Strike Off Of Company under Section 248 of Companies Act, 2013
The Companies Act 2013 provide two modes of strike-off – namely
- Strike off by the ROC under Section 248(1) of the Companies Act 2013, and
- Strike off by a company on its own accord under Section 248(2) of the Companies Act, 2013.
Grounds for Strike off
The provision of strike-off could be enacted on the basis of the following grounds:
- The company has not commenced its business within one year of its incorporation.
- The company has not 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.
Strike Off by ROC
The Registrar of Companies may issue a notice to the Companies and its Directors in Form STK-1 (Removal of Names of Companies from the Registrar of Companies) if ROC holds a reasonable cause as specified above. Such a notice would inform the respective companies of the removal of its name from the record and request it to send its representatives with the requisite documents within thirty days of the issue of such notice. This process is also named as Compulsory removal of name from the Registrar of Companies.
Strike off on the Company’s Accord
A company may file an application to the Registrar of Companies in E-Form STK-2 after closing off its liabilities. This could be performed by passing a special resolution, which must be consented by 75% of its members.
Checklist for Strike Off
Companies may pursue a strike off by following each of the following specified procedures:
The Holding of Board Meeting
A resolution for the purpose of this provision could be passed by a company through a Board Meeting, after which any of its directors would be designated to make an application to the Registrar of Companies (ROC) for strike off.
Closing off Liabilities
A company desirous of a strike off must have closed off all its liabilities.
Holding of General Meeting
A general meeting of shareholders should be held by the company by passing a resolution for striking off the name of the Company. This resolution must be consented by 75% of its members as per the paid-up share capital of the Company. After this stage, the Company would be necessitated to file E-form MGT-14 within a time-frame of thirty days.
Note – if the company is regulated by any other authority (Ex RBI), then the consent of such authority must be obtained for this purpose.
Furnishing of Application and Documents
Companies on the pursuit of strike-off must file an application to the Registrar of Companies (ROC), accompanied by the following documents:
- 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).
- An affidavit in Form STK 4 (by all directors of the company).
- CTC of Special Resolution (duly signed by every director of the company).
- A statement concerning any pending litigations with respect to the company.
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.
The following companies do not qualify for the provision of strike off:
- Listed companies.
- Companies delisted on account of non-compliance of listing regulations, listing agreement or any other statutory laws.
- Vanishing companies.
- Companies which has been listed for inspection or investigation – if such directive is being carried out/pending/completed but the prosecutions concerning such inspection or investigation are pending in the Court of law.
- Companies which hasn’t yet responded to notices of select provisions.
- Companies which hasn’t furnished the follow-up instructions on any report under section 208 of the Act.
- If the prosecutions related to the above two provisions are pending in a Court of law.
- Companies against which any case for prosecution is pending in a Court of law.
- Companies, whose application for compounding is pending before the competent authority for compounding the offences committed by it or any of its officers in default.
- Companies accepting any public deposits which are outstanding.
- Companies having any charges which remain to be satisfied.
- Companies registered under Section 25 of the Companies Act, 1956 or Section 8 of the Act.