This blog will help you understand the dissolution of a foreign company in India. Due to several reasons, the company may need to take steps for the closure of its operations in India. Let us discuss the steps that must be taken to dissolve a foreign company in India.
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Striking Off The Company
A foreign company can be struck off by applying to the ROC through the following two forms-
- E-form MGT-14 (normal fee)
- E-form STK-2(fee of ₹10,000/-)
Documents To Be Attached
- An indemnity bond, notarized by all directors, should be attached along with E-form STK-2.
- Statement of liabilities.
- Special Resolution (Certified true copy).
- Board resolution.
- Statement related to any pending litigation (if any).
- No objection certificate (if needed, from the relevant regulatory department or authority).
Step-by-step Procedure Of Voluntary Striking Off
1. A board meeting has to be convened by an officer or director of the company.
2. A board resolution must be passed in the meeting.
3. Send notice of the Annual General Meeting (AGM) or Extraordinary General Meeting (EGM) (whichever is relevant).
4. In the General Meeting, a special resolution has to be passed.
5. Form MGT-14 has to be filed (attach relevant documents).
6. Form STK-2 has to be filed (attach required documents).
7. Once the ROC has reviewed all the applications and documents, it shall issue a public notice before striking off the company.
Normally, it takes around 3-4 months for the ROC to review the applications and strike off the company.
Voluntary Winding-Up
Voluntary winding-up has been provisioned by the Insolvency and Bankruptcy Code, IBC, 2016. It is a process that can be entered into by a corporate person. This must be done under the provisions of Section 59(1) of the Patents Act, 1970.
Let’s discuss the certain criteria to be considered before the liquidation process can be initiated-
- Declaration of solvency (attached with audited financial statements and report of valuation).
- Members’ approval has to be sought officially.
- Creditors’ approval (NOC).
- Notifying the ROC and IBBI about the resolution within 7 days of such a decision.
- The voluntary winding-up process should be commenced on the date when the resolution has been passed.
Process Of Voluntary Liquidation
- A public announcement within 5 days of the appointment along with the commencement date, details of the liquidator, mode, and last date of submitting a claim have to be present.
- A new “in liquidation” bank account has to be opened to receive and send settlement dues by the corporate person or body.
- All claims have to be collected and verified within 30 days of the public announcement.
- A preliminary report within 45 days of the commencement date has to be prepared.
- The liquidator then has to set all assets either through auction or a direct party and then distribute the proceeds.
- A final report has to be prepared and submitted to ROC, IBBI, and NCLT. Then, the NCLT passes an order for the dissolution of the corporate body or entity.
- A copy of that order has to be submitted to the ROC through e-form INC-28.
Necessary Forms As Per Schedule 1 Of IBBI Regulations, 2017-
- Form A Public Announcement
- Form B Proof of claim by Operational Creditors except by workmen & employees
- Form C Proof of claim by financial creditors
- Form D Proof of claim by workmen & employees
- Form E Proof of claim by an authorized representative of workmen and employees
- Form F Proof of claim by any other stakeholder
The liquidator’s role in this whole process is paramount for the closure of a branch office/liaison office or a project office in India. The designated AD category has to be approached along with the RBI’s approval for the establishment of the office and the auditor’s certificate.
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