Explore the steps, prerequisites, restrictions, and FAQs related to striking off a company under Section 248 of the Companies Act, 2013. Understand the voluntary process, compliance, and dissolution requirements.
Striking off a Company is a mechanism provided in Section 248 of the Companies Act, 2013 wherein Companies are provided an ‘exit opportunity’ so that they are no longer required to do any compliances and the name of the Company gets struck off from the Register of Companies.
Further, there are following two methods of strike off:
1. Compulsory Strike off
2. Voluntary Strike Off
However, in this article, we shall study only about the voluntary process of strike off.
RELEVANT PROVISIONS: Section 248 and 249 of the Companies Act, 2013 read with the Rule 4, 5, 6 and 8 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016
PRE-REQUISITES FOR APPLICATION OF STRIKE OFF
- The Company hasn’t commenced its business within one year of its incorporation, or
- The Company hasn’t been pursuing any business or activity for the preceding two financial years, for which it hasn’t sought the status of Dormant Company under Section 455 of the Act
STEPS FOR FILING STRIKING OFF APPLICATION
1. Convene Board Meeting for the following:
- Ensure that the Company is meeting the pre-requisites for filing strike off application
- Ensure that there are no liabilities and assets in the Company
- Ensure that the registrations like GST, EPF, ESI and similar are surrendered
- Ensure that all the bank account has been closed and a proof in this respect has been obtained
- Pass board resolution for striking off the Company
- Decide on the day, date, time and place for convening extra ordinary general meeting for filing striking off application and dispatch notice of the same accordingly.
2. Convene Extra Ordinary General Meeting for passing special resolution for striking of the Company.
3. Filing of eForm MGT-14 with fees (dependent on authorized capital) along with the following attachments:
- Certified true copy of the special resolution passed
- Notice of Extra Ordinary General Meeting
4. Filing of eForm STK-2 with fees of Rs. 10,000/- (same for every Company) along with the following attachments:
- Indemnity Bond duly notarized by all directors (in Form STK 3)
- A statement of liabilities comprising of all assets and liabilities of the companies (certified by a Chartered Accountant) having UDIN
- An affidavit in Form STK 4 (by all directors of the company)
- CTC of Special Resolution (duly signed by every director of the company)
- CTC of person having authority to file the resolution
- Copy of latest ITR filed
- Self-attested and professional certified identity and residence proof of the Directors
- Copy of bank closure certificate
5. On receiving satisfactory documents, the Registrar of Companies shall approve the eForm STK-2.
However, practically it is important to note that you will not receive any communication when the application is approved by the Registrar of Companies. But, you have to regularly check the master data until the status of the Company changes from being “Active” to “Under the process of Strike off”. Simultaneously, the status of the respective SRN on “Track Transaction Status” of the MCA portal gets change from “Pending for Approval” to “Action initiated for strike off”.
6. The Registrar shall cause publication of notice of strike off in Official Gazette and then, the Company shall stand dissolved. After this, the Company shall receive the approval mail for STK-2 and this can even take months.
RESTRICTIONS ON MAKING APPLICATIONS FOR STRIKE OFF
Companies are restricted on filing applications for strike-off, if at any time during the last three months, it has:
- Changed its name or relocated its registered office to another state.
- Made a disposal for the value of property or rights held by it (subject to conditions).
- Engaged in any other activity other than what is necessary or expedient for making an application under the concerned provision, and so and so forth.
- Filed an application to the Tribunal for the granting of Compromise or Arrangement, and a consensus for the same hasn’t yet been arrived at.
- Been wound up under Chapter XX, whether voluntarily, by the Tribunal or under the Insolvency and Bankruptcy Code (IBC), 2016.
FAQS – STRIKE OFF
1. Is it necessary to file INC-20A for striking off the Company?
Reply: It is not necessary in every case. Try prefilling the eForm STK-2 and if gets prefilled you can file the Form without filing eForm INC-20A.
2. In case the Company has not done compliances since incorporation and it has been 4-5 years, can the Company be stroke off without doing any compliances?
Reply: Practically, we have filed such application and the same were even approved on the ground that the promoters didn’t brought in the share capital amount into the Company and that hence, there was no business commenced into the Company.
3. If another Director is not willing to strike off or is absconded, what can be done?
Reply: As both Directors’ signatures are required in documents, it could only be possible when both are ready/available.
4. I had revenue in previous years but intends to strike off the Company now, can I do it?
Reply: No, it is necessary that your Company should not have any operations in the previous two years when you are making the striking off application/
5. How can a Section 8 Company stroked off?
Reply: Legally, a Section 8 Company cannot go for striking off under the provisions of 248 of the Companies Act, 2013 however, it can apply for strike off after conversion into a normal private limited Company.
6. The status of my Company is “under the process of strike off” on the MCA portal. I am liable to do any compliances since the Company has not been stroke off yet.
Reply: Once the status of your Company on master data of MCA portal gets changed to “Under the process of strike off”, you are not liable to do any compliances. In fact, you will not be able to do any since none of the forms will prefill the CIN of your Company.
{The author i.e., Mrs. Kajal Goyal is a Company Secretary in Practice and can be reached at (M) +91-9999952595 and (E) cskajalgoyal@gmail.com}
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