Striking a company’s name off the register is an alternate method of ceasing business. For specific situations, the Registrar of Companies (‘ROC’) can issue a notice to strike the company name from the Register of Companies. The firm can also file a request with the ROC to have its name removed from the Register of Companies.
The procedure for striking out company names by the ROC or voluntarily by the company is outlined in sections 248 to 252 of the Companies Act, 2013 (‘Act’). The removal of a company’s name from the register expedites the closure of a defunct business. It is the most straightforward method of dissolving a corporation.
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Application to Strike Off a Company on a Voluntary Basis
- A business can file an application to the ROC to have its name removed from the Register of Companies by passing a special resolution or obtaining the permission of 75% of its members (in terms of paid-up capital).
- The corporation can petition to the ROC to have its name removed when it has paid off all of its debts on any or all of the following grounds:
i. Within one year after establishment, the company collapses or does not start doing business.
ii. The company has been inactive or has not carried on any activity for the previous two financial years and has not filed an application for dormancy under Section 455 of the Act within that time period.
The ROC shall make a public notice in the manner provided by the Act upon receiving the company’s application for the name to be struck off.
Restriction on a Company’s Ability to File a Voluntary Application to Strike Off
If the company has made a disposal for value of rights or property held by it, immediately before the cessation of trade, for the purpose of disposal for gain in the normal course of carrying out business or trading, or has shifted its registered office from one state to another or changed its name, or has filed an application with the National Company Law Tribunal (‘Tribunal’), the company cannot apply to have the company name struck off.
Striking Off Company Name by ROC
The ROC will send a notification to the organization and its overseers of the expectation to eliminate the organization name/strike-off organization name from the Register of Companies assuming there is a sensible reason to trust that:
- the organization flops or doesn’t start working within a year of its incorporation
- the organization is not in operation or not conveying any business in two preceding financial years and has not recorded any application inside such period for getting the dormant status under Section 455 of the Act
The ROC will demand the organization to send depiction with duplicates of the pertinent documents within a period of thirty days from giving the notification of striking off the organization name.
Striking Off a Company Name Procedure
A notice issued by the ROC or an application filed by a corporation for the striking off of its name shall be published in the Official Gazette to inform the general public. When the stipulated time in the notification for striking off expires, the ROC will strike the company name from the Register of Companies unless the company presents a compelling justification for the same within the specified time.
After striking out the company name from the Register of Companies, the ROC will publish the dissolution notification in the Official Gazette. The corporation will be dissolved after the notice is published in the Official Gazette. The ROC will ensure that suitable provisions are made for the payment or discharge of company liabilities, the realisation of funds owed to the company and its obligations within a reasonable period before granting an order of company dissolution and striking off the company name.
In this regard, the ROC will also seek the required assurances from the director, managing director, or other persons in charge of the company’s management. Even after the date of the order removing the firm name from the Register of Companies, the company’s assets will be available for the discharge or payment of its obligations and liabilities. Every manager, director, or other official exercising any power of management, as well as every member of the dissolved company, retains their liability, which can be enforced as if the business had not been dissolved.
Effects of Dissolution of Company
When a company is dissolved under Section 248 of the Act and a notice is published in the Official Gazette, the company ceases to exist on the date specified in the notice. The ROC’s Certificate of Incorporation will be considered null and void as of the date of dissolution. The Certificate of Incorporation, on the other hand, will be valid for the payment or discharge of corporate liabilities, as well as the realisation of amounts owed to the company and the discharge of company obligations.
Appeal to the tribunal
Any person who has been harmed by a ROC order notifying that a corporation has been dissolved under Section 248 of the Act has three years from the date of the ROC order to submit an appeal with the Tribunal. If the Tribunal believes that the removal of the business name is not justified due to the absence of the grounds on which the ROC issued the order, it might issue an order to restore the company name to the Registrar of Companies. The ROC, the corporation, and all other parties involved shall be given a reasonable opportunity to make representations and be heard by the Tribunal.
Upon filing of copy of tribunal order to ROC by company, within thirty days from the date of order of Tribunal, the ROC will restore the organization name in the Register of Companies and issue a new Certificate of Incorporation. The ROC can apply to the Tribunal looking for company name restoration assuming it is fulfilled that the organization name has been struck off from the Register of Companies dependent on mistaken data outfitted by the chiefs or organization or coincidentally and requires reclamation. The ROC can document to the Tribunal for restoring the name of company on the Register of Companies within 3 years from dissolution.
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