What Is Strike Off Of A Company In India? – Here’s All You Need To Know About Closure Of A Company And Its Revival After Striking Off

In this article, we’ll be tactfully detailing the process of strike off of a company in India, which is essentially a process of closure of a company based on certain reasons or in case the company isn’t able to meet certain criteria. Simply put, strike off of a company is a process of removing your company’s name from the register of companies in India, which is maintained by the Registrar Of Companies (ROC) in India. 

Once the company is “struck off”, it is effectively closed and therefore, it can’t perform any business operations any further, post its closure. 

Now, while we’re on the subject – it’s important to know that striking off a company can either be: 

  1. Voluntary – By the company owners 
  1. Mandated – By the ROC 

How To Voluntarily File For Strike Off Of A Company 

Starting off with voluntary striking off a company – In this article, we shall talk about closing of a company under the Fast Track Exit (FTE) mode, which is the preferable procedure followed these days to close a company. 

In this case, before we get to the process, there are certain pre-requisite conditions which shall be fulfilled and certain documents which need to be executed or filed in order to comply with all the rules and regulations before actually closing the company. 

The pre conditions necessary for the strike off process include Form AOC 4 (Financial Statement) and Form MGT 7 (Annual Return), which should be filed with the ROC up to the end of the financial year in which the company essentially decided to stop engaging in business activities. Other conditions such as the company having nil assets and liabilities, a closed bank account and filed the latest income tax return are also necessary to be complied with. 

For the detailed list of pre-requisite conditions which need to be adhered to in order to effectively file for closure under the FTE scheme, do take a look at our quick presentation (Page 4) by clicking here

Now while the FTE scheme is the most preferred mode of company closure or striking off, there are certain specific kinds of companies which can’t essentially opt for the FTE scheme. Primary conditions for these companies include being listed companies, or companies which are de-listed due to non-compliance of certain listing regulations, companies with pending notices against them / investigations against them / charges against them, etc. and from a registration standpoint, companies which are registered under Section 25 of the Companies Act, 1956 or Section 8 of the Companies Act. 2013. 

For a detailed list of the type of companies which can’t apply for FTE, do take a look at our quick presentation (Page 5) by clicking here

As for the procedure when it comes to voluntary striking off, you can follow the said steps and the company name will effectively be written off from the register of companies: 

The process starts with convening a Board Meeting of the Board of the Directors (BOD) of the Company to consider the closure of the Company and to obtain the approval for calling of Extra Ordinary General Meeting (EGM). Following which, the next step is to prepare the application for closure of Company along with the required documents, affidavits, and consents. 

The next step is convening the EGM and passing a resolution for company closure, which required 75% mandate. If the company is regulated under a special Act, then it is imperative to obtain the approval of the regulatory body under that Act before the company files for closure. Once done, all the documents shall be signed and executed by the directors and if the documents are to be executed in a country other than India, then they must be notarized and apostilled. 

After this, Form STK-2 must be filed along with the necessary documents and submitted to the ROC for checking / scrutiny. On verification, the ROC shall then publish on the MCA portal about the status of the company as struck off as well as in gazettes / newspapers (national and local, the latter for where the main office of the company is located). 

Cases Where ROC Can Mandate Striking Off Of A Company 

The ROC can essentially strike off a company itself when certain conditions aren’t met or certain compliance matters aren’t adhered to, which majorly include the reasons explained aforesaid or all of the following reasons discussed below: 

Primary conditions which might warrant for the strike off of the company by the ROC include the company not engaging in any business within one year from its official date of incorporation or the said company not engaging in any business activity in the 2 immediately preceding financial years from the current date. 

Other conditions include the subscribers to the memorandum having not paid the subscription which they had undertaken to pay at the time of incorporation of the said company (and a declaration to this effect has not been filed within 180 days from its official date of incorporation). 

And lastly, if the ROC conducts a physical verification of the company and comes to the conclusion that the said company isn’t carrying out its operations or any business activity – then the ROC can effectively strike off the company on its own. 

How To File For The Company’s Revival After Strike Off Of The Company 

In case the company has been struck of voluntarily or by the ROC under Section 248 of the Companies Act, 2013 and the company feels that the decision of the ROC is unjust, it can file an appeal for the revival of the company with the National Company Law Tribunal (NCLT) under Section 252 of the Companies Act, 2013 within a period of 3 years from the official date of the strike off. 

The appeal is filed via Form no. NCLT-9 under Section 252 of the Companies Act, 2013. The copy of the said appeal is furnished to the Income Tax Department and the ROC.  

If NCLT finds validity and coherence in the documents presented by the company, it shall order for the restoration of the company and secondly, before passing any order, it shall give appropriate opportunities of representation to the company to justify their case for the company revival – be it if the strike off process was voluntary and the decision is now being reversed or in case the strike off the company was directly done by the ROC. 

One hearing the appeal of the company on an issued date, the NCLT can approve the application for the company to be restored. When the order is issued by the NCLT, the receipt for the said order shall be presented to the ROC within 30 days of the order being pronounced and then, the ROC effectively restores the company name and removes its strike off status, issuing it a fresh certificate of incorporation. Subsequently, the company can complete all its belated filings, if pending.  

Following the restoration, the said company can engage in operations and commence its business activities. 

 

Written by 

Amrita Deol 

Amrita currently leads Coinmen’s Corporate Secretarial Services as an Assistant Manager. 

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