CS Divesh Goyal

Ministry of Corporate Affairs (MCA) issued a Notification dated 26th December, 2016 notifying Section 248, 249, 250, 251 and 252 of Companies Act, 2013 (Chapter XVIII). This chapter deals with Removal of Names of Companies from Register of Companies. MCA has appointed 26.12.2016 as effective date for Section 248 to 252.

This is alternative to winding up of a Company subject to statutory criterion specified under the section. This has replaced Section 560 (Form FTE) of erstwhile Companies Act, 1956.

1. Ways of Striking off of Companies

  • By Registrar of Companies on suo-motto
  • By Application of Company for removal of name/ Strike off of Company

2. Type of Companies which can not be removed under these provisions:

i. Listed Companies

ii. Companies registered under section 8

iii. Companies having charges which are pending for satisfaction

iv. Companies whose application for Compounding is pending

v. Companies against which any prosecution for an offence is pending in any court

vi. [1]Vanishing Companies

vii. Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;

viii. 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.

ix. Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;

x. Companies where notices under section 234 of CA 1956 or 206 or 207 of the Act, 2016 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.

3. Grounds of Strike off of Companies

i. A company has failed to commence its business within one year of its incorporation. OR

ii. A company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455.

4. Situations in which Company cant apply for Strike off:

The Company shall not made any application for the strike off of the Company if any time in the previous 3 month the company has done any of the below mentioned workings:

i. Has Changed its name or

ii. Has Shifted its registered office from one State to another;

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;

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;

v. has made an application to the Tribunal for the sanctioning of a Compromise Or Arrangement and the matter has not been finally concluded; or

vi. is being wound up under Chapter XX, whether voluntarily or by the Tribunal.

Provisions for Removal of Name of Companies on application of the Company:

Obligation of Company

Calling of Board Meeting:

Company will call the Board Meeting as per Secretarial Standard 1 to pass a Board resolution for the purpose of Strike off of Company and to authorize any director of the Company to file application with Registrar of Companies.

Extinguishment of the Liabilities:

After passing of Board resolution if there is any liabilities in the Company. Company will set off all the liabilities before next step.

Calling of General Meeting:

Company will hold the general meeting of members of the Company and pass a resolution for strike off of Companies with the approval of 75% of members as per paid up share capital of the Company. After passing of Special resolution company will file MGT-14 within 30 days.

Application to ROC by Company:

Application shall be made in eform STK-2 (fee Rs. 5,000/-). Following below mentioned documents will be attached in the Form STK-2. Rule 4(1)

Attachment – STK-2: Rule 4(3)

  1. NOC from the appropriate concerned authority, if required (RBI, IRDA, Housing Finance, SEBI etc.) Rule 4(2)
  2. [2]Indemnity Bond from Every Director in Form STK-3
  3. Statement of Accounts certified by CA. Statement should not be older than 30 days from the date of application.
  4. An Affidavit from every Director in Form STK-4
  5. CTC of Special Resolution duly signed by each Director
  6. Statement regarding pending litigations, if any, involving Company. (Better to give in affidavit format)

Certification- STK-2:

E-form STK-2 shall be signed (Affixation of DSC) by a Director. Director should be [3]authorized by the Board for such purpose. Rule 5.

In case director don’t have DSC:

Physical copy of STK-2 manually signed by the director authorized shall be attached with the form STK-2.

Certification from Professional:

The e-form STK-2 shall be certified by Company Secretary in Whole time Practice or Chartered Accountant or Cost Accountant in whole time practice.

Place of application on Website:

The Company will place the copy of application on its website till the disposal of the application. . Rule 7(1).

Undertaking from Director – Discharge of Liability:

The Registrar, if feel necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company that the sufficient provision has been made for the realization of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company.

Declaration from any Director:

The directors will give following below mentioned declarations:

  • The application has been in accordance with the conditions mentioned under sub section (1) and (2) of section 248 and sub section (1) of section 249:
  • There is no inspection or investigation ordered and carried out or yet to be carried out or being carried out against the company and where inspection or investigation have been carried out , no prosecution pending in any court arising out of such inspection or investigation;
  • The company is neither having any public deposit which are outstanding nor the company is in default in its repayment or interest thereon ;
  • The company does not have any outstanding loans, secured or unsecured;
  • The company does not have any dues towards income tax .VAT, excise duty, service tax or any other duty, by whatever name called, payable to the central government or state government, statutory authority or local authority;
  • All other liabilities of the company have been settled or discharged or extinguished;
  • All the requirements of the act and rules made thereunder relating to removing the name of the company from the register of companies and matters incidental or supplemental thereto have been complied with;
  • To the best of my knowledge and belief, the information given in this application and iuts attachment is correct and complete;
  • the requisite fee has been paid.

Obligations to ROC:

Issue of Notice for any objections:

The Registrar shall, on receipt of such application Issue a public notice in form STK-6. Such notice shall be published in following manner. Rule 7(1).

  • Place copy of notice on the official website of MCA on a separate link.
  • Published in the Official gazette
  • Publish in one English and one vernacular language newspaper, both having wide circulation in the state in which registered office of the Company is situated.

Intimation to Authorities for any objections:

The Registrar of Companies shall, simultaneously intimate the concerned regulatory authorities regulating the Company, having jurisdiction over the Company, viz;

  • Income Tax Authorities
  • Central Excise Authorities
  • Service Tax Authorities

If the authorities have any objections, they have to furnished the same within a period of 30 days from the date of issue of the letter of intimation.

Issue notice of Striking off and dissolution of Companies:

If no objections received then ROC shall issue a notice u/s 248(5) of striking off of Company and publish the same in official gazette in form No. STK-7. The copy of notice shall also be placed on the official website of the MCA.

Other Provisions:

Liability of Directors:

The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved.

Effect of Strike off:

It shall on and from the date mentioned in the notice under sub-section (5) of section 248 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 realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.

Appeal to Tribunal:

Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal (NCLT) within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies.

CONCLUSION:

Due to enforcement of Section 248-252, 26th December, 2016 onwards all the strike off applications will be file in e-form STK-2. Form FTE has been demolished. No application can be file through FTE. There is also little change in process of Strike off like there is need to pass special resolution, publication of notice on website of Company etc.

Life always started to death. Company can be created and wind up. Sometimes, Idea of a company conceives, but fails to take life

[1] Means a Company registered under this act, listed on stock exchange which has failed to file its returns with the Registrar of Companies and Stock Exchange for a consecutive period of 2 years, and not maintaining its registered office at the address notified with the Registrar of Companies or Stock Exchange, and none of its directors are traceable

[2] If the person is foreign national or non-resident Indian, the indemnity bond, and declaration shall be notarized or apostillised or consularised.

[3] Better to pass a Board Resolution for authorization of Director.

(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

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10 responses to “Strike off of Companies / Dissolution of Company- New Provision”

  1. Oshin Gehlot says:

    A Company which has been incorporated in April, 2016 and no ROC Forms has been filled up to a day but transactions has done so revenue has been generated, company have no other defaults and now wants to strike off the name of company. So what will be the proceedure to close the company.

  2. pooja says:

    suppose a company has been established in 2003
    and its annualfilings are made in 2017 for 2015,2016..but inthe mca portal the company status is showing as strike off company ..will u suggest the remedy to be taken for getting back the company to active

  3. vijay says:

    while attaching statement of accounts date of application is inclusive or exclusive for calculating 30 days??

  4. CS Chandan Seth says:

    i think no need to file mgt-14..

  5. CS Shiriti Kumari says:

    Please do clarify as per Act language under section 248:

    by a special resolution
    or
    consent of seventy-five per cent.
    members in terms of paid-up share capital

    “Not mandatory to file SR with if NOC is taken from 75% value of shareholders in terms of paid up”

  6. Sjose says:

    Please help urgent : Private Limited company which was operational six months back with no transactions in account post August 2016 , can we apply for STK 2 voluntary wind up ?? or is it possible only after 2 years

  7. AMITA SHARMA says:

    suppose there is pvt ltd company has filled annual returns till 2016 and carrying business activity or operation, now it wants to get a status of a dormant company, but as per compnaies act provided that company not carried any business activity or operation for past few years: or must not filled annual returns fo past 2 years; or must not carried any significant transactions for past 2 years , so please suggest me an alternate and benefits will company get from such alternate option

  8. Pratibha says:

    Published in the Official gazette Publish in one English and one vernacular language newspaper, both having wide circulation in the state in which registered office of the Company is situated.-

    will this be initiated by the Company or the ROC?

  9. Bhanu Prasad says:

    How much time MCA will take for the release of new forms, All are waiting to close the companies.

  10. Bhumika says:

    if there is one company which has not filed annual return for last 2 years and ROC now have sent Show Cause Notice. now company wants to strike off. is the compounding of such non filing of annual return is necessary before opting this FTE scheme, 2016. company have no other default.

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