Explore the step-by-step procedure for striking off a company under Sections 248 to 252 of the Companies Act, 2013. Learn about the grounds, ways, and liabilities involved in the striking off process. Whether initiated by the Registrar of Companies (ROC) or the company itself, understand the detailed process, obligations, and implications for directors, managers, officers, and members. Stay informed about the legal provisions and considerations for the removal of names of companies from the Register of Companies.
Procedure of Strike off of Company
Section 248 to 252 of the Companies Act, 2013 governs the provision of the Removal of Names of Companies from the Register of Companies. These provisions provide an opportunity for non-performing companies to get their names struck off from the register of the Registrar of Companies
DORMANT COMPANY:
A company may also choose to temporarily shut down its operations due to adverse market conditions and decide to commence its operations at a future date. In all such cases, a company may make an application to the ROC to change its status from “active” to “dormant”. Dormant companies are also known as inactive companies.
GROUNDS FOR STRIKE OFF
The following are the grounds of striking off a company:
- The company hasn’t commenced its business within one year of its incorporation.
- The company hasn’t been carrying any business or activity for the preceding two financial years, for which it hasn’t apply for the status of Dormant Company under Section 455 of the Companies Act.
WAYS OF STRIKING OFF OF COMPANIES:
There are two ways of striking off:
- As per Section 248(1), Suo moto by the ROC; or
- As Section 248(2), an application made by the company for striking off of company
- Strike Off by ROC:
As per provisions of section 248(1), if an existing company failed to commence its business within one year of its incorporation or not carrying on any operation for a period of two immediately preceding financial years and has not made any application for obtaining the status of a dormant company under section 455 of the Act or the subscribers to the memorandum have not paid the subscription money and a declaration for the same has not been filed within 180 days of incorporation, then in such case, the Registrar can suo moto after giving notice strike off the name of the company.
- Strike Off by the company:
A company may file such an application, after set off all its liabilities, by passing a special resolution or consent of seventy-five percent members in terms of paid-up share capital. On receipt of the application along with necessary fees, the Registrar issue a public notice to intimate the general public about the removal of name of the company and to give a chance to the creditors and general public to submit their objection, if any. In case no objection is received after the expiry of the specified time, the ROC may proceed for striking off the name of the company from the Register of Companies and publish a notice of the same in the Official Gazette. On publication of notice, the name of the company stands struck off.
COMPANIES WHICH CANNOT BE REMOVED UNDER THE STRIKE-OFF PROVISIONS:-
(i) Listed Companies
(ii) Section 8 companies
(iii) Companies have charges which are pending for satisfaction
(iv) Companies of which application for Compounding is pending
(v) Companies against which any prosecution related to an offence is pending in court
(vi) Vanishing Companies
(vii) Companies that have been delisted due to non-compliance with listing regulations.
(viii) Companies which took public deposits which are either outstanding or is in default in repayment of the same.
(ix) Companies where inspection or investigation is ordered and an actions or such order are yet to be taken up or are completed but prosecutions arising out of such inspection or investigation are pending in the court.
(x) Companies where notices have been issued by the Registrar under section 234 of Companies Act, 1956 or 206 or 207 of the Act, 2016 and reply for the same is pending in court.
PROCEDURE FOR STRIKING OFF ON SUO MOTU BASIS BY ROC:
1. Service of notice: A notice in the form STK-1 is required to be sent by the registrar to the company and all its directors, to remove the name of the company from the register of companies.
2. Reply to Notice: Upon receipt of the notice, the company and all its directors are required to send their representations within a period of thirty days from the date of the notice.
3. Consideration of the representation made: The ROC will overview the representations made by the company and all its directors of the company.
4. Publication of Notice: For removal of the name of the company, notice should be made in form STK 5 and should be placed on the official website of the Ministry of Corporate Affairs and published in the Official Gazette.
5. Intimation to regulatory authorities: For striking off the name of the company, an intimation must be sent to the regulatory authorities.
6. Striking off the name of the company: If there are no objections received within thirty days, the Registrar of companies will proceed with striking off.
7. Provision for realisation of amount due: The provisions must have been made for realisation of all amount due to the company.
8. Notice of dissolution: The Registrar of companies proceed to strike off after the expiry of the time specified in the notice.
LIABILITIES OF DIRECTORS, MANAGERS, OFFICERS AND MEMBERS REMAINS SAME:
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 this section, continues and may be forced as if the company had not been dissolved.
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