If you are a business owner in India, you may have heard the term strike off company. It is a process that involves removing a company’s name from the Registrar of Companies (ROC) list. In other words, the company is no longer legally registered and cannot conduct any business activities.
Why would a company want to be struck off? There could be several reasons, such as the company is no longer operational, the directors or shareholders wish to dissolve the company, or the company was registered by mistake. Whatever the reason, it is important to follow the proper procedure for striking off company in India.
In this article, we will explain everything you need to know about striking off company in India. We will cover the process, the documents required, and some important points to keep in mind.
What is Strike Off Company India?
Striking off company refers to the process of closing down a company by removing its name from the official register of companies maintained by the relevant government agency. This process is also known as deregistration or dissolution. The company is considered to be no longer in existence once it has been struck off.
The Process of Striking Off Company Typically Involves the Following Steps:
Apply for Striking Off: The company directors or shareholders must apply to the relevant government agency to have the company struck off the register. The company should accompany the application with any required documents, such as financial statements or tax returns.
Public Notice: The government agency will publish a notice in the official gazette or a local newspaper to inform the public of the company’s proposed striking off once they receive the application. This notice aims to provide creditors and other interested parties with the opportunity to object to the striking off.
Objections: Creditors or other interested parties may object to the striking off within a specified period, typically two to three months. If any objections arise, the company may have to provide further information or take other steps to address them.
Striking Off: If no objections are received, or if all objections are successfully resolved, the company will be struck off the register. The government agency will publish a final notice confirming the striking off.
Process for Striking Off Company in India
The process for striking off a company in India can be divided into two parts: voluntarily striking off and striking off by the Registrar of Companies (ROC).
Voluntary Strike Off
If a company is not carrying out any business activities or is dormant for a period of two years, the directors or shareholders can apply for a voluntary strike off. The steps involved in voluntary strike off are as follows:
- Hold a board meeting to pass a resolution for striking off company
- Notify all the creditors and shareholders of the intention to strike off the company
- Publish a public notice in a newspaper about the intention to strike off the company
- Submit an application for striking off to the ROC along with the necessary documents
The ROC will then verify the application and, if satisfied, will strike off the name of the company from the ROC list.
Strike Off by ROC
If the ROC has reason to believe that a company is not carrying out any business activities, it can initiate the process of striking off company. The steps involved in the strike off by ROC are as follows:
- Send a notice to the company asking for an explanation for the non-filing of annual returns
- If the company does not respond or provide a satisfactory explanation, the ROC will publish a public notice in a newspaper about the intention to strike off the company
- If there is no response from the company or its stakeholders within 30 days of the public notice, the ROC will strike off the name of the company from the ROC list.
Documents Required for Striking Off Company in India
To strike off a company in India, you require the following documents.
- Application in Form STK-2
- Board resolution for striking off company
- Affidavit from all the directors of the company
- Statement of accounts duly certified by a chartered accountant
Important Points to Keep in Mind
Here are some important points to keep in mind when striking off company in India:
- The company should not have any outstanding statutory dues or liabilities
- The company should not have any assets or liabilities at the time of strike off
- The directors of the company have the responsibility to ensure that they meet all the requirements for strike off.
- Once the Registrar strikes off a company, the company cannot use its name for any other business activity.
Some FAQs about Striking Off Company Include:
Q: Why would a company choose to be struck off?
A: The directors might choose to strike off a company for several reasons, such as if the company is no longer active or if they wish to retire. Striking off can also be a simpler and cheaper alternative to formal liquidation.
Q: Can a struck-off company continue to operate?
A: Once the register has struck off a company, the company can no longer operate as it is no longer a legal entity. Any assets or liabilities of the company will become the responsibility of the company’s former directors or shareholders.
Q: When a company is struck off, what happens to its debts?
A: Striking off the company does not automatically cancel any outstanding debts or liabilities of the company. The directors or shareholders may still be personally liable for these debts.
Q: How long does the striking-off process (procedure) take?
A: The length of the process (procedure) can vary depending on the jurisdiction and any objections or issues that arise. In some cases, it may take several months or even longer.
Q: Is it possible to restore a struck-off company to the register?
A: In some jurisdictions, companies may have the possibility to apply for the restoration of their registration within a certain period of time, usually up to 6 years after the striking off process. This process usually involves paying any outstanding fees and providing evidence that the company is still solvent.
In conclusion, striking off company in India is a complex process that requires careful planning and execution. It is important to follow the proper procedure and submit all the necessary documents to the ROC. By striking off the company smoothly, you can avoid any legal complications.