Section 248 to 252 of the Companies Act, 2013 (‘Act’) provides the procedure of striking off company names by the ROC or voluntary by the company.
Striking off the name of a company is an alternative mechanism for closing the operations of the company. The Registrar of Companies (‘ROC’) can issue a notice to strike off the company name from the Register of Companies for certain reasons. The company can also apply for the ROC to strike off its name from the Register of Companies.
Section 248 to 252 of the Companies Act, 2013 (‘Act’) provides the procedure of striking off company names by the ROC or voluntary by the company. Strike off of a company name means closing a defunct company in a faster manner. It is the simplest way to dissolve a company.
The word dormant, in general terms, means inactive or inoperative. Similarly, a company is classified as dormant if it has been registered under the Companies Act for a future project or to hold an asset or intellectual property but isn’t pursuing any significant accounting transactions. To gain the classification though (which has its own benefits) the Company must file an application to the Registrar. The concept of dormancy was introduced to the corporate provisions in the Companies Act of 2013.
E-Form STK-2 is required to be filed pursuant to Section 248(2) of the Companies Act, 2013 and rule 4, 5, 6 & 8 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016
The Form STK-2 can only be filed by an Active Company or by a dormant company, it cannot be filed by a Section 8 Company.
No application in Form No. STK-2 shall be filed by a company unless it has filed 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), up to the end of the financial year in which the company ceased to carry its business operations.
The passing of Board Resolutions has been mandated for major enactments in the corporate sphere.
A company desirous of a strike-off must have closed off all its liabilities.
A general meeting of shareholders should be held by the company by passing a special resolution for striking off the name of the Company.
Companies on the pursuit of strike-off must file an application to the Registrar of Companies (ROC), accompanied by the following documents:
Application filed by a company for striking off its name should be published in the Official Gazette for informing the general public. The ROC will strike off the company name from the Register of Companies upon the expiry of the specified time in the notice for striking off unless the company shows the contrary reason for the same within the mentioned time.
The ROC will publish the dissolution notice in the Official Gazette after striking off the company name in the Register of Companies. Upon publication of the notice in the Official Gazette, the company will stand dissolved.
Before passing an order of company dissolution and striking off the company name, the ROC will satisfy itself that sufficient provision is made for the payment or discharge of company liabilities, the realization of amounts due to the company and its obligations within a reasonable time.
The ROC will also obtain the necessary undertaking from the director, managing director or other persons in charge of the company management in this regard.
However, the company’s assets will be available for the discharge or payment of its obligations and liabilities even after the date of the order of removing the company name from the Register of Companies.
If a company confirms its dissolvement, it shall cease its operations as a company from the date of such dissolvement, and the Certificate of Incorporation issued to it by the ROC shall be deemed to have been canceled, except for the discharge of any existing liabilities or obligations
Companies are restricted on filing applications for strike-off, if at any time during the last three months, it has:
E-form STK-2 has fees of INR 10,000/-
CONCLUSION
The Companies Act, 2013 (Act) provides for various modes by which a company can be dissolved such as striking off, winding up, amalgamation etc. The mode and manner of closing a company depends upon a number of factors such as commercial rationale of the members, financial position and business operations of the company, timelines and costs involved etc.
When a company is not carrying on any business, its operations have been shut down and there is no intention of reviving it in the future, then it should be prudent to file an application for strike off its name from the register of companies(“Register”) by following a simple procedure prescribed under chapter 18 (section 248 to 252) of the Act read with The Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016.
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