What is a Company Strike-Off?
A company strike-off refers to the removal of a company’s name from the Register of Companies by the Registrar of Companies (ROC), effectively dissolving the company. This process can be initiated either voluntarily by the company or compulsorily by the ROC under specific circumstances.
✅ Eligibility for Voluntary Strike-Off
Under Section 248(2) of the Companies Act, 2013, a company can apply for a voluntary strike-off if:
- It has failed to commence business within one year of incorporation.
- It has not carried on any business or operation for the preceding two financial years and has not applied for dormant status under Section 455.
???? Restrictions on Filing for Strike-Off
A company cannot apply for strike-off if, in the past three months, it has:
- Changed its name or shifted its registered office to another state.
- Disposed of property or rights for value outside the normal course of business.
- Engaged in any activity other than those necessary for making an application for strike-off or concluding its affairs.
- Applied to the National Company Law Tribunal (NCLT) for compromise or arrangement, and the matter has not been concluded.
- Is being wound up under Chapter XX of the Companies Act.
Violating these conditions can lead to penalties up to ₹1 lakh.
???? Procedure for Voluntary Strike-Off
- Board Resolution: Convene a Board Meeting to pass a resolution for strike-off and authorize a director to file the application.
- Settlement of Liabilities: Ensure all liabilities are settled, and obtain a No Objection Certificate (NOC) from creditors, if applicable.
- Special Resolution: Conduct a General Meeting to pass a special resolution with at least 75% of shareholders’ consent.
- Filing MGT-14: File the special resolution with the ROC using Form MGT-14 within 30 days.
- Application in STK-2: Submit Form STK-2 along with the prescribed fee and necessary documents.
???? Documents Required
- Copy of Board Resolution authorizing the application.
- Copy of Special Resolution passed by shareholders.
- Indemnity Bond (Form STK-3) duly notarized by directors.
- Affidavit (Form STK-4) by directors confirming the company has no liabilities.
- Statement of Accounts certified by a Chartered Accountant.
- Copy of PAN card of the company.
- Bank account closure certificate.
- No Objection Certificate (NOC) from relevant regulatory authorities, if applicable.
???? Timeline for Strike-Off Process
- Application to Approval: Approximately 3 to 6 months, depending on the ROC’s processing time.
- Objection Period: 30 days from the publication of notice in the Official Gazette.
- Final Strike-Off: If no objections are raised, the company is struck off after the objection period.
⚠️ Consequences of Strike-Off
- The company ceases to exist as a legal entity from the date of strike-off.
- The Certificate of Incorporation is deemed canceled.
- Liabilities of directors and other officers may continue and can be enforced as if the company had not been dissolved.
- Assets of the company, if any, can be used to settle outstanding liabilities.
???? Restoration of Company Name
If a company has been struck off and any aggrieved party believes the removal was unjustified, they can appeal to the NCLT within three years from the date of strike-off. The Tribunal may order the restoration of the company’s name in the Register of Companies.
❓ Frequently Asked Questions (FAQs)
Q1: Can a company apply for strike-off if it has outstanding liabilities?
A1: No, all liabilities must be settled before applying for strike-off.
Q2: Is it mandatory to obtain shareholders’ approval for strike-off?
A2: Yes, a special resolution with at least 75% of shareholders’ consent is required.
Q3: What is the fee for filing Form STK-2?
A3: The government fee for Form STK-2 is ₹10,000.
Q4: Can the ROC strike off a company without its application?
A4: Yes, under Section 248(1), the ROC can initiate strike-off if the company is inactive or has not commenced business within a year of incorporation.
Q5: What happens to the company’s assets after strike-off?
A5: The company’s assets can be used to settle any outstanding liabilities, and directors may be held responsible for any unresolved obligations.
