The Ministry of Corporate Affairs to ease out the procedures to strike off of the Company notified Removal of Names of Companies from the Register of Companies and The Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016 with effect from 26th December, 2016.
Further MCA via notification dated 17th March, 2023 notified establishment of C-PACE Centre for Processing Accelerated Corporate Exit and centralized the process of striking off companies from the MCA Register. This move aims to facilitate ease of doing business and simplify the exit process for companies.
Provisions relating to removal of name of the Company are stated in Section 248 of the Companies Act, 2013 (Act), as per this there are two modes under which name of Company can be removed from the Registrar of the Companies which are;
- Voluntary Strike off of the Company by management and
- Strike Off by ROC
Voluntary Strike off of the Company by management
- Management of the Company who does not wish to carry business in the Company can avail option of removing of name of the Company from Registrar of Companies.
To initiate process of strike off management shall check Company is not following any of following categories:
- Listed companies;
- Delisted Companies due to non-compliance of listing or other regulations;
- Vanishing companies;
- Companies in investigation, inspection or inquiry is pending or ordered;
- Companies having charges which are pending for satisfaction;
- Companies, which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
- Companies against which any prosecution for an offence is pending in any court;
- Companies whose application for compounding is pending before the competent authority for compounding the offences committed by the company or any of its officers in default;
- Company registered under Section 8 of the Companies Act, 2013 and
- Annual Filing up to the end of the financial year in which the company ceased to carry its business operations.
Procedure for Voluntary Removal of Company Name from the ROC
- Convene Board Meeting for approval of following items
- Strike off a Company.
- Extinguishment of liabilities of Companies;
- Authorization of any Director of the company to apply to ROC for strike off and
- Approval of date, day, place and time for concluding General Meeting and notice thereof.
- Call for an Extraordinary General Meeting
To Call for Extraordinary General Meeting a notice has to be sent to all the Shareholders with a copy of the notice passed in the Board Meeting. The notice of Extraordinary General Meeting must be sent at least 21 days prior to the date of the Extraordinary General Meeting.
- Hold Extraordinary General Meeting
An Extraordinary General Meeting must be held for attaining the shareholder’s approval for the removal of the name:
- By passing a Special Resolution or obtaining shareholder’s approval;
- or by getting the assent of 75% of members in terms of paid-up share capital of the Company.
- Prerequisites for filing of the Application to Registrar of Companies
The filing of an application for Removal of Name of Company must be by the Company in Form SKT-2. The application shall have the signatures of the company’s Directors.
The following attachments is necessary with Form SKT-2:
- The Copy of the Special Resolution passed in Extraordinary General Meeting; or the consent of 75% of members of the Company in terms of the paid-up share capital of the Company.
- Explanatory Statement of notice;
- Indemnity Bond in Form STK-3 which is duly certified by at least two Directors of Company on a stamp paper of Rs. 500 /- duly notarized by advocate and attorney;
- The statement of account in form STK-8 duly certified by Chartered Accountants presenting NIL Asset and NIL Liability within 30 days from approval of members for strike off;
- The Board resolution for the closure of the Company;
- NOC (No Objection Certificate) from the regulatory authorities under which the company’s registration took place;
- Bank Account Closure Letter;
- Main Object of the Company and
- Affidavit in form STK-4 by at least two Directors on stamp paper of Rs. 100 /- duly notarized by advocate and attorney along with self and CA / CS / CMA certified pan and adhar card for identity and address proof respectively.
Upon receiving the application from the company, the Registrar of Companies has the responsibility and authority to carefully verify that appropriate provisions have been made to fulfill all outstanding amounts owed to the company and to fulfill its liabilities and obligations within a reasonable timeframe. If deemed necessary, the ROC may request undertakings from the managing director, director, or other individuals responsible for managing the company.
After completing all the aforementioned formalities, the ROC will issue a public notice regarding the planned closure of the company. Once the specified time mentioned in the notice has passed, the Registrar can proceed with striking off the company’s name from the register of companies. A notice announcing the striking-off will be published in the Official Gazette. From the date of publication of this notice in the Official Gazette, the company will be officially dissolved.
- Undertaking by Director/s
In Form STK-2, the Managing Director or Director of the company is required to declare that:
- There is no inspection or investigation ordered and carried out or yet to be carried out or being carried out against the company and where inspection or investigation have been carried out, no prosecution is pending in any court arising out of such inspection or investigation;
- The company is neither having any public deposits which are outstanding, nor the company is in default in its repayment or interest thereon;
- The company does not have any outstanding loans, secured or unsecured;
- The company does not have any dues towards income tax, VAT, excise duty, service tax or any other tax or duty, by whatever name called, payable to the Central or any State Government, statutory authority or local authority;
- All the other liabilities of the company have been settled or discharged or extinguished;
- All the requirements of the Companies Act and rules made thereunder relating to removing the name of the company from the register of companies and matters incidental or supplemental thereto have been complied with;
- Ineligibility for making application under Section 248 as per Section 249 of The Act
- If the company changed its name or shifted its registered office from one State to another before three months of filing of Form STK-2;
- If the company has disposed property or rights held by it, before three months of filing of Form STK-2. This provision is not applicable for trade wherein disposal of property for gain is in the normal course of trading or carrying on of business;
- If the company has engaged in any other activity except the one which is provided in the MOA or expedient before three months of filing of Form STK-2.
- If the company has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded;
- If the company is being wound up under Companies Act or under the Insolvency and Bankruptcy Code, 2016.
- Certification by CA/CS/CMA
Chartered Accountant, Company Secretary, or Cost Accountant in whole-time practice shall verify the Form SKT-2.
- Publication of Notice and Objections
The Registrar of Companies will publish a notice to call any objections against the offered Removal of Name of Company. The objection will be sent to the Registrar within 30 days from the date of publication of the notice. The Registrar may also request undertakings from the company’s management, directors, or other responsible individuals regarding the discharge of liabilities.
Further, there shall be:
- A publication of notice on the official website of the Ministry of Corporate Affairs;
- The publication of the same in the Official Gazette;
- or in a leading English newspaper and at least in one vernacular language newspaper where the Company’s registered office is;
- The Registrar shall also inform the regulatory authorities which regulate the Company, about the offered notice for Removal of Name of Company from him/her and try to find any objections from them.
- Dissolution of Company
Upon considering all the relevant factors, and in the event where no valid objections have been raised, the Registrar will proceed with the removal of the company’s name from the ROC. A notice of the removal will be published in the Official Gazette using Form SKT-7. Consequently, the company will be deemed dissolved from the date specified in the notice.
Strike Off by ROC
ROC can direct for strike off a company if it has reasonable cause to believe that–
- a company has failed to commence its business within one year of its incorporation or
- a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company or
- the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and form INC 20A is not filed within 180 days.
- the company is not carrying on any business or operations, as revealed after the physical verification after registered office of company is found by Registrar of Companies.
RoC shall send the notice in E-form STK-1 to the company for strike off, and informed them to send representation along with required documents within 30 days.
If company doesn’t give any defense within 30 days, RoC shall give public notice for objection of public, in E-form STK-5.
Further, If RoC does not receive any objection; ROC will release a notification in the Official Gazette in E-form STK-7 about the Company’s strike-off and Dissolution.
Conclusion
The implementation of Form STK-2 by the Ministry of Corporate Affairs has facilitated the efficient voluntary strike off procedure for companies as prescribed in section 248(2) of the Companies Act 2013. By adhering to the stipulated processes outlined in Form STK-2 and securing the necessary authorizations, Companies can effectively initiate and navigate through the removal of name in compliance with legal obligations. The publication of official notices and subsequent removal of the Company’s name from the register serve as tangible evidence of the company’s dissolution.
Disclaimer: This article provides general information existing at the time of preparation and we take no responsibility to update it with the subsequent changes in the law. The article is intended as a news update and Affluence Advisory neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this article. It is recommended that professional advice be taken based on specific facts and circumstances. This article does not substitute the need to refer to the original pronouncement
