Process of Strike Off of a Company as per Companies Act, 2013

Posted by Priyash Nigam on January 6th, 2020

Strike off procedure is one of the alternative ways for the Winding of the company. There are two mechanisms for the process of Strike off in accordance to the Companies Act, 2013:

1. Strike of by the Registrar of the Companies i.e. Suo moto by Roc (Section 248(1)).

2. Strike by the Companies on its own i.e. Voluntary Strike off (Section 248(2)).

   STRIKE BY THE COMPANIES ON ITS OWN I.E. VOLUNTARY STRIKE OFF(SECTION 248(2)).

   Voluntary Strike Off is the removal of the Company’s Name from the Register of the Companies maintained by the Registrar of the Company, on the request made by the Company itself. Voluntary Strike off is governed under Section 248(2) of the Companies Act, 2013 which is to read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

   Section 248(1) of the Companies Act, 2013 is as follows- “without prejudice to the provisions of sub-section (1), a company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent. members in terms of paid-up share capital, file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in sub-section (1) and the Registrar shall, on receipt of such application, cause a public notice to be issued in the prescribed manner:”

   A company who wishes to remove its name from the Register of the Company can file an application to the Registrar of the Companies for the removal of the name. However, the Company can make application subjected to the following condition –

   1. Extinguishing all the company’s Liability and

   2. By a special resolution or consent of seventy-five per cent members in terms of paid-up share capital.

   According to Section 248(1) of the Companies Act, 2013, there are certain grounds on which the Companies can request for the removal –

   1. A company has failed to commence its business within one year of incorporation;

   2. the subscribers to the memorandum have not paid the subscription which they had undertaken to pay within a period of one hundred and eighty days from the date of incorporation of a company and a declaration under sub-section (1) of section 11 to this effect has not been filed within one hundred and eighty days of its incorporation;

   or

   3. The company is not carrying out any business or Activity for preceding 2 financial years and has not sought the status of Dormant Company under Section 455 of the Act.

   Procedure to be followed by the companies for strike off by its own under Section 248(2):

   Step-1: Conduct a board meeting

   A board meeting is to be held to pass the Board resolution for the Strike off the names of the Company and also to authorize the director to make an application to the registrar of the Company for the removal of the name for the register of the Companies.

   Step-2: Extinguish of the liabilities of the Company

   Before making application to the Registrar and after the board resolution, the company has to extinguish all its liability.

   Step-3: Conduct a general meeting.

   After all the liability is extinguished, the company will hold a general meeting of its shareholders and a resolution should be passed regarding the Strike off of the company’s name from the register maintained by registrar. Special resolution is to be passed with the approval of 75% of its members in terms of paid-up share capital. After the special resolution is passed, it is required to be filed before the Registrar of the Company in MGT-14( e-form) within 30 days.

   **According to the proviso of section 248(2) “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.”

   Documents to be filed along Form STK-2

   1. No objection Certificate from the regulatory authority, if the Company is regulated under Special Act;

   2. Indemnity bond duly notarised by every director in Form STK 3;

   3. A statement of accounts containing assets and liabilities of the company made up to a day, not more than thirty days before the date of application and certified by a Chartered Accountant;

   4. An affidavit in Form STK 4 by every director of the company;

   5. A copy of the special resolution duly certified by each of the directors of the company or consent of seventy five per cent of the members of the company in terms of paid up share capital as on the date of application;

   6. A statement regarding pending litigations, if any, involving the company.

      Step-5. Procedure to be followed by ROC

      Section 248(2) of the Companies Act, 2013 to be read with Rule 7 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 provides for Publication of the notice for the removal of the company’s name and the manner in which it is to be published.