Strike Off means removing the name of the Company from the Register of Companies maintained by the Registrar of Companies. It is more like a Closure of the Company and the Company will not be in existence after being Struck Off and cannot perform any operation thereafter.
Ø APPLICABLE SECTION:
- Section 248 of the Companies Act, 2013
- Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016
*this section is applicable to Private and Public Company. However, the same is not applicable to Section 8 Company.
Ø MEANING:
Removing the name of the Company from the Register of Companies maintained by the Registrar of Companies. An alternative mechanism to the Winding up of a Company is striking off the Company.
Ø GROUNDS FOR STRIKE OFF:
The Company can be struck off if the ROC satisfied on the following grounds:
- The Company has failed to commence its business within one year from its incorporation Or
- The Company is not carrying on any business or operation for period of immediately preceding two financial years and has not made any application for obtaining status of dormant company.
Ø METHODS OF STRIKE OFF
- SUO MOTO BY THE REGISTRAR OF COMPANIES [SECTION 248(1)]:
For reasons that the company has failed to commence its business within one year or had not been doing business or operation for last two financial years.
- BY WAY OF APPLICATION BY THE COMPANY [SECTION 248(2)]
The Company can file an application voluntarily with the Registrar of Companies for Striking off the name of the Company. The grounds for voluntarily making such an explanation by the company remains the same as is mentioned in the 1st mode, i.e. the company has failed to commence business or had not done any business for last two financial years.
Ø PROCESS OF BY WAY OF APPLICATION BY THE COMPANY [SECTION 248(2)]
As per the provisions of Section 248-252 of Companies Act, 2013 read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, a company may file an application for strike off as detailed herein below:-
- Holding a Board Meeting:
company needs to hold a Board meeting to pass Board Resolution for strike off the company subject to approval of the shareholders and authorizing the filing of this application with the ROC.
- Holding a General Meeting:
to hold a general meeting of members of the company to obtain Shareholder's approval by way of Special Resolution (3/4th of the members in terms of Paid up capital).
- Extinguishment of all the Liabilities:
After passing of Board resolution if there are any liabilities then the Company will extinguish all the liabilities before the next step.
- Approval of concern Authorities:
In the case of a company regulated by any other authority, approval of such authority shall also be required.
- Application to ROC in form STK-2
Application in Form STK- 2 to be filed by the Company along with following documents:
ü Indemnity Bond duly notarized by every director in Form STK 3
ü An affidavit in Form STK 4 by every director of the company
ü A statement of accounts containing assets and liabilities of the company made up to a day, not more than thirty days before the date of application and certified by a Chartered Accountant in STK-8
ü A copy of the special resolution duly certified by each of the directors of the company or consent of seventy-five per cent of the members of the company in terms of paid up share capital as on the date of application.
ü A statement regarding pending litigations, if any, involving the company
ü Government filing fees: INR 10,000/-
ü In the case of a Company regulated by any other authority, approval of such authority shall also be required.
- Public notice by ROC:
After filing application for strike off by the company, the ROC shall publish a public notice in Form STK-6 inviting objections to the proposed Strike off, if any. The objections are to be sent to the respective ROC within thirty days from the date of publication. The notice shall be placed on the website of Ministry of Corporate Affairs, published in the Official Gazette and published in a leading English newspaper and at least in one vernacular newspaper where the registered office of the company is situated.
- Intimation to regulatory authorities:
The ROC shall simultaneously intimate the concerned regulatory authorities regulating the company, viz, the Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over the company, about the proposed action of removal or striking off the names of such companies and seek objections, if any.
- Publication of notice of dissolution:
ROC, after having followed and dealt with the above steps, shall strike off the name and dissolve the Company and a Notice of striking off and its dissolution to be published in the Official Gazette in Form STK 7. On the publication in the Official Gazette of this notice, the company shall stand dissolved with effect from the date mentioned therein. The same shall also be placed on the official website of the MCA.
- Notice of striking off and dissolution of company:
After having followed and dealt with the above steps, the Registrar shall strike off the name and dissolve the Company. Notice of striking off and its dissolution to be published in the Official Gazette (Form STK 7). The published notice shall be to the effect that the company’s name has been struck off the register of companies and the said company dissolved with effect from the date (mentioned therein). The same shall also be placed on the official website of the Ministry of Corporate Affairs. (Section 250)
Ø FOLLOWING COMPANIES CANNOT MAKE APPLICATION FOR STRIKE OFF: (249)
As per the section 249 of the Companies Act, 2013 following companies not eligible to make the application for strike off under 248 (2) of the Companies Act, 2013, if such compnies at any time in previous Three months:
ü A company, in pursuance of provisions of section 249 of the Act, is not eligible to make an application for strike off under section 248(2) of the Act if, at any time in the previous three months:
ü the name of the company changed or registered office has been shifted from one state to another by the company;
ü the company has made a disposal for value of property or rights held by it, immediately before cesser of trade or otherwise carrying on of business, for the purpose of disposal of gain in the normal course of trading or otherwise carrying on of business;
ü the company has engaged in any other activity except the for one which is mandatory or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company or complying with any statutory requirement;
ü an application has been made by the company to the National Company Law Tribunal ("Tribunal") for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
ü is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy Code, 2016.
Ø COMPANIES ON WHOM STRIKE OFF UNDER SECTION 248 IS NOT APPLICABLE
The guidelines do not applicable to:
ü Listed companies.
ü Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws.
ü Vanishing companies.
ü Companies where inspection or investigation is ordered and being carried out or actions on such order are yet to be taken up or were completed but prosecutions arising out of such inspection or investigation are pending in the Court.
ü Companies where notices have been issued by the Registrar or Inspector (under Section 234 of the Companies Act, 1956 (old Act) or section 206 or section 207 of the Act) and reply thereto is pending.
ü Companies against which any prosecution for an offence is pending in any court.
ü Companies whose application for compounding is pending.
ü Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same.
ü Companies having charges which are pending for satisfaction; and
ü Not-for-profit Companies registered under Section 25 of the Companies Act, 1956 or section 8 of the Companies Act, 2013.
Ø Some other facts to consider
- If there is pending prosecution against the company and its directors:
If the pending prosecutions are only for non-filing of Annual Returns under section 92 and Balance Sheet under section 137 of the Act, such application may be accepted provided the applicants have already filed the compounding application. However, steps for final strike of the name of the company will be taken only after disposal of compounding application by the competent authority.
- NOC from Tax Authorities:
NOC is not required from Income Tax / Sales Tax / Central Excise / other Govt. authorities. But all directors need to confirm that there are no dues pending against Company with any such authorities. And MCA will send notice to the Income Tax / other authorities enquiring whether they have any objection for striking off the name of the said Company.
- Manner of notarisation, apostilled or consularisation of indemnity bond and declaration in case of foreign nationals or non-resident Indians:
As provided under STK rules, if the Director of the Company applying for striking off, is a foreign national or non-resident Indian, the indemnity bond and declaration shall be notarised or apostilled or consularised in the country of the foreign national.
- Stamp Duty:
Stamp Duty is required to be paid on Affidavit and Indemnity Bond as per respective State Stamp laws.
- Filing of Annual Returns
Pending Annual Returns to be filed before filing the Strike Off Application till the Financial Year in which the Company carried on the Business
Ø PENALTIES:
ü In case application is filed in violation of section 248(1):
In pursuance of Section 249(2) that if a company files an application in violation of Section 248(1) it shall be punishable with fine which may extend to Rs. 1 lakh.
ü In case application is filed with the intention to defraud:
Section 251(1) provides that where it is found that an application by a company has been made with the object of evading the liabilities of the company or with the intention to deceive the creditors or to defraud any other persons, the persons in charge of the management of the company shall, notwithstanding that the company has been notified as dissolved, be jointly and severally liable to any person or persons who had incurred loss or damage as a result of the company being notified as dissolved; and be punishable for fraud in the manner as provided in Section 247. Furthermore, ROC may also recommend prosecution of the persons responsible for the filing of an application under Section 248(2).
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Author:
TEAM DCS ADVISORS LLP
Disclaimer:
The Views expressed are solely of the Author and the contents of this article is to share the Knowledge on subject matter. Expert advice should be sought for your specific circumstances.
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