With the advent of the companies act, it works toward creating an atmosphere of competition and corporate governance is the key along with professional approach is the essence of all business operations today. Prior to the coming force of the provisions of Sections 248-252 and Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, the names of Companies were struck off under the provisions of Section 560 of the Companies Act, 1956 under Fast Track Exit Mode.
Under the Companies Act, 2013, even the private companies are expected to be compliance oriented. Section 248-252 of the Companies Act, 2013 read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 deal with the removal of names of companies from the Register of Companies. This facility of striking off of the name of the company is a very cost-effective, easy and hassle-free way of closing down of business by corporates which are not carrying on any business, due to any reason whatsoever or defunct.
Coming down to the legal formalities, a company’s name can be struck off the register of companies after complying with the provisions of S248 of the companies act which envisages the two feasible scenarios:
- A company has failed to commence its business within one year of its incorporation
- A company is not carrying on any business for two immediately preceding financial years and has not made any application for the status of a dormant company under s.455.
Procedure for striking off name of Company:-
- The process starts by the registrar sending a notice in form STK-1 to any company, who fall under the sub-sections of S.248. The Notice lays out the intention of the Registrar to remove the name of the Company as it requests the company to send their representations along with copies of relevant documents within a period of 30 days from the date of the Notice.
- Or the Company may on its own motion file an application with the Registrar of Companies in form STK-2, after extinguishing all its liabilities and passing of special resolution or obtaining the consent of 75% of the members in terms of paid up share capital.
Requirements of form STK-2(company filing an application on its own motion):
- The application is accompanied by:-
- An indemnity bond on a stamp paper in Form STK 3
- a statement of accounts containing assets and liabilities of the company made up for a day, but not more than thirty days before the date of application which is further certified by a Chartered Accountant;
- an affidavit on a stamp paper, in Form STK 4 by every director of the company to be given individually;
- a copy of the special resolution duly certified by each of the directors of the company or consent of 75% of the members of the company in terms of paid-up share capital as on the date of application;
- Copy of Pan Card / Passport of all the directors, duly attested by a Gazetted officer
- Copy of documentary evidence supporting the residence address of all the directors, duly attested by a Gazetted officer
- a statement regarding pending litigations, if any, involving the company.
- if the person is a foreign national or non-resident Indian, the indemnity bond, Affidavit and declaration shall be notarized or apostilled or consularised. (A) This application has to be signed by a director duly authorized by the Board. (B) This Form STK 2 shall further also be certified by a Chartered Accountant in whole time practice or Company Secretary in whole time Practice
- On receipt of an application, the Registrar shall issue a public notice either in form STK-5 or STK-6, as the case may be and it shall be placed on the official website of the Ministry of Corporate Affairs and published in the Official Gazette. Provided that in case if the application is filed by the Company on its own under subsection (2) of section 248 of the Act, the company shall also place the application on its own website.
- At the same time, the Registrar of Companies shall simultaneously intimate the regulatory authorities regulating the company, viz, the Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over the company, about the proposed action of removal.
- At the expiry of the time, the Registrar may, unless cause to the contrary is shown by the Company, strike off the name of the Company from the Register of Companies and shall publish thereof in the official Gazette in form STK-7.