In this editorial Author discuss the few questions relating to Strike off of Companies.

I. Whether without completion of Annual Filing a Company can apply for Strike off in e-form STK-2?

II. Whether a company can apply for suo-moto Strike off after action initiated by ROC u/s 248(1)?

III. Whether a Company can suo-moto apply for strike off without filing of Active Form INC 22A?

IV. If ROC suo-moto struck off a Company, then whether Directors shall be disqualified?

A. Whether without completion of Annual Filing a Company can apply for Strike off in e-form STK-2?

Provisions of Suo-moto Strike off of Company has stated under Section 248 read with Rule 4.

As per Rule 4, Extract of Law:- “An application for removal of name of the company under sub-section (2) of section 248 shall be made in Form STK-2 along with the fee of ten thousand rupees. Provided that no application in Form No. STK-2 shall be filed by a company unless it has filed 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”

Note:- One can opine that as per rule 4 first proviso, a company can’t file application in e-form STK-2 for suo-moto strike off of Company, until unless company has completed filing of annual Form AOC-4 and MGT-7 till the financial year company carry its business operations.

In other word, there is no need to file pending annual form for strike off of Company, if company has not carried any business operation in those years.

B. Whether a company can apply for suo-moto Strike off after action initiated by ROC u/s 248(1)?

Provisions of Suo-moto Strike off of Company has stated under Section 248 read with Rule 4.

As per Rule 4, Extract of Law:-

“Provided further that in case a company intends to file Form No. STK-2 after the action under sub-section (1) of section 248 has been initiated by the Registrar, 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”

Note:- One can opine that as per rule 4 second proviso, if company has received notice u/s 248(1) from Roc in such case,  company can’t file application in e-form STK-2 for suo-moto strike off of Company, until unless company has completed filing of annual Form AOC-4 and MGT-7 till date.

In other word, it is mandatory to file pending annual form for strike off of Company, if company has received notice u/s 248(1) from ROC.

C. Whether a Company can suo-moto apply for strike off without filing of Active Form INC 22A?

As per Rule 25A of Companies (Incorporation) Rules, 2014 every company incorporated on or before the 31st December, 2017 shall file the particulars of the company and its registered office, in e-Form ACTIVE. If Company fails to file Active form then shall not allow filing following forms.

  • SH-07 (Change in Authorized Capital);
  • PAS-03 (Change in Paid-up Capital);
  • DIR-12 (Changes in Director except cessation);
  • INC-22 (Change in Registered Office);
  • INC-28 (Amalgamation, de-merger)

Note: – In the above mentioned rule it is nowhere mentioned that if company fails to file INC 22A it can’t file STK-2. Therefore, one can opine that a Company even not file Active form can file e-form STK-2 with ROC for suo-moto strike off.

In other word, it is not mandatory to file Active form for strike off of Company through e-form STK-2.

D. If ROC suo-moto struck off a Company, then whether Directors shall be disqualified?

As per provisions of Section 248(1) Where the Registrar has reasonable cause to believe that— (a) a company has failed to commence its business within one year of its incorporation or (c) a company is not carrying on any business or operation for a period of two immediately preceding financial years he shall send a notice 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

As per provisions of Section 164(2) No person who is or has been a director of a company which—

a) has not filed financial statements or annual returns for any continuous period of three financial years; or

b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.

Note: – As per above mentioned provisions:

  • Power of ROC for strike off arise if company fails to file Annual Forms for two financial years and
  • Disqualification arise if Company fails to file financial statement for three financial years

Therefore, one can opine that if ROC issue notice for strike off after failure of filing of financial statement for 2 financial years then directors of such company shall not be disqualified.

In other words, until unless company made default in filing of annual documents for three financial years directors shall not be disqualified.

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

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