Terminate Company
An alternative procedure to winding up a firm is the striking off process. The Companies Act allows for two different ways to be struck off: by the ROC (Registrar of Companies), as provided for in Section 248(1) of the Companies Act 2013, and by a company acting independently, as provided for in Section 248(2) of the Companies Act, 2013. This essay explores the idea of the Company being struck off with regard to both of these provisions.
Reasons to strike off
The following reasons could be used to legislate the strike-off provision:
Within a year of its incorporation, the company has not started operating.
For the previous two financial years, the corporation didn’t pursue any business or activities. It has not applied for the designation of a dormant company under Section 455 of the Act during those years.
Inactive Company
In general, the word “dormant” refers to something that is not functioning. Similar to this, a business is considered dormant if it has registered under the Companies Act for a future project, to own an asset, or to hold intellectual property but isn’t engaging in any substantial accounting transactions. However, the Company must submit an application to the Registrar in order to obtain the classification (which has its own benefits). In the 2013 Companies Act, the idea of dormancy was included to the corporate regulations.
ROC Strikes Off
If the Registrar of Companies has a good reason, as described above, he or she may send a notification to the company and its directors in Form STK-1 (Removal of Names of Companies from the Registrar of Companies). This notification would advise the relevant companies that their names had been removed from the records and ask them to submit representatives with the necessary documentation within 30 days of the notice’s issuance. Compulsory removal of name from the Registrar of Companies is another name for this procedure.
Start Begin in accordance with the Company
After closing off its liabilities, a firm may submit an application in E-Form STK-2 to the Registrar of Companies. You may accomplish this by passing a A special resolution may be passed to do this, but it would require the support of 75% of the membership.
Strike Off Checklist
Companies may seek a strikeoff by carrying out each of the outlined steps below:
The Organization of Board Meetings
Major corporate initiatives have been required to be approved by Board Resolution. A company may adopt a resolution for the purposes of this clause at a board meeting, following which any of its directors shall be authorised to submit a request for strike-off to the Registrar of Companies (ROC).
Getting Rid of Debts
A business that wants to be struck off must have eliminated all of its liabilities.
Meeting of the General Assembly
The corporation should call a general meeting of shareholders and enact a resolution to remove the word “Company” from its name. In accordance with the paid-up share capital of the Company, this resolution requires the support of 75% of its members. After this point, the Company would have to submit E-form MGT-14 within a thirty-day window.
Nota: If the corporation is subject to the regulation of another body, this must be done with that body’s permission.
Application and Documents Submission
Companies seeking strike-off must submit an application to the Registrar of Companies (ROC) with the necessary supporting documentation:
- Indemnity Bond duly notarized by all directors (in Form STK 3). (in Form STK 3).
- All directors have properly notarized an indemnity bond (in Form STK 3).
- a statement of obligations listing all of the companies’ assets and liabilities (certified by a Chartered Accountant).
- A declaration in Form STK 4 (by all directors of the company).
- Special Resolution CTC (duly signed by every director of the company).
- a comment on any ongoing legal actions involving the company.
Consequences of Dissolution
If a company acknowledges its dissolution, it must stop operating as a company as of that date, and the Certificate of Incorporation it received from the ROC is presumed to have been revoked, with the exception of any outstanding debts or obligations. Additionally, any current corporate liabilities for directors,
Requirements for Applying for a Strike Off
Companies are prohibited from submitting strike-off applications if, at any point during the previous three months, they have:
- renamed itself or moved the location of its registered office to a different state.
- made a disposition for the value of the assets or rights it had (subject to conditions).
- any activity other than what is required or practical to submit an application under the relevant regulation, and so forth.
- filed a request with the Tribunal asking for the approval of a compromise or an arrangement, but no agreement has yet been reached on the matter.
- been voluntarily wound up under Chapter XX, by the Tribunal, or by the Insolvency and Bankruptcy Code (IBC), as of 2016.