In India, thousands of Companies are incorporated every month under jurisdictions of various ROC’s. These Companies are incorporated for undertaking varied business activities under a single corporate umbrella and deliver value and profitability to its key stakeholders. The day-to-day changing dynamics of the law have created more stringent compliances for the corporates to mitigate any sort of ill practise to defraud the stakeholders. Under the clean out drive undertaken by the government in various tranche, lakhs of shell concerns were struck off under Section 248 of the Companies Act 2013 from the Register of Companies on account of non-filing of Financial Statements and Annual Returns for continuous period of three preceding financial years, and their Directors were also declared as disqualified.
However, to begin with let’s first understand what leads to Strike off and the due process involved in its revival.
Action Initiated:
1. By Company Itself u/s 248(2):
The Company itself, post extinguishing all the liabilities, vide passing Special Resolution (consent of 75% members in terms of Paid-up share capital), make an Application to the Registrar in a prescribed manner to get the name of the Company struck off from the Register of Companies on any of the below mentioned grounds:
i) Company failed to commence its business operations within 1 year of Incorporation.
ii) Company not carrying on business or operation for immediately preceding 2 FY and has not applied for obtaining status of Dormant Company.
iii) Subscriber have not paid the subscription money on the shares subscribed by them and have thus failed to file Form INC 20-A (Declaration for commencement of business), within 180 days of incorporation under Section 10A.
How to make an application?
Application u/s 248(2), of the Act need to be made in e-Form STK-2 along with:
a) Indemnity bond notarized by every Director- STK-3
b) Statement of accounts containing assets and liabilities made up till the date not preceding thirty days from date of making Application, duly certified by Chartered Accountant.
c) Affidavit by every Director- STK-4
d) Copy of Special Resolution passed in General Meeting.
e) Disclosure of pending litigations, if any.
f) Copy of Board Resolution authorizing filing of the application.
The Registrar, on receipt of the application:
- Cause a public notice to be issued in Form STK-6, and the same be published in Official Gazette, placed on the website of Ministry of Corporate Affairs, and simultaneously published in English Daily in the State in which Registered Office of Company is situated.
- The Registrar shall simultaneously intimate the concerned Regulatory Authorities e.g. Excise, Service Tax, Income tax having jurisdiction over the Company, and would seek objections against Strike off, if any, within thirty days of such intimation.
In the aforesaid case, if no objection is raise by the concerned, regulatory authorities, it is deemed to be a green signal to carry out the Strike off of the concerned Company, and the name be struck off the Register of Companies and notice for the same be issued by the Registrar and same be published in Official Gazette in STK-7.
Key Points:
- In case the Company is governed by specific Regulator, in such case No objection needs to be taken from such Regulatory Authorities as stated hereunder:
- Company engaged in providing Non-Banking finance and investment activities.
- A Housing Finance Company
- Insurance Companies
- Capital Market Intermediaries
- Companies engaged in Collective Investment schemes under SEBI.
- Asset Management Companies
- A Company registered under Section 8 of Companies Act, 2013, i.e. Companies incorporated for charitable objects, cannot opt for Voluntary Strike off.
2. By the Registrar on its own motion u/s 248(1):
The Registrar has power to serve the notice in Form STK-1 to Company and all its Directors, intimating his intention to remove name of the Company from the Register of Companies along with reasons thereof, on having reasonable cause to believe that:
i) Company failed to commence its business operations within 1 year of Incorporation.
ii) Company not carrying on business or operation for immediately preceding 2 FY and has not applied for obtaining status of Dormant Company.
iii) Subscriber have not paid the subscription money on the shares subscribed by them and have thus failed to file Form INC 20-A (Declaration for commencement of business) under Section 10A.
iv) the Company has not been carrying out business or operation, after physical verification of the Registered office as required u/s 12 of Companies Act, 2013.
The Company and Directors on receipt of the aforesaid notice have to provide with their representations and evidentiary documents, within a period of thirty days, in case they oppose the contesting view of the Registrar.
Upon no such representations being received within the time specified, the Registrar has inherent powers to strike off the name of the Company from the Register of Companies and the same shall stand dissolved.
The Registrar before striking of the name needs to?
- The Public Notice in view of the aforesaid be issued in Form STK-5, and the same be published in Official Gazette, placed on the website of Ministry of Corporate Affairs, and simultaneously published in English Daily in the State in which Registered Office of Company is situated.
- The Registrar shall simultaneously intimate the concerned Regulatory Authorities e.g. Excise, Service Tax, Income tax having jurisdiction over the Company, and would seek objections against Strike off, if any, within thirty days of such intimation.
In the aforesaid case, if no objection is raise by the concerned, regulatory authorities, is deemed to be a green signal carry out the Strike off of the concerned Company, and the name be struck off the Register of Companies and notice for the same be issued by the Registrar and same be published in Official Gazette in STK-7.
Revival of Companies Struck off u/s 248 of Companies Act, 2013
252(1) Vs 252(3)
The application for revival of Company whose name has been struck off from the Register of Companies by the Registrar u/s 248 of the Act, can be made u/s 252(1) or u/s 252(3) of Companies Act, 2013.
| S.No. | Section 252(1) | Section 252(3) |
| 1 | The section talks about making an appeal to the Tribunal for restoring the name of the Company by any person. | This section talks about making an application to the Tribunal for restoration of name of the Company whose name has been struck off, and such application can be made by any member, creditor, workmen or even the Company itself through its Directors or shareholders. |
| 2 | The time limit for filing appeal under this section is three years from the date of order of Registrar for striking off the name of the Company. | Application under this Section could be made within a period of twenty years from the date of order of Registrar published in Official Gazette i.e. STK-7. |
| 3 | Grounds for appeal for restoration of name being inadvertent or incorrect information provided to the Registrar where Company has opted for suo motu strike off procedure, or where Registrar itself has struck off the name of the Company based upon incomplete information. | Grounds for making an application to Tribunal under this section being absence of any of the grounds as provided under Section 248(1), wherein the Registrar has authority upon its own satisfaction to strike off the name of the Company, if any of the criteria as specified under Section 248(1) is fulfilled.
The additional ground for restoration under this Section for restoration of the name of the Company is under “Just Grounds.” |
Application u/s 252(3):
- Application/Appeal to be made in Form NCLT-9 to the NCLT Bench within whose jurisdiction the Registered Office of the Company is situated.
- Notice of admission in Form NCLT-2.
- General Affidavit verifying the petition in Form NCLT-6.
- Brief Synopsis of the case.
- Dates and events of material nature.
- Copy of the financial Statements from the year in which the name was struck off till the latest one, if the name has been struck off due to non-carrying of business or operations.
- Coy of Memorandum and Articles of Association.
- Board Resolution for filing Application with NCLT for restoration of name as well as authorizing the professional for appearance before the Tribunal.
- Copy of Bank draft evidencing proof of payment for application.
- Memorandum of Appearance in Form NCLT-12 OR Vakalatnama, as the case may be.
Upon hearing, if the NCLT is of the opinion that the strike off of the name of the Company was not justified and no grounds ever existed on the basis of which such strike off was done, then it may on the merits decide the matter and order restoration of the name of the Company in the Register of Companies, and such an order be filed with the Registrar in Form INC-28 within thirty days of declaration.
Conclusion:
Companies Act, 2013 provides for Strike off of the Company vide two different routes. First, being the suo motu strike of by the Registrar itself, on the grounds as specified under Section 248(1) of the Companies Act, 2013 and the other being application made by the Company itself on own accord for getting its name struck off from the Register of Companies.
However, in both the aforesaid cases proper due diligence needs to be done i.e. the Registrar should, before passing any such order for striking off satisfy himself that proper provisioning has been done to for realisation of any amount that stands due to the Company and that all the liabilities and obligations standing in the books of the Company has been provided for and discharged in a timely manner. Also the liabilities arising out of any such act done by the Director or any officer of the Company delegated with such authority, during the period would continue to be the liability and be provided for as if the Company isn’t dissolved.
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