Strike off of the name of the company

Governed by Section 248(2) of the Companies Act, 2013 read with Rule 4 of the Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016

When can a company get strike off?

A company can get strike off due to the following reasons:

• It has failed to commence its business within one year of its incorporation; or
• It 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; 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 a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under Section 10A(1); or
• It is not carrying on any business or operations, as revealed after the physical verification carried out under Section 12(9).

Can a Company apply for strike off?

Strike off provisions gives a choice or an option to non-working companies to remove its name from the Register of Companies. There are many companies that are registered with ROC but due to various reasons they are not operative.

A company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five percent members in terms of paid-up share capital, file an application in E-FORM STK-2 to the Registrar for removing the name of the company from the register of companies. The form shall be signed by the directors and certified by Practicing CS/CA/CWA. In the case of a company regulated under a Special Act, approval of the regulatory body constituted or established under that Act shall also be obtained and enclosed with the application.

Procedure of striking off of the name of the company by way of an application to ROC:

STEP-1

Call and hold Board Meeting to pass Board resolution for the purpose of striking off of the name of the company, subject to the approval of the shareholders of the company and for fixing date, time and venue for the Extraordinary General Meeting. After passing of Board resolution, if there is any liability in the company, the company will set off/pay all its liabilities.

STEP-2

The directors of the company shall sign and execute duly notarized indemnity bond in Form STK-3 and Affidavit in Form STK-4. The company shall get the statement of accounts in Form STK-8 containing the assets and liabilities of the company made up to a day, not more than thirty days before the date of application. Such a statement should be certified by a Chartered Accountant.

STEP-3

Extraordinary General Meeting to be held on the day, date, time and venue as fixed earlier for passing of the special resolution.

STEP-4

Within thirty days from the date of the passing of the special resolution, the company shall file MGT-14 with the ROC.

STEP-5

An application for removal of the name of the company shall be made in Form STK-2 along with the fee of ten thousand rupees.

STEP-6

After filing the application, the ROC shall publish a public notice in Form STK-6 inviting objections to the proposed strike off, if any. The notice will also be published for information of the general public in the following ways:

• Placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;
• Published in the Official Gazette;
• Published 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.

STEP-7

Intimation about the proposed action of striking off the name of the company shall be sent to the Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over the company to seek their objections, if any, which shall be furnished within a period of thirty days from the date of issue of the letter of intimation.

STEP-8

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

STEP-9

If no objections are received within the prescribed time, 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 shall be published in the Official Gazette in Form STK-7.

Forms to be filed with ROC:

• MGT-14 (Fees for filing is ₹400-₹600)
• E-Form STK-2 (Fees for filing is ₹10,000)

Attachments in E-Form STK-2:

• CTC of Board Meeting
• Notice of Extra-Ordinary General Meeting
• CTC of Extra-Ordinary General Meeting
• NOC from the members of the company
• Indemnity bond duly notarized by every director in STK-3
• Affidavit by every director along with self-attested KYCs of Directors in STK-4
• Declaration of no secured/unsecured loans certified by a Chartered Accountant
• Statement of Accounts in STK-8
• Bank account closure letter (if the company has a bank account) OR Declaration of having no bank account (if the company doesn’t have a bank account)

Optional Attachments:

• Consent of the members if the EGM was conducted on shorter notice.
• Statement regarding pending litigations, if any, involving company. (Better to give in affidavit format).

Situations in which a company cannot apply for strike off under Section 248(2):

The Company shall not make any application for the strike off of the company, if at any time in the previous 3 months, the company has done any of the below mentioned activities:

• Has changed its name; or
• Has shifted its registered office from one State to another; or
• 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 for gain in the normal course of trading or otherwise carrying on of business; or
• Has engaged in any other activity except the one which is necessary 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; or
• Has made an application to the Tribunal for the sanctioning of a scheme of compromise or arrangement and the matter has not been finally concluded; or
• Is being wound up under Chapter XX of the Companies Act, 2013 or under the Insolvency and Bankruptcy Code, 2016.

Type of Companies which cannot be removed under Section 248(2):

• Listed Companies;
• Companies registered under section 8;
• Companies having charges which are pending for satisfaction;
• Companies whose application for compounding is pending for compounding of offences committed by the company or any of its officers in default;
• Companies against which any prosecution for an offence is pending in any court;
• Vanishing Companies;
• Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;
• Companies where inspection or investigation is ordered and being carried out or actions or such order are yet to be taken up or were complete but prosecutions arising out of such inspection or investigation are pending in the court;
• Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
• Companies where notices under section 234 of Companies Act, 1956 or 206 or 207 of the Companies Act, 2013 have been issued by the Registrar or Inspector and reply thereto is pending or report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the court.