COMPANY STRIKE OFF: What is Company Strike Off? Firstly, How to Solve this Issue? Contact Rajendra Corporate Law Firm, one of the all in all Top Law firms in India for Company Litigation Matters.
Corporate Law Firm for Restoration of Company Name
Corporate Lawyers in this Law Office are indeed Experts in the Restoration of a Company name struck off. Section 248 can be done in the following way: Appeal: Any person aggrieved by the order of the Registrar (ROC) to strike off the name of the company, may be appealed within a period of 3 years from the date of the Registrar order.
Meaning of Company Strike Off:
Removal of the name of a Company by the Registrar of Companies from the Register of the Companies maintained by it is called the Strike Off of a Company. Once the Registrar strike off the name of the company it means the company will not be in existence or closure of the company and it cannot continue any of its operations henceforth. Thus, the Name of the company after the strike-off is permissible for use by the new companies.
An alternate mechanism for the winding up of a company
This process is an alternate mechanism for winding up a company. Companies need not go through the tedious and time-consuming process of winding up under this method. By the way, Provisions for this method will be under sections 248 to 252 of the Companies Act 2013.
Reasons for Company Strike Off
One can process a Strike off of a company on the basis of the following grounds
- If within one year of its incorporation, the company has failed to commence its business.
- The company does not undertake any business or activity during the previous two financial years and has not sought “Dormant Company” status under Section 455 of the Act -.
- The term “dormant”, generally means inoperative or inactive. Similarly, companies are classified as “dormant” if it is registered under the Companies Act for a future project or hold intellectual property or assets but to obtain the classification (which has the advantage of its own), the Company must submit an application to the Registrar. The dormancy concept was introduced with the provisions of the company in the Companies Act 2013.
- Subscribers to the memorandum have not paid their subscription have been undertaken to pay within 180 days from the date of incorporation of the company and a declaration under sub-section (1) of Sec 11 to this effect has not been filed within 180 days of the Company Incorporation;
- Lack of profitability.
- The conflict between directors.
- The company never got off the ground.
- Challenges facing the company in the future.
MODES OF COMPANY STRIKE OFF:
There are two ways an inactive company can be struck off:
STRIKE OFF VOLUNTARILY BY A COMPANY :
A company can voluntarily make an application to the Registrar of Companies to declare itself defunct and strike off its name from the register of the companies under section 248(2) of the Companies Act, 2013. A company that wants to strike off should pass a special resolution with the consent of seventy-five percent of its members by conducting a board meeting after closing off all its liabilities.
PROCEEDURE FOR FILLING APPLICATION FOR VOLUNTARY STRIKE OFF:
The company has to file Form STK-2 with the MCA, The form has to file online and furnish the below documents along with the application:
- Indemnity Bond in Form STK 3 issued by all the Directors of the company
- A statement of accounts detailing all the assets and liabilities of the company prepared within 30 days before the filing of the application, certified by a Chartered Accountant.
- An affidavit in Form STK 4 signed by all the Directors.
- Special Resolution CTC (Every director duly signed in the company).
- A Concerned statement with regard to any pending litigation in the company.
- Copy of Board Resolution authorizing the Directors
- Copy of special resolution for the consent of 75% of its members.
- A Concerned statement regarding pending litigation, if any, which involves the company.
POINTS TO NOTE IN COMPANY STRIKE-OFF:
- The digital signature of the Directors with authorization has to be affixed to the form or a physical copy with the manual signature of the directors with authorization can be submitted along with STK–2 at the time of filing.
- Form STK-2 shall be certified by a CWA / CA / CS in whole-time practice.
- The Company can obtain the Approval order from a regulatory authority like SEBI for applying to strike off.
- Notary attestation as per the rules of the respective countries in the affidavit and indemnity bonds need to be obtained in case of NRI’s and foreign nationals.
PROCEDURE FOLLOWED BY ROC AFTER FILING OF APPLICATION:
After Scrutinizing the application received, ROC will publish 30 days’ notice in the Official Gazette, the Website of MCA, and in two newspapers and shall inform the regulatory authorities related to the company like central excise, service tax, etc., regarding the application inviting for any objection or claims against the strike off.
Secondly, If ROC does not receive any objections or claims against the strike-off within 30 days of the date of publishing in the official Gazette it shall strike the name off the register and issue a notice of strike-off in the official Gazette. Likewise, The date of publication in the official Gazette shall be the date of dissolution of the company.
LIMITATION ON STRIKE OFF:
The Procedure of strike-off will not be applicable for the companies as follows:
- The company has Changed the name of the registered office or moved to another state.
- Companies against which any prosecution for the offense is pending in a Court of Law;
- Companies that request compounding are pending before the authorities for compounding of offenses committed by the company or officials in default
- The Listed companies.
- Companies, which have public deposits, outstanding or the company having the Repayment default;
- Make a disposal for the property value or rights owned by it (depending on conditions).
- Engage in other activities other than what is necessary or expedient to make an application under the relevant provisions, and so and so forth.
- Companies that are not on the list due to non-compliance with the listing agreement or other legal Law;
- Disappearing company;
- Companies that have a pending charge for satisfaction.
- Companies having the inspection or investigation orders and are in the action on the order have not taken or completed but the prosecution arising from the examination or investigation is pending at the Court;
- Any Company in the registration under section 25 of the Companies Act, 1956 or Sec 8 of the Companies Act, 2013;
- To the Companies for which a notice under Sec 206 or Sec 207 of the Companies Act, 2013 or Sec 234 of the Companies Act, 1956 or has been issued by the Registrar of the Inspector and the reply is delayed or report under section 208 has not been submitted or follow-up of the instructions is delayed or anywhere else prosecutions arising from the investigation or the inquiry is pending in court;
If a Company files an application under the voluntary strike-off in accordance with Sub-Sec (2) of Sec 248 offense to strike off of the Company by the Registrar of Companies (ROC) pursuant to subsection (1) of Sec 248 then it is a punishable offense with a fine.
First, If the application of a company is with the purpose of the Following
- Avoiding Liability
- With intent to defraud creditors
- To deceive everyone else
People who are accountable for the management of the company shall, be that as it may the fact that the company has been notified as dissolved, be Severally as well as jointly liable to any person or persons who have suffered loss or damage as a result of the company notified as dissolved; and convicted for fraud in the manner provided in Sec 247.
ROC can also suggest the person to prosecute who is accountable for filing the application under Sec 248 (2).
STRIKE OFF BY ROC AND PROCEDURE:
Registrar of Companies has the power to Strike Off the Company’s name from the list, and sue motu pursuant to Section 248 (1) of the Companies Act, 2013.
For the reasons stated supra the Registrar shall issue a written notice to the directors of the company in the form of STK 1 to the address provided by Speed post or by RPAD, stating the reasons for which the company’s name will be removed from the Register of companies and will seek representation, if any, of the proposed actions, of the company and the Board of Directors together with relevant document copies, if any, within 30 days of receipt of the notice.
First, This process is a “Compulsory Removal” which is a Mandatory deletion of the name of the Registrar of Companies..
The notification shall be publishable in the norms as per Form STK 5 and Form STK 6 and also in the Official Gazette for information of the general public.
After the expiry of 30 days, Registrar can strike from the company name of the List if there is no cause to the contrary by the company in the same Fashion.
Official website of the Ministry of Corporate Affairs
In other words, Registrar to Print and circulate the same in the Official Gazette on Form STK 7, and publish the information on the official website of the Ministry of Corporate Affairs. In the same way, The Company shall stand dissolved on the date of notification.
Obligations and Liabilities of the company
At the time of passing the order strikes off Registrar shall make necessary provisions in the implementation of the obligations and liabilities of the company. That is to realize all the money for the company. In fact, For such purposes registrar must obtain the efforts of the Board of Directors or other people responsible for the management company is in need.
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Contact Top Corporate Lawyers in India
Apart from the submission of undertakings referred to in this subsection. Firstly, The company’s assets must be available for the payment or discharge of all liabilities and obligations. Moreover, That must be even after the date of the order removing the company name from the list of companies. In any case, Find the Best Corporate Lawyers in India and Contact them for Company Strike Off issues.