STRIKE OFF A COMPANY

By: Amrita Sachidanandan, Advocate

INTRODUCTION

On incorporation of a company, ROC issues a Certificate of Incorporation certifying that the company named in the Certificate has come into existence from the date of issue of the Certificate, and its name has been entered in the Register of Companies maintained by the ROC. Further, ROC allows a Corporate Identification Number (CIN) to every registered company, which is its unique identification number. However, once the company is registered, its name cannot be removed from the Register unless it is legally dissolved, either through winding up or through an amalgamation with another business. However, the Act provides an alternative to the winding up procedure in the event that the business is defunct, namely Striking off the name of the Company from the Register of Companies.

STRIKE OFF

To “Strike Off” or close a company means to remove the name of the Company from the Register of Companies. When the management of a company decides they do not want to continue operating the business of the Company, they file for strike-off with the Register of Companies. The procedure of striking off ends a company’s business operations. The Companies Act 2013 contains provisions for striking off a company from the Register of Companies.

Sections 248 to 252 of the Companies Act, 2013 and the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, as modified from time to time, contain the strike-off provisions for a company.

On April 17, 2023, the MCA revised the regulations. It included a new concept and authority for processing applications to strike off companies, the Registrar, Centre for Processing Accelerated Corporate Exit (C-PACE), which has territorial jurisdiction across India. In order to exercise functional jurisdiction over the processing and disposition of applications submitted in E-form STK-2 and all issues linked to it under Section 248 (C-PACE) shall be the RoC. C-PACE is the only authority for striking off companies.

WAYS OF STRIKING OFF A COMPANY

1. BY REGISTRAR OF COMPANIES (ROC) /(C-PACE) SUO-MOTO

Where the Registrar has reasonable cause to believe that—

A company has failed to commence its business within one year of its incorporation.
OR
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 under section 455.

They shall notify the company and all of its directors in writing of their intention to have the company’s name removed from the register of companies by sending a notice in E-form STK-1. They shall also ask for their representations to produce copies of any pertinent documents within thirty (30) days of the receipt of such notice. If the company doesn’t give any response within thirty (30) days, ROC shall give public notice for the objection of the public in E-form STK-5.

Following Companies cannot be Removed Suo Moto by Registrar

Listed companies;
Companies that have been delisted 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 under section 206 or section 207 of the Act have been issued by the Registrar or Inspector and reply thereto is pending or report under section 208 has not yet been submitted or follow up of instructions on the report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the Court;
Companies against which any prosecution for an offence is pending in any court; Companies whose application for compounding is pending before the competent authority.
Companies whose public deposits are outstanding or the company is in default in repayment of the same;
Companies whose charges are pending for satisfaction; and
Section 8 Companies

2. BY COMPANY ITSELF

A company may request to have its name removed from the Register of Companies on all or some of the grounds listed in (i) by Special Resolution or with the consent of 75% of its members in terms of paid-up share capital after extinguishing all its liabilities. The Registrar shall, upon receipt of such request, issue a public notice.

THERE ARE CERTAIN COMPANIES WHO CANNOT MAKE APPLICATION FOR STRIKE OFF:

Changed its name or shifted its registered office anytime during the previous 3 months.
Has made a disposal for value of property or rights held by it, immediately before closing of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business;
Has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement;
The application was pending before the Tribunal for the sanctioning of a Compromise or Arrangement.
Is being wound up, whether voluntarily or by the Tribunal or under the IBC, 2016.