Strike off of Companies Voluntary Removal
In this case Companies Act 2013 introduce section 248-252 read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 deals with removal of names of companies from the Register of Companies. This facility of striking off of name of company is a very cost effective as compared to winding up and it is easy and hassle free way of closing down of business.
Strike-Off Means
The Removal of name of the company from the register of companies by the ROC, either by ROC itself or on the application of company and making company dissolved on some specific grounds.
Removal of name of the company under section 248 of the companies act, 2013
- By registrar Section 248 (1)
- By company Section 248 (2) STK-2
Grounds of strike off under section 248(1) for any kind of strike off
- Company failed to commence business within one year of its incorporation
- Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made application for obtaining dormant status within such period under section 455.
When company approach for the strike off to ROC voluntary
Voluntary removal of company’s name by itself under section 248(2) read with rule 4 of the companies (removal of names of companies from the register of companies) rules, 2016
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:
Provided that 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.
Companies on the pursuit of strike-off must file an application to the Registrar of Companies (ROC), accompanied by the following documents:
- Indemnity Bond duly notarized by all directors (in Form STK 3).
- An affidavit in Form STK 4 (by all directors of the company).
- A statement of liabilities comprising of all assets and liabilities of the companies (in STK-8 not older than 30 days certified by a Chartered Accountant).
- Copy of CTC of Special Resolution (duly signed by every director of the company).
- If resolution is not passed consent of shareholders required to attach.
- A statement concerning any pending litigations with respect to the company.
- Bank Closure Certificate
FAQ related to practical issues related to this form:
1. What the form and fees payable for application of strike of the company?
An application for removal of name of the company under section 248(2) shall be made in form STK-2, the ROC fees for the relevant form is Rs 10,000/-
2. Is Bank closure certificate is needed while approaching the voluntary closure?
If the company open the bank account at the time of incorporation for receiving the subscription money and making transaction. So while apply for company closer “bank closure certificate” is mandatory to attach in the form.
3. Is form INC-20A mandatory to file while apply for closure?
Yes, if company incorporated after 2nd Nov, 2018 after a period of 180 days of incorporation, filing of form INC-20A is allowed to be filed first. Thereafter, they can file STK-2 if they desire. Company has receipt Subscription Money and files INC 20A. (Because without complying this strike off is not allowed)
4. Is Form MGT-14 required to file at the time of closure?
Practically Form MGT-14 is not required, to file at the time of closure because company can get the consent of seventy-five per cent members in terms of paid-up share capital in the prescribed manner and attach the same to the form.
5. Is annual filling required to update while filing the form STK-2?
No, return of ROC must be updated at the time when company as active and doing business if company not active need not to file ROC annual filling forms and directly go for closer.
Example: If Company ABC Pvt Ltd incorporated 2018 and doing the business since 2020 and now in 2022 the company management wants to close the company because there is no business from last two year. In this case company go for voluntary strike off without filing of annual filling forms for the year 2020-2021 and 2021-2022.
6. How the status has change when the form STK-2 got approved from the concern ROC ?
After getting the approval of STK-2 the company master data has been change with the title of “under process of strike off” and when the company name officially published in Official gazette (ROC) the status will be changed as “strike off.”
7. After getting the status of “Strike Off” what is that mean?
Its mean that the name would be removed from the company register and it cannot trade, sell its assets or make payments or even it cannot get involved in any other business activities.
8. Under which circumstances company cannot file strike off ?
- Company has not filed 20A (inc. after 2nd Nov,2018)
- One year is not completed since incorporation
- Listed Companies
- Delisted Companies, if delisting has happened due to non-compliances
- Vanishing Companies
- for ongoing company i.e having business transactions in last 1-2 years
- DIN are deactivated
- Any director is disqualified
- Company has already received notice from ROC of strike-off
- Any ongoing litigation are pending
- Compounding application is pending before competent authority
- Form filed by a Section 8 company
9. Can the company strike off with in 1 year from incorporation?
One can opine that, to get status of Company as Strike off Companies are required to file e-form STK-2 at least after one year from the date of Incorporation. If Company file form for strike off before completion of One year from date of Strike off, ROC can put the form for re submission or reject the application.