Summary: Section 248 of the Companies Act, 2013, read with the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, provides for removal of a company’s name either through action initiated by the Registrar or through a voluntary application by the company. Voluntary strike-off under Section 248(2) requires the company to extinguish its liabilities, obtain the prescribed shareholder approval and submit Form STK-2 to the Centre for Processing Accelerated Corporate Exit (C-PACE) with the prescribed fee of Rs. 10,000. The procedure involves board approval, a special resolution or consent of members holding 75% of paid-up share capital, clearance of outstanding statutory and financial obligations, and filing of overdue financial statements and annual returns. Supporting documents include Form STK-3 indemnity bonds, Form STK-8 statement of accounts certified by a practising Chartered Accountant, Form STK-4 affidavits and Form MGT-14 where a special resolution is passed. Following scrutiny, the Registrar publishes a notice in Form STK-6 inviting objections within 30 days. If the Registrar is satisfied, Form STK-7 is issued and the company’s name is removed from the register, resulting in dissolution.
Strike off under the Companies Act, read with the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016
Section 248 of the Companies Act, read with Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, provides for two distinct processes for the successful striking off of a company from the register of companies. The automatic striking off commences from a suo moto power vested upon the registrar according to section 248(1) of the Companies Act; the second, voluntary striking off, is discussed as per the provision of 248(2) and rule 4. A company is eligible for striking off if it has not commenced business within one year of incorporation, has not carried on any business or operation for two immediately preceding financial years without applying for dormant status under Section 455, or has no obligations or liabilities as of the application date.
As per the notification issued on 17th April, 2023, by MCA, the application for removal of the name of a company under sub-section (2) of section 248 shall be made to the Registrar, Centre for Processing Accelerated Corporate Exit in Form No. STK-2, along with a fee of ten thousand rupees.
- Board Meeting and Shareholder Approval for Voluntary Strike Off
- Clearance of Outstanding Liabilities Before Filing STK-2
- Verification of MCA Annual Filing Status
- Statutory Documents Required with Form STK-2
- STK – 3 Indemnity Bond
- STK – 8 Statement of Accounts
- STK – 4 Affidavit
- MGT – 14 Special Resolution
- Publication of Notice in Form STK-6
- Final Strike Off Order in Form STK-7 and Dissolution
Board Meeting and Shareholder Approval for Voluntary Strike Off
The first step in voluntary striking off is convening a board meeting to recommend ceasing its operations, pursuing the voluntary removal of its name, and authorising a director to sign and submit Form STK-2. This is laid down in Rule 5 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. The board shall then convene a general meeting or an EGM to comply with 248(2), which requires 75 % members in terms of paid-up share capital or through a special resolution, agreeing to file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies. Where the company proceeds through a special resolution, the applicable resolution is to be filed with the Registrar in Form MGT-14 under Section 117. Where the company proceeds through the 75% paid-up share capital consent route, the required consent is to be obtained, and the current Form STK-2 requires the company to indicate that such consent has been obtained and attached.
Clearance of Outstanding Liabilities Before Filing STK-2
Before filing the application for removal of the company’s name under Section 248(2) of the Companies Act, 2013, the company must ensure that all its liabilities have been extinguished, including but not limited to :
Bank loans and overdrafts, Vendor and trade creditors, Employee due, deposit all pending TDS and file any overdue TDS returns (Form 24Q, 26Q), file all pending GSTR-1, GSTR-3B, and GSTR-9 returns; clear any outstanding tax, interest, and late fees on the GST portal, file the final ITR; pay all advance tax and self-assessment tax.
Verification of MCA Annual Filing Status
Importantly, the companies MCA filing status has to be verified as per Rule 4(1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, the company cannot file Form STK-2 unless it has filed its overdue financial statements under Section 137 and overdue annual returns under Section 92 up to the end of the financial year through MGT 7 (Annual return) OR MGT 7-A as applicable and AOC – 4 (Financial Statement).
Statutory Documents Required with Form STK-2
The STK – 2 is to be supported with four statutory documents under Rule 4(3) :
STK – 3 Indemnity Bond
STK – 3 Indemnity Bond: as per rule (3)(i) of Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016; From every director, notarised on stamp paper of value as prescribed by the state
STK – 8 Statement of Accounts
STK – 8 Statement of Accounts: as per Rule 4 (3) (ii) of Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016; Duly certified by a Chartered Accountant in whole-time practice with Membership No/Certificate of Practice Number with seal. It shall not be older than 30 days from the date of STK-2 filing.
STK – 4 Affidavit
STK – 4 Affidavit: as per Rule 4(3)(iii) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, is an affidavit that every director of the company must furnish along with the voluntary strike-off application
MGT – 14 Special Resolution
MGT – 14 Special Resolution: Where the company proceeds through the special resolution route under Section 248(2)
Publication of Notice in Form STK-6
Once the application is accepted, C-PACE will arrange for a notice, using Form STK-6, to be published in the Official Gazette and on the MCA website. This notice will give anyone, including creditors, regulators, or the general public, 30 days to submit any objections. The ROC might also send separate notices to specific authorities.
Final Strike Off Order in Form STK-7 and Dissolution
If there are no valid objections and the Registrar is satisfied that everything is in order, the ROC will issue Form STK-7. This is the official document that removes the company’s name from the Register of Companies. The order will be published in the Official Gazette. After this date, the company will be dissolved and will no longer exist as a legal entity.
