The Companies Act contains provisions that permit the removal of a company’s name from the Register of Companies. This article delves into the nuances of the process, highlighting both mandatory and voluntary strikeoffs.
Removal of Names of Companies from the Register of Companies (Chapter XVIII)
> Power of Registrar to Remove Name of Company from Register of Companies [Section 248(1)]
- a company has failed to commence its business within one year of its incorporation OR
- 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 455 OR
- 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 one hundred and eighty days of its incorporation under subsection (1) of section 10A OR
- 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.
Under section 248(1) registrar suo-moto may remove name of the company from registrar of companies.
> Voluntary strike off by Company [Section 248(2)] “Without prejudice to the provisions of section 248(1)”
- A company may, after extinguishing all its liabilities,
- By a special resolution or consent of seventy-five per cent. Members in terms of paid-up share capital,
Company file form (STK-2) with the registrar for removing name of the Company [Rule 4(1)]
♦ Procedure for Strike off of Company by registrar [section 248(1)]
1. Service of notice by ROC: The ROC is required to 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. Such a notice shall contain the reasons on the basis of which the name of the company is to be removed from the Register of Companies. Such a notice should be sent to all the directors of the company at the addresses available on record, by registered post with acknowledgement due or by speed post [Rule 3(2)].
2. Reply to the Notice from the company: On receipt of such a notice, the company and
all the directors of the company are required to send their representations along with copies of the relevant documents, (if any), explaining the reasons as to why the name of the company should not be removed from the Register of Companies. Such a representation should be given within a period of 30 days from the date of the notice.
3. Consideration of the representation made by the company: The ROC will consider the
representation made by the company and all the directors of the company. If the ROC is not satisfied with the representation made by the company and its directors, it may proceed to strike off the name of company.
4. Publication of notice of strike off by ROC: The notice for removal of the name of the
company should be in form STK – 5 for the information of the general public and should be: [Rule 7(1)]
(i) Placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;
(ii) Published in the Official Gazette;
(iii) Published in Form No. STK – 5A 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.
Such a publication is required to be given for the information of the general public in order to enable the general public to give their objections, if any, to the proposed removal / striking off of name of the companies from the Register of Companies and requiring them to send their objection to the ROC within thirty days from the date of publication of the notice.
5. Intimation to regulatory authorities: Intimation about the proposed action of removal or striking off the names of company should be sent to the regulatory authority if the Company regulated by any regulatory authority or Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over such a company. Such intimation should be given to enable the authorities to give their objections, if any. Such objections are required to be given within a period of 30 days from the date of issue of the letter of intimation
6. Striking off / Removal of the name of the company: After expiry of 30 days from the date of issue of the letter of intimation, if there are no objections received within 30 days from the general public or respective authority and unless cause to the contrary is shown by the company, the ROC can proceed to strike off or remove the name of the company from the Register of Companies.
7. Provision for realisation of amount due: The ROC before passing an order for Striking off / Removal of the name of the company should satisfy himself that sufficient provision has been made for realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time. The ROC can obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company. Notwithstanding the undertakings, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the Register of Companies.
8. Notice of dissolution of the company by the ROC: After the expiry of the time mentioned in the notice, the ROC can strike off the name of the company from the Register. The notice of striking off the name of the company from the Register of Companies and its dissolution should be published in the Official Gazette in Form STK -7 and the same should also be placed on the official website of the Ministry of Corporate Affairs. The company shall stand dissolved on the publication of this notice in the Official Gazette [Rule 9].
♦ Strike off by Filing an Application by the Company [Section 248(2)]
The board of directors of the company shall follow the following procedure for removal of name of the company from the Register of Companies maintained by the ROC:
I. Call and hold Board Meeting to pass Board resolution for the purpose of striking off of the name of the company from the Register maintained by the ROC, subject to the approval of the shareholders of the company, and to authorize any director to file an application and for fixing date, time and venue for the Extraordinary General Meeting of the shareholder.
II. After passing of Board resolution, if there is any liability in the company, the company will set off / pay all its liabilities.
III. General Meeting should be held on the day, date, time and venue as fixed earlier for passing of the special resolution OR take consent of 75% members in terms of paid-up share capital.
IV. Every director of the company should sign and execute indemnity bond duly notarised by every director in Form STK – 3 and Affidavit in Form STK- 4 In case director is a foreign national or non-resident Indian, the documents should be notarized or apostilled or consularised. [Rule 4 ].
V. Company should get the statement of accounts in Form STK-8 containing the assets and liabilities of the company made up to a day, not more than thirty days before the date of application. Such a statement should be certified by a Chartered Accountant; [Rule 4].
VI. Within thirty days from the date of the passing of the special resolution in the General Meeting or after obtaining consent, company should file MGT-14.
VII. Approval of concerned authorities is required in case of a company regulated by any other authority.
VIII. Thereafter, an application for removal of the name of the company shall be made in Form STK-2 along with the prescribed fee [Rule 4].
Following documents will be attached in the Form STK-2. [Rule 4(1) and (3)]:
a. No objection certificate from the appropriate concerned authority, if applicable (RBI, IRDA, Housing Finance, SEBI etc.) Rule 4(2).
b. Indemnity Bond duly notarised by every Director in Form STK-3. (However, in case of a government company or a subsidiary of a government company, a duly notarised indemnity bond in Form STK-3A shall be given by an authorised representative, not below the rank of Under Secretary or its equivalent, in the administrative Ministry or Department of the Government of India or the State Government, as the case may be, on behalf of the company).
c. Statement of Accounts certified by CA in Form STK-8, Statement should not be older than 30 days from the date of application. [Rule 4(3)(ii)]
d. An Affidavit by every director in Form STK-4.
e. Certified true copy of 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.
f. Statement regarding pending litigations, if any, involving company. (Better to give in affidavit format). It must be noted that Form STK-2 cannot be filed by a company unless it has filed its overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return), up to the end of the financial year in which the company ceased to carry its business operations. Also, in case a company intends to file Form No. STK-2 after the action under sub-section of section 248 has been initiated by the ROC; it shall file all pending overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return) before filing Form No. STK-2. Form No STK-2 also cannot be filed once notice in Form No. STK-7 has been issued by the ROC pursuant to the action initiated under section 248(1).
IX. E-Form STK-2 shall be signed by an authorized director.
X. E-Form STK-2 shall be certified by Company secretary in whole time practice or Chartered Accountant in whole time practice or Cost Accountant in whole time practice.
XI. Public notice by ROC: After filing application for strike off by the company, the ROC shall publish a public notice in Form STK-6 inviting objections to the proposed strike off, if any. The notice will also be published for information of the general public in the following ways:
a. placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;
b. published in the Official Gazette;
c. 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.
The company shall also place the application on its website, if any, till the disposal of the application.
XII. Intimation to regulatory authorities: Intimation about the proposed action of removal or striking off the name of the company should be sent to the Income-tax authorities, central excise authorities and service- tax authorities having jurisdiction over the company to seek their objections, if any, which shall be furnished within a period of thirty days from the date of issue of the letter of intimation.
XIII. Striking off / Removal of the name of the company: After 30 days from the date of issue of the letter of intimation and unless cause to the contrary is shown by the company, if there are no objections received within 30 days from the general public or respective authority, the ROC can proceed to strike off or remove the name of the company from the Register of Companies.
XIV. Provision for realisation of amount due: The ROC before passing an order for striking off / Removal of the name of the company should satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time. The ROC can obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company. The assets of the company should be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the Register of Companies.
XV. Notice of dissolution of the company: After the expiry of the time mentioned in the notice, the ROC can strike off the name of the company from the Register. The notice of striking off the name of the company from the register of companies and its dissolution should be published in the Official Gazette in Form STK – 7 and the same should also be placed on the official website of the Ministry of Corporate Affairs. The company shall stand dissolved on the publication of this notice in the Official Gazette.
NOTE: The Company shall not make any application for the strike off of the company, if at any time in the previous 3 months, the company has done any of the below mentioned activities:
I. Has changed its name; OR
II. Has shifted its registered office from one State to another; OR
III. 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; OR
IV. 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; OR
V. Has made an application to the Tribunal for the sanctioning of a scheme of compromise or arrangement and the matter has not been finally concluded; OR
VI. Is being wound up under Chapter XX of the Companies Act, 2013 or under the Insolvency and Bankruptcy Code, 2016.
An application for striking off the name of the company under Section 248(2) of the Act shall be withdrawn by the company or rejected by the ROC as soon as the above stated conditions are brought to notice. In case of violation of the above provision, the company shall be punishable with fine.
Letter of Consent
[Pursuant to subsection (2) of section 248 of the Companies Act, 2013]
To,
The Board of Directors
XXXXXXXX PRIVATE LIMITED
Add: XXXXXXXXXXXXX
Subject: Consent letter under subsection (2) of section 248 of the Companies Act, 2013, regarding removal of name of the company from the register of registrar of companies.
Dear Sir/Madam,
I, RAMU, S/o Mr. SHYAM, member of XXXXXXX PRIVATE LIMITED holding 40,000 equity shares (00.00%), hereby give my consent under sub section (2) of section 248 of the Companies Act, 2013 for removal of name of the company “XXXXXXXXX PRIVATE LIMITED” from the register of Registrar of Companies, Delhi & Haryana.
Thanking you
SIGN……………
Name of Member:
(MEMBER)
DATE:
PLACE:
Conclusion: Striking off a company from the Register of Companies is a meticulous process, governed by various stipulations under the Companies Act. Whether initiated by the ROC or the company, adherence to the outlined procedure is imperative to ensure compliance and prevent legal complications.
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