Striking off names of company 

STRIKING OFF NAMES OF COMPANY 

Striking off the names of a company, also known as dissolution or winding up, is the process of removing a company’s name from the register of companies, effectively ending its legal existence. This process is typically initiated when a company has ceased its business activities, or is unable to pay its debts.

RECENT CHANGES IN RULE OF STRIKING OFF THE NAMES OF THE COMPANY

MCA has come with a Gazzate Notification dated 9th June, 2022 amending the erstwhile Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 with Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2022.

It is by this notification that Rules related to Striking off the names of company from the records maintained by Registrar under Section – 248 has been amended which is discussed below, but before that let us first understand the concept of Section – 248(2) related to suo-moto application by Company for removing their name from the register of companies

Pursuant to the provisions of sub-section (2) of Section 248 of the Companies Act, 2013, the company after extinguishing all its liabilities and passing a special resolution or obtaining consent of 75% members in terms of,

paid-up share capital, can make an application voluntarily to the Registrar of Companies (ROC) for striking off its name from the Register on all or any of the grounds as mentioned in sub-section (1) of section 248.

Such application shall be made by the company in Form STK 2, being an application form for voluntary striking off the name of the company.

The company further needs to obtain a No Objection Certificate from the appropriate regulatory authority if it is governed by any Special Act and the same needs to be attached with Form STK 2.

Further, the application needs to be certified by a CA/CS/Cost Accountant in whole time practice. Along with the application, indemnity bond in Form STK 3 and an affidavit from the directors in Form STK 4 shall be annexed thereto. It is to be noted that Section 8 companies cannot make voluntary application to ROC for striking off.

Section 8 Companies or Charitable Companies cannot directly apply for striking off of its name and as a result of which, such company needs to convert itself into a Private Company and then, make an application for striking off.

The effect of such conversion is that the application is now being made by a private company and not by a section 8 company.

However, MCA through its notification dated 9th June, 2022, stated that if on examination of application made by a company in Form STK 2, for voluntary striking off the name; ROC finds such application or any documents attached thereto to be incomplete or defective or discovers the need to call for further information,

it shall inform the same to the applicant company, giving them 15 days time (from the date of communication) to make such corrections and resubmit the application, failing which ROC shall treat the form as invalid.

If on resubmission also, ROC finds such application or any documents attached thereto to be incomplete or defective, it shall give further time of 15 days to complete the form or remove the defects, failing which, ROC shall consider the form to be invalid.

Through this insertion in rule (4), after sub rule (3) of Companies (Removal of Names of Companies from the Register of Companies), Rules, 2016, we can opine that if the ROC on finding the application made in,

Form STK 2 incomplete, defective, or needs further information in this regard, then, a maximum of two resubmissions shall be allowed; after which the Registrar shall treat the form as invalid.

Further it is to be noted that any resubmission of the application form in STK 2 prior to 9th June, 2022 shall not be included in the limit of maximum number of resubmission of such forms.

In addition to this, the following forms have undergone certain changes through MCA’s notification dated 9th June, 2022.

Vide this notification, the MCA has prescribed the number of resubmissions allowed (i.e., 2 resubmissions) along with the period within which resubmission is to be made by the concerned companies when they are in the process of voluntary strike off. The MCA has also revised the formats of Form STK-1, STK-5 & STK-5A.

The amendment is summarized as follows:-

i. Upon examination of form STK-2, if it is found necessary by the concerned ROC to call for further information or if the application or any document is incomplete or defective, he shall inform the applicant to remove such defects;

ii. the applicant has to resubmit the form within 15 days from the date of such information;

iii. after the re-submission of the form, if the ROC finds that the form/ document is defective or incomplete in any respect, he shall give further time of 15 days to remove such defects;

iv. in both the resubmissions, any failure to resubmit the form within 15 days shall make the application invalid;

v. any re-submission of the application in form STK-2 made prior to the commencement of these rules shall not be counted for the purposes of reckoning the maximum number of re-submissions

 

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