Process of Strike Off of Companies
Introduction
Strike off of a company refers to the removal of the name of a company from the Register of Companies maintained by the Registrar of Companies (ROC). Once a company is struck off, it ceases to exist as a legal entity. The provisions relating to strike off are governed under Section 248 of the Companies Act, 2013 read with the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.
Modes of Strike Off
1. Strike Off by Registrar of Companies (ROC Suo Moto)
The ROC may remove the name of a company if:
- The company has failed to commence business within one year of incorporation;
- The company is not carrying on any business or operation for two immediately preceding financial years and has not applied for dormant status;
- Subscribers to the memorandum have not paid subscription amount and declaration under Section 10A has not been filed;
- The company is found not carrying on business after physical verification.
2. Voluntary Strike Off by Company
A company may voluntarily apply for strike off by filing an application with ROC in prescribed form after obtaining approval of shareholders and clearing all liabilities.
Eligibility Criteria for Voluntary Strike Off
A company can apply for strike off if:
- It has no business operations;
- It has no outstanding liabilities;
- All statutory filings are completed up to the date of closure;
- Consent of shareholders is obtained;
- The company has closed all bank accounts and disposed of assets, if any.
Companies Not Eligible for Strike Off
The following companies cannot apply for strike off:
- Listed companies;
- Companies delisted due to non-compliance;
- Vanishing companies;
- Companies under inspection, inquiry or investigation;
- Companies against which prosecution is pending;
- Companies having outstanding public deposits;
- Section 8 companies;
- Companies with unsatisfied charges;
- Companies involved in compounding applications pending before authorities.
Procedure for Voluntary Strike Off
Step 1: Hold Board Meeting
A Board Meeting shall be convened to:
- Consider proposal for strike off;
- Authorize a director to take necessary actions;
- Approve notice for Extra Ordinary General Meeting (EGM).
Step 2: Obtain Shareholders’ Approval
The company shall obtain approval of shareholders by:
- Special Resolution passed in General Meeting; or
- Consent of 75% members in terms of paid-up share capital.
Step 3: Preparation of Documents
The following documents are required:
- Indemnity Bond in Form STK-3 by every director;
- Affidavit in Form STK-4 by every director;
- Statement of Accounts certified by CA;
- Copy of Special Resolution;
- Statement regarding pending litigations, if any.
Step 4: Filing of Form STK-2
The company shall file Form STK-2 with ROC along with prescribed government fees and attachments.
Step 5: Examination by ROC
The ROC shall examine the application and, if satisfied, issue public notice in Form STK-6 inviting objections from the public within 30 days.
Step 6: Strike Off by ROC
If no objection is received and ROC is satisfied that the company is eligible for strike off, ROC shall issue notice in Form STK-7 and remove the name of the company from the Register of Companies.
Effect of Strike Off
Upon strike off:
- The company ceases to exist as a legal entity;
- Certificate of Incorporation stands cancelled;
- Directors’ liabilities may continue for acts done before dissolution;
- Assets, if any, vest with the Central Government.
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