How to strike off a company in India?

Once the name of the Company is registered then it cannot be removed from the Register unless it is dissolved by the process of law, either as a result of its winding up or upon its amalgamation with another Striking off Company. However, in case the Company is a Defunct Company, the Companies Act provides a short-cut to the winding up process, namely striking off company the name of the Company of the Register by the ROC. Thus it is an alternative mode of dissolution to the winding-up of a Company.

MCA has revised the procedure of striking off the name of the company from the register of companies maintained by the Registrar of Companies vide its notification dated 26th December 2016 on notifying Section 248 to 252 of the Companies Act, 2013.

The provisions relating to Strike Off provide an opportunity to the defunct companies to get their names struck off from the records of the ROC. To provide a procedural aspect of Strike Off under Act, MCA has issued Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

Different modes of Striking Off Company

As per the Companies Act, 2013 there are two modes of strike off as below:

• Strike off by ROC under Section 248(1) of the Companies Act 2013
• Strike off by Company by its own under Section 248(2) of the Companies Act 2013.

Strike off by ROC under Section 248(1) of the Companies Act 2013:

The ROC may remove the name of a company from ROC on below following grounds:

• A company has failed to commence its business within one year of incorporation;
• The company is not carrying out any business or Activity for the preceding 2 financial years and has not sought the status of Dormant Company under Section 455 of the Act.

ROC shall send a notice to the Company and to all the directors of the Company, stating the intention to remove the name of the Company from the register of the Companies and requesting them to send their representations for further process of Strike Off.

Procedure of strike off to be followed by ROC

• ROC shall send notice in STK-1 to the Company and all the Directors by speed post.
• The notice shall contain the reason for the removal of the name and seek the representative of the Company.
• The Company shall send the required documents and representation within 30 days from the date of the notice.
• On satisfaction of representation, the ROC may drop out the strike off. IF ROC is not satisfied, then it may proceed with a strike off the name of a company.
• The notice for removal of name under sub-section (1) of section 248 in STK-5 shall be published on the official website of MCA, in Official Gazette, English newspaper and one vernacular language at the place registered office is situated.
• TO ROC shall also intimate to the Authorities regulating the Company about the proposed action of removal or striking off the names of such companies.
• If no cause to the contrary is shown by the company, ROC may on expiry of the time mentioned in the notice strike off the name of the Company and shall be published in Official Gazette.

Striking off by Company by its own under Section 248(2) of the Companies Act 2013:

• The Company shall hold Board Meeting to get approval from the Board of Directors for striking of a name of the Company and shall approve the notice of EGM.
• The Company shall take approval from Shareholders bypassing the special resolution in General Meeting for such strike off.
• The Company is regulated by any other authority than shall take approval from them.
• After taking approval the Company shall file an application in form STK-2 along with the following documents:
• STK 3: An indemnity bond by every director duly notarized.
• STK 4: An affidavit by every director of the Company.
• Statement of accounts containing assets and liabilities of the company made up for a day, not more than thirty days before the date of application and certified by a Chartered Accountant;
• a copy of the special resolution duly certified by each of the directors of the company or consent of seventy-five percent of the members of the company regarding paid-up share capital as on the date of application;
• A statement regarding pending litigation, if any, involving the company.
• After receiving an application, ROC shall publish a public notice STK-6. Any objection to the proposed strike off shall be sent within 30 days.
• After complying with all the process, ROC shall strike off the name and dissolve the company by sending notice in the official gazette in form STK-7.

Companies which cannot be strike off

• Listed Companies;
• Not-for-profit Companies registered under Section 25 of the Companies Act, 1956 or Section 8 of the Companies Act, 2013;
• Companies having charges which are pending for satisfaction;
• Companies against which any prosecution for an offense is pending in any court;
• Companies whose application for compounding is pending;
• Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;
• Vanishing companies;
• 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 investigation or inspection are pending in the Court;
• 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 Companies Act, 2013 (new Act)and reply thereto is pending;
• Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;

Takeaway

The process of striking off is an alternative mechanism to the winding up of a company. The Companies Act facilitates two modes of strike-off – namely, strike off by the ROC (Registrar of Companies) under Section 248(1) of the Companies Act 2013, and strike off by a company on its own accord under Section 248(2) of the Companies Act, 2013. We hope this article dwells into the concept of strike off of Company with respect to both of these provisions.

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