Fast track Exit / Strike-off under section 248 of Companies Act, 2013 read with Companies (Removal of Name of Companies) Rules, 2016

PROCEDURE FOR FTE:-

1. ROC has the power to remove the name of companies from Register of companies under section 248 of companies act, 2013.

ROC can suo-motu or on application of a company issue notice for strike off of name of companies on following reasons/causes:

(a) If a company has failed to commence its business within one year of its incorporation, or

(b) The subscribers to the memorandum have not paid the subscription which they had undertaken to pay within a period of one hundred and eighty (180) days from the date of incorporation of a company and a declaration under section 11(1) to this effect has not been filed within one hundred eighty (180) days of its incorporation;

(c) A company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section of 455.

Exceptions:-

Following categories of companies shall not be removed from the register of companies under section 248 read with rule 3 and 4 of companies (Removal of name of companies from register of companies) Rules 2016, namely:-

(i) listed companies;

(ii) companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;

(iii) vanishing companies;

(iv) companies where inspection or investigation is ordered and being carried out or actions on such order are yet to be taken up or were completed but prosecutions arising out of such inspection or investigation are pending in the Court;

(v) companies where notices under section 234 of the Companies Act, 1956 (1 of 1956) or section 206 or section 207 of the Act have been issued by the Registrar or Inspector and reply thereto is pending or report under section 208 has not yet been submitted or follow up of instructions on report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the Court;

(vi) companies against which any prosecution for an offence is pending in any court;

(vii) companies whose application for compounding is pending before the competent authority for compounding the offences committed by the company or any of its officers in default;

(viii) companies, which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;

(ix) companies having charges which are pending for satisfaction; and

(x) companies registered under section 25 of the Companies Act, 1956 or section 8 of the Act.

Explanation: For the purposes of clause (iii), the expression “vanishing company” means a company, registered under the Act or previous company law or any other law for the time being in force and listed with Stock Exchange which has failed to file its returns with the Registrar of Companies and Stock Exchange for a consecutive period of two years, and is not maintaining its registered office at the address notified with the Registrar of Companies or Stock Exchange and none of its directors are traceable.

Restrictions on making application under section 248 in certain situations: – (Section 249)

(1) An application under sub-section (2) of section 248 on behalf of a company shall not be made if, at any time in the previous three months, the company –

(a) has changed its name or shifted its registered office from one State to another;

(b) has made a disposal for value of property or rights held by it, immediately before cesser 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;

(c) 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;

(d) has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or

(e) is being wound up under Chapter XX, whether voluntarily or by the Tribunal.

(2) If a company files an application under sub-section (2) of section 248 in violation of sub-section (1), it shall be punishable with fine which may extend to one lakh rupees.

(3) An application filed under sub-section (2) of section 248 shall be withdrawn by the company or rejected by the Registrar as soon as conditions under sub-section (1) are brought to his notice.

2. ROC shall send a notice in Form STK-1 to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, against the proposed action within a period of thirty (30) days from the date of notice (as per section 248(1)).

3. A company may after extinguishing all its liabilities, by a special resolution or consent of seventy five (75%) per cent. Members in terms of paid-up share capital, file an application in the prescribed manner i.e. STK-2 along with the fee of five thousand (Rs. 5000) to registrar (ROC) for removing the name of the company from the register of companies on all or any of the ground specified in sub-section (1) and the Registrar shall, on receipt of such application, cause a public notice to be issued in the prescribed manner (as per section 248(1) read with rule 4).

Company will call the Board Meeting as per SS-1 to pass a Board Resolution for the purpose of strike off of the company and to authorize any director of the company to file the application with the Registrar of Companies.

Provided that in the case of a company regulated under a special act, approval of the regulatory body constituted or established under that act shall also be obtained and enclosed with the application.

As per Rule 4(2), Every application under rule 4(1) shall accompany a No Objection Certificate (NOC) from appropriate Regulatory Authority concerned in respect of following companies, namely: –

(i) companies which have conducted or conducting non-banking financial and investment activities as referred to in the Reserve Bank of India Act, 1934 (2 of 1934) or rules and regulations thereunder;

(ii) housing finance companies as referred to in the Housing Finance Companies (National Housing Bank) Directions, 2010 issued under the National Housing Bank Act, 1987 (53 of 1987);

(iii) insurance companies as referred to in the Insurance Act, 1938 (4 of 1938) or rules and regulations thereunder;

(iv) companies in the business of capital market intermediaries as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

(v) companies engaged in collective investment schemes as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

(vi) asset management companies as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

(vii) any other company which is regulated under any other law for the time being in force.

4. Other attachments with STK-2:-

As per rule 4(3), the application in Form STK 2 shall be accompanied by –

(i) Indemnity bond duly notarized by every director in Form STK 3 and if the person is a foreignnational or non-resident Indian, the indemnity bond, and declaration shall be notarised or appostilised or consularised (as per rule 8);

(ii) a statement of accounts containing assets and liabilities of the company made up to a day, not more than thirty (30) days before the date of application and certified by a Chartered Accountant;

(iii) An affidavit in Form STK 4 by every director of the company;

(iv) a copy of the special resolution duly certified by each of the directors of the company or consent of seventy five per cent of the members of the company in terms of paid up share capital as on the date of application;

(v) a statement regarding pending litigations, if any, involving the company (it should be given in affidavit format).

5. Form Authentication

As per Rule 5(1), Application in Form STK-2 shall be signed by a director duly authorised by the Board in their behalf. And where the director concerned does not have a registered DSC, a physical copy of the form duly filled in shall be signed manually by the directors duly authorised in that behalf and shall be attached with the Form STK-2 while uploading the form as per Rule 5(2)

6. Certification of Form STK-2

As per Rule 6, The Form STK-2 shall be certified by a CA in whole time practice or CS in whole time practice or CMA in whole time practice, as the case may be.

7. Manner of publication of notice:–

As per Rule 7 of Companies (Removal of Name of Companies from Register of Companies) Rules, 2016:

(1) The notice under sub-section (1) or sub-section (2) of section 248 shall be in Form STK 5 or STK 6, as the case may be, and be –

(ii) placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;

(iii) published in the Official Gazette;

(iv) published in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated.

Provided that in case of any application made under sub-section (2) of section 248 of the Act, the company shall also place the application on its website, if any, till the disposal of the application.

(2) The Registrar of Companies shall, simultaneously intimate the concerned regulatory authorities regulating the company, viz, the Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over the company, about the proposed action of removal or striking off the names of such companies and seek  objections, if any, to be furnished within a period of thirty days from the date of issue of the letter of intimation and if no objections are received within thirty days from the respective authority, it shall be presumed that they have no objections to the proposed action of striking off or removal of name.

8. Undertaking by Directors:- Discharge of liability

The Registrar, if feel necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company that sufficient provision(s) has been made for the realization of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company.

9. Declaration from Director:-

The will give following below mentioned declaration:

i. The application has been in accordance with the conditions mentioned under sub-section (1) and (2) of section 248 and sub-section (1) of section 249.

ii. There is no inspection or investigation order and carried out or yet to be carried out or being carried out against the company and where inspection or investigation have been carried out, no prosecution pending in any court arising out of such inspection or investigation.

iii. The company is neither having any public deposit which are outstanding nor the company in default in its repayment or interest thereon.

iv. The company does not have any outstanding loans, secured or unsecured.

v. The company does not have any dues towards income tax .VAT, excise duty, service tax or any other duty, by whatever name called, payable to the central government or state government, statutory authority or local authority.

vi. All other liabilities of the company have been settled or discharged or extinguished.

vii. All the requirements of the act and rules made thereunder relating to removing the name of the company from the register of companies and matters incidental or supplemental thereto have been complied with.

viii. To the best of my knowledge and belief, the information given in this application and its attachment is correct and complete.

ix. The requisite fee has been paid.

10. Issue Notice of Striking off and dissolution of companies:-

The Registrar (ROC) shall cause a notice under sub-section (5) of section 248 of striking off the name of the company from the register of companies if no objections received and its dissolution to be published in the Official Gazette in Form STK 7 and the same shall also be placed on the official website of the Ministry of Corporate Affairs (as per rule 9).

11. Liability of Directors:-

The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved.

12. Applications or forms pending before Central Government:–

Any application or pending proceeding for striking off or Form-FTE filed with the Registrar of Companies prior to the commencement of these rules but not disposed of by such authority for want of any information or document shall, on its submission, to the satisfaction of the authority, be disposed of in accordance with the rules made under the Companies Act, 1956 (1 of 1956) (as per rule 10).

13. Fraudulent application for removal of name:-

As per section 251(1), Where it is found that an application by a company under sub-section (2) of section 248 has been made with the object of evading the liabilities of the company or with the intention to deceive the creditors or to defraud any other persons, the persons in charge of the management of the company shall, notwithstanding that the company has been notified as dissolved –

(a) be jointly and severally liable to any person or persons who had incurred loss or damage as a result of the company being notified as dissolved; and

(b) be punishable for fraud in the manner as provided in section 447.

As per section 251(2), without prejudice to the provisions contained in sub-section (1), the Registrar may also recommend prosecution of the persons responsible for the filing of an application under Sub-section (2) of section 248.

14. Appeal to Tribunal:-

Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal (NCLT) within a period of three years (3 years) from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies.

Form No. STK – 3

Indemnity Bond

(To be drawn on Stamp Paper of appropriate value)

(To be given individually or collectively by every director)

[Pursuant to clause (i) of sub-rule (3) of rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

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To,

The Registrar of Companies,

1. I/We, the Director(s) of ……………………… (mention name of the Company), incorporated on……………………under the Companies Act, 2013 or Companies Act, 1956 having its registered office at…………………… do hereby declare that:

(i) I/We ……………………….S/o/D/o/W/o Shri……………..am/are Director(s) of this Company.

(ii) That I/We have made an affidavit confirming that the company does not have any assets and liabilities as on date.

(iii) Further, the Company has been inoperative from the date of its incorporation/The Company commenced business/operations/commercial activity after incorporation but has been inoperative for the past ………………..year(s) (strike out whichever is not applicable). Thus the Company is defunct and I request the Registrar of Companies ………………… to strike off the name of the Company from the register of companies under Section 248 of the Companies Act, 2013.

2. I/We do hereby undertake to indemnify : –

(i) the claimants for all lawful claims against the company arising in future after the striking off the name of the Company.

(ii) any person for any losses that may arise pursuant to striking off the name of the Company.

(iii) the claimants for all lawful claims and liabilities, which have not come to our notice up to this stage, and if any claim arises or observed even after the name of the Company has been struck off in terms of Section 248 of the Companies Act, 2013.

Place:

Date:

(Name, Father’s name, Address and Signature)

(To be given by every Director)

WITNESSES:

1. Signature:

Name:

Father’s name:

Address:

Occupation:

2. Signature:

Name:

Father’s name:

Address:

Occupation:

FORM No. STK – 4

AFFIDAVIT

(to be given individually by every Director)

[Pursuant to sub section (2) of section 248 read with clause (iii) of sub-rule (3) of Rule 4]

1. I/ We ……………. Director of………………. (hereinafter called “the Company”), incorporated on …………….. under the Companies Act, 2013 or the Companies Act, 1956 having its registered office at…………………. and having CIN …………… do solemnly affirm and state as under:

(i) I/ We …………….. S/o / D/o Shri/Smt. …………. Holder of DIN/Income Tax PAN/Passport number ………………….. (copy of Income Tax PAN/Passport duly attested by a Gazetted Officer or a whole time practicing professional viz Chartered Accountant/Company Secretary/Cost Accountant) am Director of the Company stated above since………. (mention date of appointment).

(ii) My present residential address is……………………. (copy of documentary evidence duly attested by a Gazetted Officer or a whole time practicing professional viz Chartered Accountant/Company Secretary/Cost Accountant) is enclosed (Alternatively, an affidavit sworn before Magistrate may be enclosed).

(iii) My permanent address is…………………………… (copy of documentary evidence duly attested by a Gazetted Officer or a whole time practicing professional viz Chartered Accountant/Company Secretary/Cost Accountant) is enclosed (Alternatively, an affidavit sworn before Magistrate may be enclosed).

(iv) The Company does not maintain any bank account as on date.

(v) The Company ………………… (mention name of the Company) does not have any assets and liabilities as on date.

(vi) The Company has been inoperative from the date of its incorporation/The Company commenced business/operations/commercial activity after incorporation but has been inoperative for the past……………….. year(s) due to following reasons………… (give the reasons here).

(vii) As on date, the Company does not have any dues towards Income Tax/Sales Tax/Central Excise/Banks and Financial Institutions; and other Central or State Government Departments/Authorities or any Local Authorities.

2. I further affirm that –

(i) No inquiry, technical scrutiny, inspection or investigation is ordered or pending against the company;

(ii) No prosecution or any compounding application for any offence under the Act or under any of the other Acts is pending against the company or against the undersigned;

(iii) The company is neither listed nor delisted for non-compliance of listing agreement;

(iv) The company is not a company incorporated for charitable purposes under section 8 of the Companies Act, 2013 or section 25 of the Companies Act, 1956;

(v) The company does not have any management disputes or there is no litigation pending with regard to management or shareholding of the company;

(vi) No order is in operation staying filing of the documents by a court or tribunal or any other competent authority;

(v) The company is not prevented from making the applications for strike off as mentioned in section 249 of the Act.

I solemnly state that the contents of this affidavit are true to the best of my knowledge and belief and that it conceals nothing and that no part of it is false.

Signature: _____________________

(Deponent)

 

Verification: –

I verify that the contents of this affidavit are true to the best of my knowledge and belief.

Signature______________________

(Deponent)

Place:

Date:

Note: Attention is also drawn to provisions of section 449 which provide for punishment for false evidence.

 

FORM No. STK – 5

PUBLIC NOTICE

[ Pursuant to sub-section (1) and sub-section (4) of section 248 of the Companies Act,   2013 and rule 7 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

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GOVERNMENT OF INDIA

MINISTRY OF CORPORATE AFFAIRS

Office of the Registrar of Companies

(Address of RoC)

Public Notice No. —————

Date: ————

Reference:

In the matter of striking off of companies under section 248 (1) of the Companies Act,2013, of M/s._____________, M/s. ___________, M/s_______

1. Notice is hereby given that the Registrar of Companies has a reasonable cause to believe that –

(i) The following companies have not commenced business within one year of their incorporation.

M/s__________________________ (indicate names of companies)

M/s__________________________

(ii) The following companies have not been carrying on any business or operation for a period of two immediately preceding financial years and have not made any application within such period for obtaining the status of dormant company under section 455.

M/s. _____________________________

M/s. _____________________________ (indicate name of companies)

And, therefore, proposes to remove/strike off the names of the above mentioned companies from the register of companies and dissolve them unless a cause is shown to the contrary, within thirty days from the date of this notice.

2. Any person objecting to the proposed removal/striking off of name of the companies from the register of companies may send his/her objection to the office address mentioned hereabove within thirty days from the date of publication of this notice.

Registrar of Companies

FORM No. STK – 6

PUBLIC NOTICE

[Pursuant to sub-section (2) and sub-section (4) of section 248 of the Companies Act, 2013 and rule 7 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

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GOVERNMENT OF INDIA

MINISTRY OF CORPORATE AFFAIRS

Office of the Registrar of Companies

(Address of RoC)

 

Public Notice No. —————

Date: ——————

Reference:

1. In the matter of striking off or removal of names of companies under section 248 (2) of the Companies Act, 2013 in respect of:

(1) M/s.____________________,

(2) M/s.____________________,

(3) M/s.____________________,

Notice is hereby given that the Registrar of Companies had received applications from the above mentioned companies under section 248(2) of the Companies Act, 2013 for removal of its/their name (s) from the register of companies either on the ground that they have failed to commence business within one year of their incorporation or on the ground that the company (ies) is/are not carrying on any business or operation for a period of two immediately preceding financial years and has/have not made any application (s) within such period for obtaining the status of a dormant company under section 455 of the Companies Act, 2013 or the company(ies) have obtained the status of dormant company, but it/they do not wish to continue its/their registration as companies and have, therefore, requested for removal/strike off of its/their names from the register of companies.

2. Accordingly, the Registrar of Companies proposes to remove or strike off the names of the above mentioned companies from the Register of Companies.

3. Any person objecting to the proposed removal or striking off of name of the companies from the register of companies may send his or her objection to the office address mentioned here above within thirty days from the date of publication of this notice.

Registrar of Companies

FORM No. STK – 7

NOTICE OF STRIKING OFF AND DISSOLUTION

[Pursuant to sub-section (5) of section 248 of the Companies Act, 2013 and rule 9 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

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GOVERNMENT OF INDIA

MINISTRY OF CORPORATE AFFAIRS

Office of the Registrar Of Companies

(Address of RoC)

Dated: ——————

Reference:                  

In the matter of Companies Act, 2013 and of M/s ——————————————-, CIN —————————.

This is with respect to this Office’s Notice No. _____________ dated __________ application (Form STK 2) dated —————- vide SRN ……………………… and notice in form STK 5 issued on dated ____________. Notice is hereby published that pursuant to sub-section (5) of Section 248 of the Companies Act, 2013 the name of M/s———————– has this day of ………………….. been struck off the register of companies and the said Company is dissolved.

Registrar of Companies

Registrar of Companies/Additional Registrar of Companies/Joint Registrar of

Companies/Deputy Registrar of Companies/Assistant Registrar of Companies

___________________________________________________________________________

Mailing Address of the company as per record available in Registrar of Companies office:

M/s ————————————

(Author: Manish Kumar-[email protected] – 9015987775, 9467016725)