Strike off under Companies ACT, 2013 Closure of a Company?

Strike off under Companies ACT, 2013

On incorporation, the name of the company is entered in the Register maintained by the Registrar. On striking off, the name of the company is temporarily removed from the Register. Section 248(2) of the Companies Act, 2013 extends simplified and less cumbersome way to closes down business operations of the defunct Companies rather than opting for cost intensive Winding up procedure.

The provisions relating to strike off provide an opportunity to the non-working companies to get their names struck off from the records of the ROC. Vide notification dated 08th May, 2019 MCA give an opportunity to companies to strike off their names from Registrar of Companies under Section 248 to 252 under Companies Act, 2013.

Ways of Striking off of Companies

 
  

 

 

 

 

 

A company which is undergoing the process of ‘Striking Off’ either voluntarily or by action of the Registrar is given the status as ‘Striking Off’ and the status of the company is changed to Dissolved or Liquidated when affairs of the company are completely wound up by following the provision of winding up of Company. After dissolution or liquidation, the company ceases to exist.

STRIKE OFF BY ROC SUO MOTU

Subject to the provisions of sub section 1 of section 248 of companies Act 2013 read with Rule 3 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, in the following cases, the Registrar can suo motu remove the name of the company from the Register:

  • 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 under section 455 of the Companies Act, 2013 or
  • the subscribers to the memorandum have not paid 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 a declaration to this affect has not filed within 180 days of its incorporation;
  • The company is not carrying on any business or operations as revealed after the physical verification carried out under section 12(9).

Procedure to be followed by ROC for striking of the name of the Company on suo motu basis:

S. No.

Steps

Particulars

1.       

Service of notice

·         The registrar is required to send a notice in Form STK 1 to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies.

·         Such a notice should contain the reasons on which the name of the company is to be removed from the register of companies.

·         Such a notice should be sent to all the directors of the company at the addresses available on record, by registered post with acknowledgement due or by speed post.

2.       

Reply to Notice

On receipt of such a notice the company and all the directors of the company are required to send their representations along with copies of the relevant documents, if any, explaining the reasons as to why the name of the company should not be removed from the register of companies. Such a representation should be given within a period of thirty days from the date of the notice.

3.       

Consideration of the representation made

·         The ROC will consider the representation made by the company and all the directors of the company.

·         If the ROC is not satisfied with the representation made by the company and its directors, it may proceed to strike off the name of company.

4.       

Publication of Notice

The notice for removal of the name of the company should be in form STK 5 for the information of the general public and should be

ü  placed on the official website of the Ministry of Corporate Affairs;

ü  published in the Official Gazette;

ü  published in Form No. STK 5A in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated.

 

The general public can send their objection to the ROC within thirty days from the date of publication of the notice

5.       

Intimation to regulatory authorities

Intimation about the proposed action of removal or striking off the names of company should be sent to the

ü  Income-tax authorities,

ü  central excise authorities and

ü  Service-tax authorities having jurisdiction over such a company.

 

The Regulatory authorities can send their objections within a period of thirty days from the date of issue of the letter of intimation, if any.

6.       

Striking off / Removal of the name of the company

After expiry of thirty days from the date of publication of the notice in the newspaper, official gazette and intimation to regulatory authorities, if there are no objections received within thirty days from the general public or respective authority, the ROC can proceed to strike off or remove the name of the company from the Register of companies.

7.       

Provision for realisation of amount due

The ROC before passing an order for Striking off / Removal of the name of the company should satisfy that sufficient provision has been made for the realisation of all amounts due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time.

8.       

Notice of dissolution of the company

·         After the expiry of the time mentioned in the notice, the ROC can strike off the name of the company from the Register.

·         The notice of striking off the name of the company from the register of companies and its dissolution should be published in the Official Gazette in Form STK 7 and the same should also be placed on the official website of the Ministry of Corporate Affairs.

·         The company shall stand dissolved on the publication of this notice in the Official Gazette.

 

 

 

STRIKE OFF BY WAY OF FILING AN APPLICATION BY THE COMPANY

Eligibility Criteria for Companies to opt for Strike Off:

  • A company which has failed to commence its business within one year of its incorporation; or

 

  • A company filling Strike off shall first proceed with Annual Return (AOC-4, AOC-4 XBRL, and MGT-7) up to the end of the financial year in which the company ceased to carry its business operations.

 

  • Company shall file all pending overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return) before filing Form No. STK-2.

Procedure to Strike off the Company:

  • Obtaining Director’s DSC
  • Check Annual Filling Status, if filling pending file Annual Returns
  • Obtaining Self certified Director’s Proofs
  1. Pan Card
  2. Aadhaar Card
  • Application of Strike off in Form STK-2
  • Preparation of various Documents
  • Copy of Board Resolution authorizing filling this application
  • Indemnity Bond duly notarized by every Director in Form STK-3*
  • A Statement of Accounts containing Assets & Liabilities of the Company in Form STK-8
  • An affidavit in Form STK-4* by every director of the Company
  • Consent of 75% of members of the company
  • Filling Form STK-2 with MCA
  • Obtaining Strike off Certificate from ROC

 

* STK-3 & STK-4 shall be drawn on stamp paper of appropriate value.

Documents required from Client if any

  • Copy of pending litigations, if any
  • Copy of relevant order for delisting from Stock Exchange, if any

Formats

Procedure to be followed by ROC for striking of the name of the Company on suo motu basis

Particulars : ( Brief break up in respect of each item needs to be given)

Amount (Rs.)

I.          Sources of fund

 

 

(1) Capital

 

(2) Reserve & Surplus (including balance in Profit and Loss Accounts

 

(3) Loan Funds

 

Secured loans from Financial Institutions

 

Secured loans from Banks

 

Secured Loan from Govt.

 

Other Secured Loans

 

Debentures

 

Unsecured Loans

 

Deposits & Interest thereon

 

Total Loan Funds

 

 Total of (1) to (3)

 

II. Application of Funds

 

1. Fixed Assets

 

2. Investments

 

3. (i) Current Assets, loans and Advances

 

 Less : (ii) Current Liabilities & provisions

 

Creditors

 

Unpaid Dividend

 

Payables

 

Others

 

Total Current Liabilities &

 

Provisions

 

Net Current Asset (i-ii)

 

(4) Miscellaneous expenditure to the extent not written off or adjusted

 

(5) Profit & Loss Account ( Debit balance)

 

Total of 1 to 5

 

Date: 

Place:

Name and Signature of (Managing Director)*

Name and Signature (Secretary)*

Name and Signature of (Directors)

*Applicable only of there is MD/ Secretary               _________________________

Duly Certified by Chartered Accountant in whole time practice

Membership No./Certificate of Practice Number with Seal.

 

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