Strike Off Under Companies Act, 2013
With notification of Section 248-252 of Companies Act, 2013 by the MCA vide Notification No. 16/2016 on 26th December, 2016, the process of striking off the name of the Company from the Register of Companies through the Fast Track Exit also called FTE, stands amended. The “Fast Track Exit (FTE)” mode and now called “Strike Off” was introduced by the ministry of corporate affairs (MCA) to provide opportunity to the defunct companies to get their names struck off from the list of Register of Companies (ROC).
Eligibility norm for Companies to go for Strike Off:
The following companies are allowing to opting for strike off:
· A company which has failed to start/commence its business within one year of its registration; or
· A company which is not carrying on any business activity or operation for a period of two immediately preceding financial years (FY) and has not made application within that period to get the status of a dormant company under section 455 of Companies Act, 2013,
Ways of Strike Off
There are 2 modes of Strike off:
1. Suo moto by the Registrar of Companies:
For reasons that the company has failed to commence its business operation within 1 year or had not been doing business or operation for last 2 financial years.
2. By way of Application by the Company:
The Company can file an application of one’s own choice with the Registrar of Companies (ROC) for Striking off the name of the Company from register of ROC. The points for voluntarily making such an explanation by the company remains the same as is mentioned in the first mode, i.e. the company has failed to commence business operation or had not done any business for last two financial years (FY).
Here in this blog, we have discussed this 2nd mode.
As per the provisions of Companies Act, 2013 read with Companies Rules, 2016, a company may file an request for strike off as detailed herein below:-
· A company may file request in the Form STK-2 (with accompanied by certain prescribed documents under the rules) along with the fee for removing the name of the company from the Register of Companies (ROC), after putting out all its liabilities.
· The main ingredients for such an application are:
· Application in form STK-2 (With some prescribed document)
· Government filing fees
· Copy of Board resolution (BR) authorizing the filing of this application in form STK-2;
· A statement of books of accounts showing ZERO assets and liabilities of the Company which shall be not more than 30 days before the date of application for STK and certified by a Chartered Accountant (CA)
· Shareholder’s consent by way of Special Resolution (SR)
· In the case of a company administrated by any other authority, approval of such authority shall also be needed.
· Indemnity bond [to be given individually or collectively by the director(s)];
Companies on whom Strike off under Section 248 of Companies Act, 2013 is Not Applicable
The guidelines does not inter-alia cover
· Listed companies;
· Companies that have been delisted due to non-compliance of listing regulations/rules or listing agreement or any other mandatory 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 inspection or investigation are pending in the Court;
· Companies where notices have been issued by the Registrar (ROC) or Inspector (under the Companies Act, 1956 (old Act) or section 206 or section 207 of the Act)and reply thereto is pending;
· Companies against which any prosecution for an offence is pending in any court;
· Companies whose request for compounding is pending;
· Companies which have received public deposits which are either outstanding or the company is in default in repayment of the same;
· Companies having charges which are pending for satisfaction; and
· Not-for-profit Companies registered under Section 25 of the Companies Act, 1956 or section 8 of the Companies Act, 2013.
Some other facts to consider
· If there is pending prosecution against the company and its directors: If the pending prosecutions are only for non-filing of Annual Returns under section 92 of the Companies Act, 2013 and Balance Sheet under section 137 of the Companies Act, 2013, such application may be received on condition that the applicants have already filed the compounding application. However, footstep for final strike of the name of the company will be accepted only after disposal of compounding application by the competent authority.
· NOC from Tax Authorities: NOC is not required from Income Tax / Sales Tax / Central Excise / other Govt. authorities. But all directors need to affirm that there is no charge pending against Company with any such authorities. And MCA will send notice to the Income Tax / other authorities enquiring whether they have any objection for striking off the name of the said Company.
· Manner of notarisation, apostilled or consularisation of indemnity bond and declaration in case of foreign nationals or non-resident Indians: As provided under STK rules, if the Director of the Company applying for striking off name of the company, is a foreign national or non-resident Indian, the indemnity bond and declaration shall be notarized or apostil or consularized in the country of the foreign national.
· Stamp Duty: Stamp Duty is need to be paid on Affidavit and Indemnity Bond as per respective State laws.
· Make sure that the company does not maintain any bank accounts as on the date of filing application and have assets and liabilities NIL
Brief procedure followed after filing of application for Strike off
· Where a company has filed an application for strike off a public notice shall be issued by Registrar of Companies (ROC) inviting objections to the proposed Strike off, if any. The objections are to be sent to the respective Registrar of Companies within 30 days from the date of publication. The notice shall be placed on the website of MCA (mca.gov.in), published in the Official Gazette and published in a leading English newspaper and at least in 1 vernacular newspaper where the registered office of the company is situated. Application shall also be placed on the website of the company, if any have.
· Before striking off, Registrar of Companies shall satisfy itself that sufficient provision has been made for realization of all amounts due to the company and for the payment or discharging of its liabilities, if any.
· Notice of striking off and dissolution of company – After having followed and dealt with the above steps, the Registrar of Companies shall strike off the name and dissolve the Company. Notice of striking off and its dissolution to be published in the Official Gazette. The published notice shall be to the effect that the company’s name has been struck off the register of companies and the said company dissolved with effect from the date mentioned therein. The same shall also be placed on the official website of the MCA (mca.gov.in).