MCA has recently notified Sections 248 to 252 of Companies Act, 2013, w.e.f 26.1.2.2016 and also issued new rules for striking off names of companies referred as Companies (Removal of Names of Companies from the Registrar of Companies) Rules, 2016. The said rules are also effective from 27th December, 2016.
INSTANCES FOR STRIKING OFF NAME OF THE COMPANY:
- Issuing notice by Registrar of Companies for strike-off suo motto– Reasons enumerated in Section 248(1) and Rule 3
- Filing of application for striking off by Companies suo motto- Grounds specified in Section 248(2) and Rule 4
GROUNDS FOR STRIKE OFF OF COMPANY:
If Company:
a) Has failed to commence its business within one year of its incorporation or;
b) 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.
WHO CANNOT APPLY FOR CLOSURE (EXCEPTIONS -RULE 3(1) & SECTION 249)
Following companies can not apply:
(i) listed companies;
(ii) delisted companies;
(iii) vanishing companies;*
(iv) companies where investigation, inspection and prosecution is pending or carried out;
(v) companies to whom notices are issued under section 206 or 207 or 208.
(vi) companies whose application for compounding is pending
(viii) companies having public deposits either outstanding or in default
(ix) companies having charges pending for satisfaction;
(x) Section 8 or Section 25 companies registered under previous Companies Act, 1956
(xi) Companies which has made application for strike off at any time and has not applied for following in the previous three months-[Section 249]
(a) Change of name or shifting of registered office from one State to another;
(b) 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
(c) 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
(d) Application in process for compromise or arrangement to the Tribunal
(e) in the process of winding up
* “Vanishing company” means
- Companies registered under law or listed companies and
- failed to file returns with ROC and Stock Exchange for a consecutive period of two years, and
- not maintaining its registered office at the address notified with ROC and Stock Exchange and
- ALL directors are not traceable.
PROCESS FOR STRIKE OFF:
- ROC may issue suo-motto notice to companies and it’s Directors for their representations within a period of thirty days from the date of issue of notice.
OR
Application is made by company in Form STK-2 to ROC with requisite documents.
- ROC issues public notice in Form STK-5/Form STK-6 and publish it in Official Gazette, English and Vernacular language newspaper of the state where registered office of the company is situated and on MCA‘s website. Companies to place the same on website of the company till the disposal of the application.
- ROC seeks objections from other regulatory authorities within 30 days of letter of intimation. If no objection is received, it is presumed that there is no objection for the proposed strike off.
- After the expiry of time mentioned in notice, ROC issue notice about the dissolution in the official gazette and placed the name of company on official website of the MCA.[Form STK-7]
REQUISITE DOCUMENTS FOR APPLICATION FOR REMOVAL OF COMPANY [RULE 4(3)]:
- No Objection Certificate from appropriate Regulatory Authority
- Indemnity bond by every director in form STK-3 duly notarised
- Statement of Accounts certified by Chartered Accountant
- Affidavit by Director in Form STK-4 duly notarised
- Copy of Special resolution, passed by the Company for strike off
- Statement regarding pending litigations, if any.
- Statutory fees of Rs. 5000/-
- Application will be filed in e-Form STK-2 along with above documents, digitally signed by the Director and Certified by CA/CS/CWA in practice. [Rule 5 & 6]
- In case of foreign nationals or non-resident Indians, indemnity bond and declaration needs to be notarised/ apostilled/ consularised. [Rule 8]
EFFECT ON EXISTING PENDING APPLICATION UNDER COMPANIES ACT, 1956 [RULE 10]:
Any application or proceeding pending for striking off or Form-FTE filed not disposed of by such authority for want of any information or document shall, on its submission, to the satisfaction of the authority, be disposed of in accordance with the rules made under the Companies Act, 1956 only.
EFFECTS OF A COMPANY NOTIFIED AS DISSOLVED (SECTION 250):
This section implies that where a company is dissolved under section 248, it shall cease to operate as a Company and the Certificate of Incorporation (COI) shall be deemed to have been cancelled from such date except for the purpose of realizing the amount due to the company and for the payment or discharge of the liabilities of the company.
PENALTIES FOR FRAUDULENT APPLICATION FOR REMOVAL OF NAME (SECTION 251):
1. In case of the fraudulent application for the removal of name, the person in charge of the management of the company shall-
- be jointly and severally liable to any person or persons who had incurred loss or damage or result of the company being notified as dissolved; AND
- be punishable for fraud as provided under Section 447 of the Companies Act, 2013.
2. The registrar may also recommend prosecution against the persons responsible for the filing of such applications.
APPEAL TO TRIBUNAL FOR RESTORATION OF NAME (SECTION 252):
Any Aggrieved party (any person aggrieved by order, company, shareholders may apply for restoration of name by making an application to the Tribunal within the
stipulated time period and once the tribunal is satisfied that the removal is not justified, it can give directions to restore the name of the company.
Please note that before passing any order under this section, the Tribunal shall give a reasonable opportunity of making representations and of being heard to the Registrar, the Company and all the persons concerned.
