In Ancient time, we lost the veer yodha Abhimanyu in Mahabharata yudh. As he knew how to enter in chakarvayuh but not aware about the exit. Consequently, we lose the veer yodha. On the other hand, as a professional we all are aware about how to incorporate a company so it is necessary to know about the exit route for the entity, one of them is strike off.
As an entrepreneur it is a crucial decision to choose a business entity for doing business in a good manner, but it is also important to know about the closure of the business entity to save time, cost, compliance’s penalty.
When the company incorporates, its name is registered in the register of company by the registrar of the company and the company may by application or the registrar (suo moto) may strike off the name of the company from the register of companies in some circumstances.
The Ministry of Corporate Affairs (“MCA”) vide Notification dated 26th December, 2016 notified Sections 248 to 252 of the Companies Act, 2013 (“Act”) dealing with the provision for Removal of Names of Companies from the Register of Companies (“ROC”). The provisions relating to strike off provide an opportunity to the non-working companies to get their names struck off from the records of the ROC. The MCA had also issued the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 (“Rules”) to be effective from the same date i.e. 26th December, 2016 in order to provide procedural aspects of striking off
WAYS OF STRIKING OFF OF COMPANIES
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IN CASE OF AN EXISTING COMPANY WHICH HAS FAILED TO:-.
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STRIKING OFF UNDER CHAPTER XVIII OF THE COMPANIES ACT, 2013 CAN ALSO BE BY WAY OF AN APPLICATION FILED BY THE COMPANY WITH THE ROC FOR REMOVING ITS NAME FROM THE REGISTER OF COMPANIES ON ALL OR ANY OF THE GROUNDS MENTIONED:-
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Strike Off by the ROC
Here, The procedure is given for strike-off by ROC:-
Now, let’s move towards the companies which cannot apply for strike off :-
1. Listed Companies
2. Section 8 Companies
3. Companies having charges which are pending for satisfaction;
4. Companies whose application for compounding is pending for compounding of offences committed by the company or any of its officers in default;
5. Companies against which any prosecution for an offence is pending in any court
6. Vanishing Companies;
7. Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;
8. Companies where inspection or investigation is ordered and being carried out or actions or such order are yet to be taken up or were complete but prosecutions arising out of such inspection or investigation are pending in the court;
9. Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
10. Companies where notices under section 234 of CA 1956 (i.e. Power of Registrar to call for information or explanation) or 206 (i.e. Power to call for information, inspect books and conduct inquiries) or 207 (i.e. Conduct of Inspection and Inquiry) of the CA 2013 have been issued by the Registrar or Inspector and reply thereto is pending or report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the court.
Apart from above companies, in some Situations a company cannot apply for strike off under Section 248(2) of the Act: The Company shall not make any application for the strike off of the company, if at any time in the previous 3 months, the company has done any of the below mentioned activities
(i) Has changed its name or
(ii) Has shifted its registered office from one State to another; or
(iii) Has made a disposal for value of property or rights held by it, immediately before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business; or
(iv) Has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement; or
(v) Has made an application to the Tribunal for the sanctioning of a scheme of compromise or arrangement and the matter has not been finally concluded; or
(vi) Is being wound up under Chapter XX of the Companies Act, 2013 or under the Insolvency and Bankruptcy Code, 2016.
An application for striking off the name of the company under Section 248(2) of the Act shall be withdrawn by the company or rejected by the ROC as soon as the above stated conditions are brought to notice. In case of violation of the above provision, the company shall be punishable with fine which may extend to one lakh rupees.
IMPORTANT NOTE:
Before making an application to ROC for strike off it is necessary to file INC-20A form and all the pending Annual Returns i.e. AOC-4 and MGT-7/7A.
Further, DIN shall be activated of the all the directors.
Procedure of striking off of the name of the company by way of an application to ROC.
Now, let’s go through the procedure of striking off of the name of the company by way of an application to ROC.
1. Call and hold Board Meeting to pass Board resolution for the purpose of striking off of the name of the company from the Register maintained by the ROC, subject to the approval of the shareholders of the company, and to authorize any director to file an application and for fixing date, time and venue for the Extraordinary General Meeting of the shareholder.
2. After passing of Board resolution, if there is any liability in the company, the company will set off / pay all its liabilities.
3. Every director of the company should sign and execute indemnity bond duly notarised by every director in Form STK 3 and Affidavit in Form STK 4. In case director is a foreign national or non-resident Indian, the documents should be notarized or apostilled or consularised.
4. Company should get the statement of accounts in Form STK-8 containing the assets and liabilities of the company made up to a day, not more than thirty days before the date of application. Such a statement should be certified by a Chartered Accountant;
5. General Meeting should be held on the day, date, time and venue as fixed earlier for passing of the special resolution.
6. Thirty days from the date of the passing of the special resolution in the General Meeting or after obtaining consent, company should file MGT-14.
7. Approval of concerned authorities is required in case of a company regulated by any other authority.
8. Thereafter, an application for removal of the name of the company shall be made in Form STK-2 along with the fee of ten thousand rupees.
Following documents will be attached in the Form STK-2. {Rule 4(1)} Attachment – STK-2
(a) No objection certificate from the appropriate concerned authority, if applicable (RBI, IRDA, Housing Finance, SEBI etc.) Rule 4(2).
(b) Indemnity Bond duly notarised by every Director in Form STK-3.
(c) Statement of Accounts certified by CA in Form STK-8. Statement should not be older than 30 days from the date of application.
(d) An Affidavit by every director in Form STK-4.
(e) Certified true copy of special resolution duly certified by each of the directors of the company; or consent of seventy-five per cent of the members of the company in terms of paid up share capital as on the date of application.
(f) Statement regarding pending litigations, if any.
9. E-Form STK-2 shall be signed by an authorized director and E-Form STK-2 shall be certified by Company secretary in whole time practice or Chartered Accountant in whole time practice or Cost Accountant in whole time practice.
10. Public notice by ROC: After filing application for strike off by the company, the ROC shall publish a public notice in Form STK-6 inviting objections to the proposed strike off, if any. The notice will also be published for information of the general public in the following ways: (a) placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard; (b) published in the Official Gazette; (c) Published in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated. The company shall also place the application on its website, if any, till the disposal of the application.
12. Intimation to regulatory authorities: The company should be sent to the Income-tax authorities, central excise authorities and service- tax authorities having jurisdiction over the company to seek their objections, if any, which shall be furnished within a period of thirty days from the date of issue of the letter of intimation.
13. Striking off / Removal of the name of the company: After thirty days from the date of issue of the letter of intimation and unless cause to the contrary is shown by the company, if there are no objections received within thirty days from the general public or respective authority, the ROC can proceed to strike off or remove the name of the company from the Register of Companies.
14. Provision for realisation of amount due: The company should satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time.
15. Notice of dissolution of the company: After the expiry of the time mentioned in the notice, the ROC can strike off the name of the company from the Register. The notice of striking off the name of the company from the register of companies and its dissolution should be published in the Official Gazette in Form STK 7 and the same should also be placed on the official website of the Ministry of Corporate Affairs. The company shall stand dissolved on the publication of this notice in the Official Gazette.
Status of strike off company
Now, the company stands dissolved under section 248, it shall on and from the date mentioned in the notice of dissolution cease to operate as a company and the Certificate of Incorporation issued to it 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 or obligations of the company.
Here is the list of all forms used in the procedure of Strike off:-
| SR. NO. | FORM | PURPOSE |
| 1. | STK-1 | Notice by ROC for removal of name of a company from the Register of Companies |
| 2. | STK-2 | Application by company to ROC for removing its name from register of Companies. |
| 3. | STK-3 | INDEMNITY BOND (to be given individually or collectively by every director). |
| 4. | STK-4 | AFFIDAVIT (to be given individually by every Director). |
| 5. | STK-5 | PUBLIC NOTICE |
| 6. | STK-5A | PUBLIC NOTICE |
| 7. | STK-6 | PUBLIC NOTICE |
| 8. | STK-7 | Notice of Striking Off and Dissolution. |
| 9. | STK-8 | ACCOUNT STATEMENT |
DISCLAIMER: The entire contents of this article has been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, the author assumes no responsibility therefore. Users of this information agrees that the information is not a professional advice and is subject to change without notice. The author assumes no responsibility for the consequences of use of this information. IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION. THE AUTHOR – CS MONIKA MALHOTRA (PRACTICING COMPANY SECRETARY) CAN BE REACHED AT csmonikamalhotra26@gmail.com or +91-9958089808
Author Bio
I know of a private limited company company, which was incorporated in the year 2015. That Company has not started any business activity from the date of incorporation. while filing annual returns and annual financial statements, that Private Limited Company specifies in no uncertain language that no business activity has been undertaken since the date of incorporation. Even then the Registrar of Companies has not issued any notice for strike off of the name of that Private Limited Companies.
It seems that office of Registrar of Companies has been conniving at such non-functional Companies. Good policy of striking off such Companies envisaged in the Companies Act, 2013 is ignored because of inaction of the office of Registrar of Companies.
what is your view in the matter?