Strike off of a company under companies act 2013
October 9, 2019
Strike off Company under companies act 2013 means canceling the name of the company from the ROC register. The MCA (Ministry of Corporate Affairs) has revised the procedure to have the name struck off. These provisions related to strike off of companies gives an opportunity to the companies to get their names struck off from the records of the ROC.
Modes of strike off Company under companies act 2013
There are 2 modes of striking off. It could either be
- By the ROC under section 248(1) of the Companies Act 2013, or
- By company on its own under section 248(2) of the Companies Act 2013
Strike off by the ROC
The grounds on which the ROC can remove the company’s name from its register
- If the company has failed to commence its business operations for a whole 1 year.
- If the company is not carrying out business or its activity for 2 preceding financial years and has not sought the status of Dormant Company under Section 455 of the Act.
In case of any of the above conditions, the ROC will send a notice to the company stating his intention and asking for a representative to be sent from the company for the procedure of strike off company under companies act.
The procedure of striking off by the ROC
- The ROC will send a notice in STK-1 to the company and all the Directors by the speed post.
- The notice shall mention the reason for striking off and asking for a representative of the company.
- Company shall send the required documents and a representative of the company within 30 days of the notice.
- If the ROC is not satisfied, he can not strike off the name. Otherwise, he may proceed with the procedure.
- A notice of removal of name under section 248 sub-section (1) in STK-5 shall be published on the official website of MCA, in Official Gazette, English newspaper and one vernacular language at the place registered office is situated.
- ROC needs to intimate the authorities of the company about the action of removal or striking off the name.
- If the company fails in following what is suggested in the notice, then the ROC can proceed with the act of striking off the company’s name and publishing it in the Official Gazette.
Effects of striking off by the ROC
- After this process, the company is dissolved and the normal business operations are halted.
- But the liabilities of the directors, managers and the officers shall remain intact as if the company has not dissolved.
ROC can’t strike off these companies
In the following companies, the ROC can’t strike off company under companies act
- Company registered under section 8.
- All the listed companies.
- Vanishing companies.
- All the companies which are delisted for non-complaining of listing regulations or listing agreement or any other statutory laws.
- If any investigation or inspection is being carried out on the company.
- The companies, where a notice is issued by the Registrar or inspector and the reply is awaited.
- If any prosecution for an offense is pending in a court.
- All the companies which have accepted public deposit and are in default of repayment.
- Any company, whose application for compounding is pending.
- Any charge is pending from the company.
Strike off Company under companies act 2013 section 248(1)
Apart from the method mentioned above, a company can, on its own, strike off company under companies act by passing a special resolution 248(1).
The procedure of strike off Company under companies act
- The company has to conduct a board meeting declaring the issue of strike off company under companies act and issue a notice of the EGM as well.
- Now, there needs to be consent from the shareholders declaring such action valid.
- If the company is regulated by any other party, then there needs to be approval from them as well.
- Once, the approval from the company is given, some documents need to be submitted in the form STK-2
Documents required for strike off Company under companies act
The documents required for strike off company under companies act are as follows
- An indemnity bond duly notarized by every director (STK-3)
- An affidavit duly signed by every director (STK-4)
- A statement of assets and liabilities made by a company in a day, not a month before the date of application & certification of the striking off.
- Along with these documents, attach a copy of a special resolution certified by each of the directors of the company or 75% of the shareholders regarding the paid-up capital of the company on the date of the application. Keep learning on who can be the director of the company.
- Apart from all of these documents, a company needs to attach a copy of pending litigation (if any)
After the application is received, the ROC will file for a public notice under form STK-6. In case there is any objection, then it should be sent within 30 days. Once this is done, the ROC will send a notice in the official Gazette form STK-7 to strike off company under companies act.
Restrictions from strike off Company under companies act
A company cannot apply for strike off company under companies act form 248(2) of the companies act if the company has committed any of the actions within 3 months before the application
- If the company has made any change in the name of the company.
- If the company has changed its registered state to any other state.
- Within 3 months, the company has made a disposal of a value of property or rights held by it, immediately before cesser of trade business.
- Or if the company has been engaged in any other activity than the one which is mandatory under that section.
- The company has launched an application to the National Company Law Tribunal for the sanctioning of a compromise or arrangement, and the matter has not been finally concluded.
- The company is already in the process of winding up under chapter XX by the tribunal.