Revival of Companies under Companies Act, 2013

In order to increase transparency and curb the operations of shell Companies, the Registrar of Companies, in accordance with its power as per Section 248(1)(c), struck off many Companies in 2017, 2018 and then again in the year 2019. Accordingly, there have been three tranches of striking off done by the various Registrar of Companies (ROC) having jurisdictions till date.

Prior to this date, everyone was facing difficulty in reviving their Companies on account of hefty penalties involved in filing annual returns of the Company but after introduction of Companies Fresh Start Scheme, 2020 (CFSS-2020) wherein additional fees on filing annual returns has been waived off by the government amid widespread of Novel Corona Virus, many people again has start giving thought to getting their Companies revived.

To start with, let’s understand as to what does exactly the word “strike off” means. In layman’s language, “strike off means” temporary closure of Companies or to remove or erase the name of the Company from the list of Companies with the Registrar of Companies. 

REGULATORY PROVISIONS: Section 252 of the Companies Act, 2013 read with Rule 87A of the National Company Law Tribunal (Amendment) Rules, 2017.

1. GROUNDS ON WHICH ROC CAN STRIKE OFF COMPANIES:

1. The Companies which have failed to carry on the operations within one year of its incorporation.

2. The Companies which are not carrying on any operations or business for two financial years i.e. non filing of e-Forms AOC-4 and MGT-7 during preceding two financial years.

3. In case the subscribers to the memorandum has not paid the subscription money and a declaration to this effect has not been filed (eForm 20A) within 180 days.

4. The Company is not carrying on any business as revealed from the physical verification of its registered office.

However, practically, the ROC has struck off names of the Companies only on account of non-filing of e-Forms AOC-4 and MGT-7 during preceding two financial years only.

2. WHO CAN FILE APPEAL FOR REVIVAL OF COMPANY:

1. By any person aggrieved by the order of Registrar can file appeal within 3 years from date of order of Registrar.

2. By Registrar on being satisfied that the name of the Company has been struck off from the Register of Companies either inadvertently or on the basis of incorrect information furnished by the Company or its Directors can file appeal within 3 years.

3. By Company, or any member or creditor or workman aggrieved by Company having its name struck off from the register of companies can appeal file within 20 years from date the date of publication of notice of strike off in the Official Gazette

Here, it is important to bifurcate that in case of voluntary striking off, the limitation period is of twenty years and in case of compulsory striking off by ROC, the appeal has to be filed within three years of date of order of the ROC.

• GROUNDS FOR REVIVAL

The following are the grounds on which the revival of Companies is done by NCLT:

• In case the Company is having any immovable property.
• In case the Company has all done other compliances with Income tax, GST, Provident Fund and the like authorities apart from ROC.
• In case there are active transactions in the bank statements of the Company evidencing the Company to be an ongoing one.
• In case the Company is renewing any license on an annual basis, which is required to be taken like FSSAI license, Excise, etc.
• Any other documents depending upon the circumstances and case to case basis.

The basic moto is that there should be some document showing that it is in the public interest to revive the Company and the Company is an ongoing one.

3. PROCESS FOR REVIVAL OF COMPANY:

1. An appeal or application shall be made in format of NCLT 9 along with a demand draft of Rs. 1000/- in favor of “Pay and Accounts Officer, Ministry of Corporate Affairs” and following documents shall be attached with the appeal:

• An Affidavit verifying the petition in the form NCLT 6
• Order passed by the ROC for striking off
• Certificate of Incorporation
• Memorandum of Association
• Copy of audited financial statements since the financial year it has not been filed with the ROC
• Bank Statements, as the case may be
• Certified true copy of the Board Resolution authorizing the practicing professional to appear before the court
• Memorandum of Appearance
• Any other documents depending upon the circumstances and case to case basis.

2. A copy of petition shall be submitted to Registrar of Companies not less than 14 days before the date of hearingfixed with the Tribunal.

3. The Tribunal i.e. NCLT after hearing, shall pass order striking off the name or restoring the name of the Company.

4. On an order passed by tribunal for restoration of name of the Company:

• The Company shall deliver a certified copy of the order to the ROC within 30 days in eForm INC-28, and
• File pending financial statements and annual returns with the Registrar and comply with the requirements of the Companies Act, 2013 and rules made there under within such time as may be directed by the Tribunal.

5. The Company shall file the copy of order in form INC-28 with the ROC within 30 days from the date of the order and file all pending annual returns and financial statements in accordance with the order of NCLT

Additionally, it is pertinent to mention that practically, the jurisdiction bench of National Company Law Tribunal levy a penalty in the name of “‘Prime Minister’s National Relief Fund”, as costs in accordance with sub rule 4(c) of Rule 87A of the National Company Law Tribunal (Amendment) Rules, 2017 starting from a minimum amount of Rs. 25,000/- as per the discretion of the Hon’ble Judge.

On conclusion, we would like to highlight that the Company Fresh Start Scheme (CFSS-2020) paves a golden opportunity to revive your Company without involving any in-exorbitant penalties or fees.

{The author i.e. Kajal Goyal is a Company Secretary in Practice at Kajal Goyal and Associates and founder of Alliance Professionals and can be reached at (M) +91-9999952595 and (E) cskajalgoyal@gmail.com}