20 January 2017 • bsamrishindia.com
With notification of Section 248-252 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 often called FTE, stands revised. The “Fast Track Exit” mode and now “Strike Off” mode was introduced by the MCA to give opportunity to the defunct companies to get their names struck off from the Register of Companies.
Eligibility Criteria for Companies to opt for Strike Off:
The following companies are eligible for opting for strike off:
- A company which has failed to commence its business within one year of its incorporation; or
- A company which is not carrying on any business or operation for a period of 2 immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455,
Modes of Strike Off
There are two modes of Strike off:
- Suo moto by the Registrar of Companies (Section 248(1)):
For reasons that the company has failed to commence its business within one year or had not been doing business or operation for last two financial years.
- By way of Application by the Company (Section 248(2)):
The Company can file an application voluntarily with the Registrar of Companies for Striking off the name of the Company. The grounds for voluntarily making such an explanation by the company remains the same as is mentioned in the 1st mode, i.e. the company has failed to commence business or had not done any business for last two financial years.
Here in this blog, we have discussed this second mode.
As per the provisions of Section 248-252 of Companies Act, 2013 read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, a company may file an application for strike off as detailed herein below:-
- A company may file an APPLICATION in the Form STK-2 (shall be accompanied by certain prescribed documents) along with the fee of Five Thousand Rupees for removing the name of the company from the Registerof Companies, after extinguishing all its liabilities.
- The main ingredients for such an application are:
- Application in form STK-2
- Government filing fees: INR 5,000/-
- Copy of Board resolution authorizing the filing of this application;
- A statement of accounts showing nil assets and liabilities of the Company which shall be not more than thirty days before the date of application and certified by a Chartered Accountant
- Shareholder’s approval by way of Special Resolution
- In the case of a company regulated by any other authority, approval of such authority shall also be required.
- Indemnity bond [to be given individually or collectively by the director(s)] in Form No. STK-3;
- Affidavit in Form No. STK-4
Companies on whom Strike off under Section 248 is Not Applicable
The guidelines does not inter-alia cover
- Listed companies;
- Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory 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 or Inspector (under Section 234 of 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 application for compounding is pending;
- Companies which have accepted 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 Companiesregistered under Section 25 of the Companies Act, 1956 or section 8 of the Act.
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 and Balance Sheet under section 137 of the Act, such application may be accepted provided the applicants have already filed the compounding application. However, steps for final strike of the name of the company will be taken 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 confirm that there are no dues pending against Company with any such authorities. And MCA will send notice to the Income Tax / other authoritiesenquiring whether they haveany 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, is a foreign national or non-resident Indian, the indemnity bond and declaration shall be notarised or apostilled or consularised in the country of the foreign national.
- Stamp Duty: Stamp Duty is required to be paid on Affidavit and Indemnity Bond as per respective State Stamp laws.
- Make sure that the company does not maintain any bank account as on the date of filing application and also does not have any assets and liabilities.
Brief procedure followed after filing of application for Strike off
- Where a company has filed an application (e-form STK-2), a public notice shall be issued by ROC (Form STK-6) inviting objections to the proposed Strike off, if any. The objections are to be sent to the respective ROC within thirty days from the date of publication. The notice shall be placed on the website of Ministry of Corporate Affairs, published in the Official Gazette and published in a leading English newspaper and at least in one vernacular newspaper where the registered office of the company is situated. Application shall also be placed on the website of the company, if any.
- Before striking off, ROC shall satisfy itself that sufficient provision has been made for realisation of all amounts due to the company and for the payment or discharging of its liabilities.
- Notice of striking off and dissolution of company – After having followed and dealt with the above steps, the Registrar shall strike off the name and dissolve the Company. Notice of striking off and its dissolution to be published in the Official Gazette (Form STK 7). 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 Ministry of Corporate Affairs.