ACTION to be taken against ROC Notice in FORM No. STK – 5 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.

As PIB Report, during F.Y. 2017-18 ROCs identified and removed the names of 2,26,166 defunct companies from ROC and 3,09,619 directors get disqualified.

2nd drive to be launched during the current financial year 2018-19; a total 2,25,910 companies identified for being struck-off.

Many ROC’s has issued notices in form STK-5 in the month of May and June, 2018 u/s 248(4) of Companies Act, 2013. Notice has been sent to those Companies, which according to ROC have not been carrying on any business or operation for a period of two immediately preceding financial years.

According to the ROC, the Companies which have not filed financial statement for a period of two immediately preceding financial year are non-working/ non-operational Company.

The main thrust of this editorial is “What should be reply of ROC Notice?”, “Points to be analyze before reply to ROC Notice”, “What is the implication of non reply of ROC Notice?”

Points to be analyzed Before- Reply to ROC Notice?

The Companies which have not filed their Financial Statement (AOC-4 / 23AC, ACA) or Annual Return (MGT-7) for a period of two immediately preceding financial year shall receive the Notice in form STK-5. Before filing of reply to ROC Notice, following points required to be analyzed by the Company.

i. Whether Company has filed the financial statement or Annual Return or not?

ii. Whether there is any business/ operations in the Company or not?

iii. Whether promoters want to continue the Company or want to Strike off?

How to Reply – ROC Notice?

After analyzing of above mentioned question, let’s discuss how to reply the NOC Notice.

i. Whether Company has filed the financial statement or Annual Return or not?

Generally, ROC has issued notice to only those companies, who have not filed their Financial Statement or Annual return for preceding two financial years. Therefore, we can opine that all such companies have not filed their forms.

ii. Whether there is any business or operation in the Company?

First promoters have to analyze that whether Company having any business or operations or not, this is crucial point for reply to ROC Notice. Because,

i. If Company is having business or continue carrying on business. Promoters have to prove the same to ROC that our Company is operational Company.

{in this case, Before reply to ROC, complete the annual filing of the Company and then reply to ROC that, our Company is working Company and our company inadvertently fails to file Financial Statement and Annual Return.  Which we have filed with additional fees (copy of challan is attached).}

ii. If Company is not having any business then question will arise that, whether promoters want to continue the Company or strike off the Company.

Whether Promoters want to continue the Company?

{in this case, Before reply to ROC, complete the annual filing of the Company and then reply to ROC that, our Company is working company, however there are not revenue or profit in our company still we are trying for business in future and our company inadvertently fails to file Financial Statement and Annual Return.  Which we have filed with additional fees (copy of challan is attached).}

Whether Promoters Doesn’t want to continue the Company?

In this case following shall be process:

FIRST: Complete the Annual Filing of Company (by filing of AOC-4 and MGT-7 with ROC by paying additional fees).

SECOND: File e-form STK-2 for strike off of Company with the relevant attachments. Complete process of strike off of Company shall available on below mentioned link:

https://taxguru.in/company-law/strike-off-of-companies-dissolution-of-company-new-provision.html

THIRD: Reply to ROC, that we have completed our pending annual filing with additional fees, Company don’t want to continue and e-form STK-2 has been filed for strike off of Company. (attached copy of all the challans of annual filing forms and STK-2)

What is the implication of non reply of ROC Notice?

Most important, if company doesn’t reply to ROC notice then what shall be implication of such on Company?

In short following below mentioned shall be implication on the Company:

i. Name of Company shall be removed from the record of ROC.

ii. Bank account of Company shall be ceased.

iii. Directors of Company shall be disqualified.

iv. DIN of Directors shall be ceased.

v. Directors shall not be allowed to continue as directors in other companies.

vi. Directors shall be personally liable for all the statutory and other liabilities of Company.

vii. Directors shall be liable for penalties, punishment or prosecution for non-compliances under the Act.

Conclusion:

Therefore, after reading above mentioned editorial it can be opine that, Best way to reply of ROC notice is depend upon one thing i.e. “Whether Company wants to continue the Business or wants to strike off the Company”.

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at [email protected])

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One Comment

  1. Nikhil Ekhe says:

    Dear Divyesh,

    One of our company has received notice under Section for non-filing of financials for previous 2 years and their status Master Data is showing as “Under Process of Striking Off”. In such case, if they want to continue, can it be possible to file AOC-4 and MGT-7 or, they have get the status “Active” first from ROC.

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