concern Authorities

          (v).   Application to ROC

5.  Restrictions on making application for strike off [Section 249(1)]

6.  Categories of Companies which cannot be Strike off: [Proviso of Rule 3(1)]

1.  Modes of Strike Off:

As per the Companies Act, 2013 there are two modes of strike off as below:

·    By ROC under section 248(1) of the Companies Act 2013

·    By Company on its own under section 248(2) of the Companies Act 2013.


2. Grounds of Strike Off:

 ROC may remove the name of a company from Register of Companies on following grounds:

·    A company has failed to commence its business within one year of incorporation;

·    The company is not carrying out any business or Activity for preceding (two) 2 financial years and has not sought the status of Dormant Company under Section 455 of the Act.


3. Strike off by ROC under Section 248(1) of the Companies Act 2013:

·    ROC has reasonable cause  as mentioned above may send notice in Form STK-1 to the Company and all the Directors, of his intention to remove the name of the company from the register of companies and request them to send their representations along with supporting documents within 30 days from the date of notice.

·    The notice for removal of name under Section 248(1) in STK-5/5A shall be published on the official website of MCA, in Official Gazette, English newspaper and one vernacular language at the place registered office is situated.

·    ROC shall also intimate to the Authorities regulating the Company about the proposed action of removal or striking off the names of such companies.

·    After receiving an application, ROC shall publish a public notice in STK-6 and any objection on proposed strike off shall be sent within 30 days.

·    After Complying all the process, ROC may on expiry of the time mentioned in the notice; strike off the name of the Company and shall be published in Official Gazette in form STK-7.

·    On the publication in the Official Gazette of this notice, the Company shall stand dissolved in effect from the date mentioned therein. The same shall also be placed on the official website of the MCA.


Effect of Dissolution:

·    The company shall cease to operate from the date of dissolution and Certificate of Incorporation shall stand canceled.

·    The liabilities of managers, directors, and officers shall remain the same as if the Company had not been dissolved.

 

4. Strike off by Company on its own under Section 248(2) of the Companies Act 2013:

The company may apply in E-form STK-2 Suo-motto after extinguishing all its liabilities, by special resolution or with the consent of 75% of the members in terms of paid up share capital, to ROC for removing the name of the Company on all or any of the above mentioned grounds.

 ·         Process followed by Company for Strike U/S 248(2) of the Companies Act 2013:

(i). Holding of Board Meeting

To get approval from the Board for Striking off, approve the notice of EGM and to authorize any director of the Company to apply to ROC.

(ii). Extinguishment of all the Liabilities

After passing of Board resolution if there are any liabilities then the Company will extinguish all the liabilities before the next step.

(iii). Holding of General Meeting

The Company will hold the general meeting of shareholders by passing a resolution for striking off the with the approval of 75% of members as per paid up share capital of the Company and after passing of Special resolution Company will file E-form MGT-14 within 30 days.

(iv). Approval of Concern Authorities

In case if any other authority regulates the company, then the approval of such authority shall also be required.

(v). Application to ROC by Company

Application in Form STK- 2 to be filed by the Company (Government filing fees of INR 5000) along with following documents:

·    An Indemnity Bond in Form STK-3(duly notarized) by every director ;

·    A statement of accounts containing assets and liabilities of the company made up for a day, not more than 30 days before the date of application and certified by a Chartered Accountant;

·    An affidavit in Form STK-4 by every director of the company;

·    CTC of Special Resolution duly signed by each Director of the company or consent of 75% members of the company in terms of paid up share capital as on date of application;

·    In the case of a Company regulated by any other authority, NOC of such authority shall also be required;

·    A statement with respect to any pending litigations, involving the Company.

Note:-

It is necessary to do annual filing before making an application for strike off. But there are many cases where ROC approves such form without annual filing if ROC found that no transaction is there and no bank account is under operation till date, then in such case company can make application for strike off.

·    The Company will place the copy of application on its website till the disposal of the application. [Proviso to Rule 7(1)].

5. Restrictions on making application for strike off [Section 249(1)]:

The companies making an application voluntarily u/s 248(2) of the companies act, 2013 be restricted if, during the preceding 3 months, the company-

·    Has Changed Its Name Or Shifted Its Registered Office From One State To Another;

·    Has Made A Disposal For Value Of Property Or Rights Held By It, Immediately Before Sesser Of Trade Or Otherwise Carrying On Of Business, For The Purpose Of Disposal For Gain In The Normal Course Of Trading Or Otherwise Carrying On Of Business;

·    Has Engaged In Any Other Activity Except The One Which Is Necessary Or Expedient For The Purpose Of Making An Application Under That Section, Or Deciding Whether To Do So Or Concluding The Affairs Of The Company, Or Complying With Any Statutory Requirement;

·    Has Made An Application To The Tribunal For The Sanctioning Of A Compromise Or Arrangement And The Matter Has Not Been Finally Concluded; Or

·    Is being wound up under Chapter XX, whether voluntarily or by the Tribunal or under the IBC, 2016.


6. Categories of Companies which cannot be Strike Off: [Proviso of Rule 3(1)]:

·    Listed companies

·    Companies which are delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;

·    Vanishing companies;

·    Companies where inspection or investigation is ordered and being carried out against Company.

·    Companies, where notices have been issued by the Registrar or Inspector and reply, is pending.

·    Companies against which any prosecution for an offense is pending in any court ;

·    Companies whose application for compounding is pending before the competent authority;

·    Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;

·    Any charge satisfaction is pending against Company.

·    Companies Registered Under Section 8 Company


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