Strike-off is a simplified process under the Companies Act, 2013, through which a company that is no longer active can apply to have its name removed from the official register of companies. This method is typically used when a company has stopped operating and wishes to close without undergoing a full liquidation process.
A
company may be struck off in the following cases:
a) a company has
failed to commence its business within one year of its incorporation
b) 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
c) the
subscribers to the memorandum have not paid the subscription which they had
undertaken to pay at the time of incorporation of a company
d) the company is not carrying on any business or operations, as revealed after the physical verification carried out.
Modes of Strike Off-
A. Voluntary
Strike Off (by Company) – Section 248(2)
Applicable when the company:
- has not commenced its business within one year of incorporation; or
- is not carrying on any business or operation for the last two financial years and has not applied for the status of a dormant company.
The company files Form STK-2 with the RoC along with:
- Indemnity bond (STK-3)
- Statement of accounts (not older than 30 days)
- Special resolution/consent of 75% members in terms of paid-up share capital
- Affidavit from directors (STK-4)
B. Compulsory
Strike Off (by RoC) – Section 248(1)
The RoC may remove a company’s name if it has reasonable cause to believe that:
- The company has failed to commence its business within one year of incorporation; or
- The company is not carrying on any business or operation for the preceding two financial years and has not applied for the status of a dormant company; or
- The subscribers to the memorandum have not paid the subscription money and a declaration has not been filed within 180 days; or
- The company is not carrying on any business as per the information received.
RoC sends
notice to the company and its directors in Form STK-1.
Once
the company is struck off, it is no longer considered a legal entity.
Procedure
The
general steps for strike-off are as follows:
- Board
Meeting: The
board of directors approves the proposal by passing of a resolution in the
Board Meeting for strike off.
- Settlement
of Liabilities: All
the liabilities are cleared off and settled including any loans or
statutory dues. All the bank accounts of the company are closed, and NOC
is obtained from Creditors for their approval.
- Shareholder
Consent: A
resolution is passed by shareholders with atleast 75% members approving
the resolution (in terms of their share capital) confirming their
agreement to apply for strike-off.
- Filing
the Application:
The company submits an application to the Registrar of Companies in Form
STK-2 (Govt Fees for STK-2 is ₹ 10,000), along with supporting documents
such as:
· A
copy of the board and shareholder resolutions
· A
statement of accounts (not older than 30 days and certified by a Chartered
Accountant)
· Affidavits
(in STK-4) and indemnity bonds from all directors (in STK-3)
· Confirmation
of no legal disputes or pending obligations
- Public
Notice by RoC:
RoC issues a public notice in Form STK-6, allowing objections
from the public, creditors, or stakeholders (timeframe: 30 days).
- Final
Notice & Strike Off: After 30 days, if no objection is
received, the RoC strikes off the name and publishes the notice in
the Official Gazette in Form STK-7.
Revival
of the company after Strike Off:
Once the name of the company is struck off under Section 248, and the notice is
published in the Official Gazette, the company stands dissolved and ceases to
exist as a legal entity. However, under Section 252 of the Companies Act, 2013,
if the Registrar is satisfied that the name of the company has been struck off
based on incorrect information, he may file an application before the tribunal
within a period of three years from the date of passing of order dissolving the
company, seeking restoration.
Further if the company, any member, creditor, or aggrieved person may apply to the National Company Law Tribunal (NCLT) for restoration of the company’s name within twenty years from the date of publication in the Official Gazette of the Notice. If the Tribunal is satisfied that the removal was unjustified, it may order the restoration of the company’s name to the register, and the company shall be deemed to have continued as if its name had never been struck off.
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