Striking off the company name is an alternative mode of dissolution of the company. Strike off means withdrawing the company name from the register of companies. It is similar to the closure or winding up of company a.
The companies act, 2013 contains the specific procedure for incorporating the company; likewise, it also contains the specific procedure to close a company.
Section 248 of the Companies Act, 2013 contains the power of the registrar to remove the name of the company by own or an application by the company. Once the ROC removed the company’s name, it shall no longer exist; hence, it cannot perform operations after that.
Different modes of striking off a company
As per the section, there are two modes to striking off a company.
- Section 248(1): Strike off by ROC – Suo moto
- Section 248(2): Strike off by way of an application made by the company
Reasons of the strike-off company by ROC from the registrar of companies
- If a company has been incorporated but has not started its business within 1 year of its incorporation.
- If a company is not carrying its business or activity for the preceding 2 financial years and has not yet obtained the status of “dormant company.”
Procedure to strike off company name by ROC
Before removing the name of any company by its own motion, the ROC follows the following procedure. It is also known as compulsory removal of name from the register of companies.
- Issuance of notice: ROC issues a written notice in Form STK – 1 to all company directors. The notice contains the reasons to remove the name of the company. It shall ask the representations from the company and its directors if any.
- Representation of company: On receiving the notice from ROC, the company has to make representations within 30 days from the notice date. The company shall submit the representation along with the relevant supporting documents.
In case of dissatisfaction with the representation,ROC may further proceed to strike off the company name in Form STK – 5 from the register.
In addition, the notice of removal shall be published:
- On the official website of MCA
- In the official gazette
- In the English newspaper (English language) and a leading vernacular language newspaper (vernacular language) in the state where the company’s registered office is situated.
- Intimation to the regulatory authorities: The ROC shall communicate about the proposed action of the company name removal to the regulatory authorities. such as
- Income tax authorities
- GST authorities
- Any other authority regulating the company
In case of any objection, the regulatory authorities can submit the same within 30 days of notice.
- Dissolution of the company: After the expiry period of 30 days, ROC may strike off the company name. Further, it shall publish a notice in the official gazette, and from that day, the company shall be dissolved.
However, before striking off the company name, the ROC shall ensure that sufficient provisions have been made to realize all amounts due to the company for discharging the liabilities.
Effect of dissolution
- Certificate of incorporation shall be deemed to be cancelled
- The company shall stop working immediately as soon as the ROC issues the dissolution notice.
- The company can recover its dues and also has to pay all its dues
- The liabilities of directors, managers, or other company officers shall continue as if the company has not been dissolved.
Procedure to strike off company name by application made by the company
The company can file an application on its own with the ROC to strike off the company’s name. Here is the procedure that a company need to follow:
Board meeting: The company must conduct a board meeting and pass a board resolution to strike off.
General meeting: A general meeting shall hold to pass a resolution for striking off the company name. The resolution shall be passed with the consent of 75% of members as per the paid-up capital of the company.
Filing of application: After passing the resolution, any of the company’s director can make an application in Form STK – 2 to the ROC in the prescribed manner. The company must have to discharge all its liabilities before filing the application.
Public notice: On receiving the application, the registrar shall issue a public notice in Form STK – 6. The notice shall invite objections to the proposed strike off. ROC shall publish it:
- Official website of the MCA
- Official Gazette
- Leading English newspaper (English language) and one vernacular newspaper (in vernacular language)
The objection party has to submit their objections within 30 days from the date of publications.
Communication to regulatory authorities: ROC shall intimate the concerned authoritiesabout removing the name of the company.
Publication of notice of dissolution: In case of no objection from any party or concerned authority, ROC shall strike off the name and dissolve the company. And, a notice shall be issued in the official gazette in Form SKT – 7. On the day of such notice, the company shall dissolve.
Documents to be submitted along with the application form
- An affidavit in Form STK – 4 by all the company directors
- Indemnity bond in Form STK – 3 duly signed by all directors
- Copy of special resolution duly signed by all the company directors.
- A statement containing details of all liabilities and assets of the company, certified by a Chartered Accountant.
- A statement containing details of any pending litigations related to the company.
Companies not qualifying to file strike off application
If at any time during the last three months, the companies have performed any of the below-mentioned activity, it shall not allow filing application for strike off:
- It has changed the company name or place of registered office from one state to another.
- It has made an application to the tribunal for sanctioning an arrangement, and the matter is still not finalized.
- It has disposed of any property or rights held by it for gain in the ordinary course of business.
- It has engaged in any other activity other than required for making an application under section 248
Types of companies that are not qualified to strike off
Type of companies
- Listed Companies;
- Companies registered under Section 25 of the Companies Act, 1956 or Section 8 of the Companies Act, 2013;
- Vanishing companies;
- Delisted companies due to non-compliance with listing regulations/listing agreement/any other statutory laws;
Companies having any of the below obligations:
- If any charges are pending for satisfaction on the company;
- If any prosecution for an offence is pending in any court on the company;
- If an application for compounding is pending;
- If any inspection or investigation is ordered and carried out and the order is still pending or completed, but prosecutions arising out of such investigation or inspection are pending in the Court;
- If the registrar or inspector has issued under section 206 or section 207 of the Companies Act, 2013 and its reply is pending by the company;
- If the company have accepted public deposits and the company has defaulted in repayment or such deposits are outstanding.
Conclusion
Striking off the company name from the register of companies is a quick method after following the prescribed procedure. The companies Act, 2013 facilitated two approaches of strike off. i.e., by the ROC or voluntarily by the company.
However, in both methods, the ROC and companies must follow the prescribed procedures and strike off forms.
