Short Summary:
We have received queries / questions many persons Like: Professionals / corporate on subject “Whether Completion of Annual Filing Mandatory for Strike Off of Company ?”.
There is difference in views of professionals, business entities even authorities on above mentioned question. In below mentioned editorial author will discuss provision of strike off in concerned to above question.
Background:
There was three phase in History of Companies Act for “Strike off of Companies”.
Phase I: Under Companies Ac, 1956 Closure of Company was stated under Section 560.
Phase II: Then MCA came with a Scheme ‘Fast Track Exit Scheme’ (FTE) on 7th June, 2011.
Phase III: Then MCA came with Companies Act, 2013, provision of Strike off of Company falls under Section 248 effective from 26th December, 2016.
Legal Provisions:
♦ Extract of Sections 560:
As per section 560 of the Companies Act, 1956, Registrar of Companies may strike off the name of companies on satisfying the conditions therein.
As per Section 560, a company desirous of getting its name struck off has to apply to Registrar of companies in e-form 61. All pending statutory returns are required to be filed along with e-form 61. (This language was mentioned in MCA circular no 36/2011 dated 07th June, 2011.)
♦ Fast Track Exit Scheme (FTE):
In order to give an opportunity for fast track exit by a defunct company, for getting its name struck off from the register of companies the Ministry has decided to modify the existing route through e-form – 61 and has prescribed the new Guidelines. The Guidelines for “Fast Track Exit mode” for defunct companies.
NOTE: After Effective of Section 248 dated 26th December, 2016, “FTE” scheme has been omitted. Therefore, Legally after 26th December, 2016 there is no FTE Scheme.
♦ Extract Section 248 of Companies Act, 2013:
In the latest provisions of Section 248 and in respective rules language are same as was in section 560 of Companies Act, 1956. Section 248 states the provisions of strike off of the Company not for Fast Track Exit of the Company.
herefore, it is required for the Company to file pending Statutory Returns for strike off of Company.
Difference between FTE Scheme, 2011 and Companies Strike Off u/s 248
| S. No. | Particulars | Provisions under FTE Scheme | Provisions under Section 248 of Companies Act, 2013 along with rules. |
| 1. | Link for Circular/ Rules | https://taxguru.in/company-law/mca-guidelines-fast-track-exit-mode-defunct-companies-section-560-companies-act-1956.html | https://taxguru.in/company-law/companies-removal-names-companies-register-companies-rules-2016.html |
| 2. | Not Carrying Business & Activity | is not carrying over any business activity or operation for last one year before making application under FTE. | not carrying on any business or operation for a period of two immediately preceding financial years |
| 3. | Dormant Company | Any defunct company identified as dormant by the MCA, may apply for getting its name strike off | There is no such Provisions in Section 248. |
| 4. | Completion of Pending Statutory Return | Not- required to file pending statutory returns before apply for Strike Off. | Required to file pending statutory before apply for Strike Off. |
Quick Bite:
Many persons have query in mind that, where in Section 248 it is mandatory to file e-form AOC-4 and MGT-7?
First School of thought: As like FTE Scheme there is no exemption under Section 248 for Strike off of Company without completion of Annual Filing.
Second School of thought: As per Section 137 (Filing of Financial Statement) and Section 92 (Filing of Annual Return) No exemption is provided under these sections for non completion of Annual Filing in case of strike off.
Therefore, one can opine that it is mandatory to complete annual Filing of Company before filing of e-form STK-2 for Strike off of Company.
Note: Practically many Registrar of Companies (ROC) has send e-form STK-2 for re submission/ non accepting strike off if Annual filing of Company is not completed. Therefore, action of ROC give base to the opinion that “Annual filing is mandatory for strike off of Company”
Note: Liability of Directors after Strike off of Company:
As per Section 250 Where a company stands dissolved under section 248, it shall on and from the date mentioned in the notice under sub-section (5) of that section 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 realizing the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.
Therefore, we can say that in case Directors fails to complete Annual Filing then they are liable for penalty u./s 137 and 92. Even after strike off liabilities are there on directors for penalty.
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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).
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