CS Chetan Bhadouria

The Ministry of Corporate Affairs (MCA) through a Notification dated 26th December, 2016, commenced the section 248 to 252 of Companies ct, 2013 (Chapter XVIII). This chapter deals with “Removal of Names of Companies from the ROC”

Please find the Link of Notification of the same:

https://taxguru.in/company-law/companies-removal-names-companies-register-companies-rules-2016.html

By introducing these sections, Ministry has replaced the section 560 of Previous Companies Act, 1956.

Now, the process of removing the name of the company from register of Registrar has been simplified. Now instead of sending several notices as required in section 560 of the Companies Act, 1956, the registrar shall after making the necessary publication in the Official Gazette for removing the name, unless cause to contrary is shown to him by the company. Also the company and the directors are required to make their representations on the device within a period of 30 days from the date of notice.

Following are the Provisions for Removal of Names of Companies under Companies Act, 2013:

> Power of Registrar to remove the name of Company (Section 248):

1. The registrar has power to remove the name of company by sending notices (in form STK-1) to the company and its directors under the following new grounds:

  • Failure to commence its business within one year of its incorporation, or
  • Failure in not carrying on any business or operation for period of two immediately preceding financial years and has not made any application for obtaining status of dormant company under section 455.

2. If a company extinguishing all its liabilities, by a special resolution, file an application to the Registrar for removing the name of the company and the Registrar shall on receipt of such application, cause a public notice (in form STK-1) and shall published in the official gazette for the information of general public.

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

3. At the expiry of the time mentioned in Notice, the registrar may, strike off the name of company form the register of companies and on the publication in the Official Gazette, the company stand dissolved.

4. The liability of every director, manager or other officer exercising any power of management and every member of company dissolved shall continue and may be enforced as if company had not been dissolved.40

> Process for getting the name struck off by company:

File duly filled form STK-2 along with fees of Rs. 5000, with the attachment of following Docs:

1. indemnity bond duly notarised by every director in Form STK 3;

2. An affidavit in Form STK 4 by every director of the company;

3. A statement of accounts certified by a CA;

4. A copy of resolution signed by director of the company

4. Following category of companies shall not be removed from the register of companies:

1. listed companies;

2. Companies under non compliance of Listing regulations or any other laws;

3. vanishing companies;

4. Companies where investigation, inspection and prosecution is pending or carried out;

5. Companies where notice issued under section 206 or 207 have been issued;

6. companies whose application for compounding is pending before the competent authority;

7. Companies, accepted public deposits which are either outstanding or in default;

8. companies having charges which are pending for satisfaction; and

9. Companies registered under section 8 of the Act.

> Situations when a company cannot make application to Registrar if, at any time in the previous three months, the company (Section 249):

1. Has changed its name or shifted its registered office from one state to another;

2. Has engaged in any other activity except the one which is necessary or expedient for the porpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company.

3. Has made an application to the tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or

4. Is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy code, 2016.

If a company make an application in violation of section 248, it shall be punishable with fine upto 1 lakh.

> Effects of a company notified as dissolved (Section 250).

This section implies that where a company is dissolved under section 248, it shall cease to operate as a Company and the Certificate of Incorporation (COI) shall be deemed to have been cancelled from such date except for the purpose of realizing the amount due to the company and for the payment or discharge of the liabilities of the company.

> Penalties for Fraudulent Application for removal of name. (Section 251)

If a fraudulent application made by a company for removal of it’s name from the register of companies, with the intention to deceive the creditors or to defraud any other persons or with the object of evading the liabilities, the person in charge of the management of the company shall-

√ Be jointly and severally liable to any person or persons who had incurred loss or damage or result of the company being notified as dissolved; and

√ Be punishable for fraud as provided in section 447.

The registrar may also recommend prosecution against the persons responsible for the filing of such applications.

> Appeal to Tribunal. (Section 252)

Restoration of Name: If any Person, aggrieved by an order of the ROC, can file an appeal to the Tribunal within 3 years for restoration of the name of the company. If the Tribunal is of the opinion that removal of name is not justified, may order for restoration of it’s name.

If the Registrar believes that the name of the company has been struck off from the register of companies on the basis of incorrect information, which requires restoration, he may also file an application to Tribunal for seeking restoration of the name of the company.  

A Company/member/creditor/workman, if aggrieved by the company having its name struck off, may apply to the Tribunal before expiry of Twenty years from the publication in the official gazette of the notice

Earlier, in Companies Act, 1956, the workman was not considered as an aggrieved party. Now his interest has been taken care.

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