Since Company is a creation of law, therefore, it is to be closed by the prescribed Rules and Regulations of the Companies Act 2013. The owners and directors of the Company can decide various options to close the business of its Company but in this era of Ease of doing business, as introduced by the Government, the easiest way to close the Company is by filing an application to Registrar of Companies (ROC) when a company is inoperative for a certain period of time.
Section 248 to 252 of the Companies Act 2013 read with Companies (Removal of Names of Companies from the Registrar of Companies) Rules, 2016 deals with the procedural requirements in order to remove the name of the Company from the Registrar of Companies (ROC).
GROUNDS ON WHICH A COMPANY CAN STRIKE OFF THE NAME BY ROC:
As stated above, as per section 248 (1) of the Companies Act 2013 and rules made thereunder, there are various grounds on which the business of the Company can be strike off by the Registrar of Companies, which are as follows:
1. A company has failed to commence its business within one year of its incorporation.
2. A company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made an application within such period for obtaining the status of a Dormant Company under section 455 of the Act.
3. The subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within 180 days of its incorporation under subsection (1) of section 10A of the Act.
4. The company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.
PROCEDURAL REQUIREMENTS FOR REMOVING THE NAME OF THE COMPANY:
1. Hold a board meeting for the following purpose:
- To consider and approve filing of application for removal of name.
- To authorise any director to file an application to ROC for removal of name and to obtain consent of minimum 75% of the members of the Company.
- To fix the date, day, place and time for the general meeting of the Company for passing a Special resolution.
- To approve the draft notice of the general meeting along with the explanatory statement.
- To authorise any officer to issue notice of the general meeting.
2. Hold a general meeting to pass the special resolution for removal of name of the Company from the ROC.
3. File a copy of special resolution in form MGT-14 within 30 days of passing the resolution.
4. File an application to ROC for removal of name of company in Form STK-2 along with the required following documents :
- Indemnity bond duly notarised by every director in Form STK-3.
- A statement of accounts in Form STK-8 containing the assets and liabilities of the Company made up to a day not more than 30 days before the date of the application and duly certified by CA.
- An affidavit in Form STK-4 by every director of the Company.
- A statement regarding pending litigations, if any, involving the Company.
5. ROC shall on receipt of an application:
- Place notice on the official website of MCA in Form STK-6.
- Publish in official gazette.
- Publish in English language in a leading English newspaper and at least once in a vernacular language where the registered office of the Company is situated.
6. ROC shall simultaneously intimate the concerned regulatory authorities regulating the Company, i.e., Income tax authority, central excise and GST Authorities about the proposed action of closure of the company in order to seek their objections, if any, to be furnished within 30 days of issue of letter of intimation and if no objection is received, it shall be presumed to propose the action of striking off the Company.
7. After compliance of all the process, ROC shall strike off the name and dissolve the company by sending notice in the official gazette in Form STK-7.
OTHER POINTS TO REMEMBER:
Before making an application for removal of the name of a company, following points are to be considered:
1. A company needs to extinguish all its liabilities in order to close the Company.
2. Application for removal of a company cannot be made by a company, if it has not filed overdue returns in Form AOC-4/ AOC-4 XBRL and Form MGT-7 up to the end of the financial year in which the company ceased to carry on its operations.
3. Application for removal of the Company cannot be made if, at any time in the previous 3 months, the Company:
- Has changed its name or its registered office from one state to another;
- Has made a disposal for value of property or rights held by it, immediately before Cesar 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.
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Disclaimer: The entire contents of this editorial have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, users of this information are expected to refer to the relevant existing provisions of applicable Laws. In no event I shall be liable for damages resulting from the use of the information.
(The author of this editorial is CS Aakriti Gupta, proprietor of AAKRITI GUPTA & ASSOCIATES; COMPANY SECRETARY in Practice is from Ghaziabad and can be reached out at [email protected])
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