At the time of incorporation, every company has a vision of running its business forever. But all the businesses can’t run successfully for a long period. There are certain procedures for incorporating, running, and closing a business. There are only 2 ways to close a business, and these are struck off, winding up the company.
In this article, we will see only about striking off the company. Here, Odint Consulting provides you with information about the strike off of the company. Here, we will discuss what strike the company is, its procedure, and many more related to the same
What is the strike off company?
A striking-off company means removing the name of the company from the register of the company, and the company also ceases to exist. There are two types of strike off companies.
- Voluntary strike off company-
In this case, the company is struck off by the directors by dissolving it. Directors dissolve a company when they leave with no reason to run the company. There may be other reasons too for striking off a company, such as the retirement of directors, focus on another project, etc.
- Compulsory strike off company-
In this case, a third party is involved. The third party will sign the petition for compulsory striking off a company. This can also be done by the registry house of companies when a company does not comply with the rules and regulations and also does not file annual accounts and financial statements.
They have to notify all the related parties about the strike-off company by uploading a notice on the Gazette. Other parties have a period of 2 months for objecting to the notice. Once the period is up, then the name of the company will be removed, and the company will cease to exist.
Which companies can strike off?
Any type of company can go for strike off such as-
- Private company
- Public company
- Section 8 company
- One person company
But a dormant company cannot apply for strike off. And section 8 companies cannot go for voluntary strike-off according to the Company Act, 2013.
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Situations when a company cannot apply for strike off
According to the Company Act, 2013, a company cannot make an application for strike off when it had done the following actions in the previous three months: –
- It has changed its registered office from one state to another and its name.
- Immediately after ceasing of trade or in the normal course of business, it has made a disposal for the value of its property or held it.
- It is conducting activities except for the one which is necessary for making an application for this..
It has made an application to the tribunal for sanctioning compromise, and the matter has not been concluded yet.
Conditions to be fulfilled before applying
The following conditions are needed to be fulfilled before making an application for a strike of the company: –
- In case of voluntary strike-off
A company goes for voluntary strike-off, then it is required to pay off all the liabilities and also take approval from all the members by having a special resolution.
- In case of compulsory strike-off
When a company is required to go for compulsory strike-off by the order of tribunal or registrar of the company only in the following cases:
- If it fails to start its business within a year of incorporation.
- If it is not carrying any operations immediately preceding two previous years.
- If subscribers to the Memorandum do not pay the subscription amount and the declaration is also not filled within 180 days from its incorporation.
- If it is found during physical verification by the registrar of the company that this company is not carrying out any operations.
Required forms and fees for Strike off Company
For applying for strike-off, a company is required to file MGT-14 and STK- 2 electronically. The fee to be paid at the time of filing the forms electronically is ₹10,000/-.
Documents required for filing forms
The following documents are required to be attached while filing these forms for applying for striking off a company: –
- An indemnity bond is notified by all directors in form STK-3.
- A statement that shows all the liabilities and assets of the company and should be certified by a practising-chartered accountant.
- A copy of a special resolution signed by all the directors and certified.
- In form STK-4, an affidavit.
- A statement showing all the pending litigation of the company.
- Relevant orders copy for delisting of a company.
- A certificate of non-objection from the respective regulatory department.
Application for Company Strike off
When a company applies for strike off, then it is mandatory to give a valid reason to the registrar of companies. Section 248 to 252 of the company act, 2013 shows the procedure of striking off the company.
If a company applies for strike off voluntarily or compulsorily, they have to notify the public through an official gazette. After the expiry of the specific time, the ROC will remove the name of the company, but it has to mention a valid reason for the same.
The registrar of companies will also mention a dissolution notice of the striking off the company in the official Gazette once the company dissolves.
The ROC will make sure that the company has made sufficient provisions for paying off the liabilities of the company and realizing the number of assets before passing an order for dissolution or striking off. ROC is required to take necessary undertakings from the directors, managing directors, and other individuals responsible for the management of the company.
A company can use its assets for paying off its liabilities even after its name is removed from the registrar of companies. And it is also required to pay off all the liabilities of the directors, managing directors, and other responsible persons of management of the company.
What happens when a company is officially dissolved?
As per section 248 of the company act, 2013, a company is notified to be dissolved in the official Gazette then it ceases to operate from the date mentioned.
The certificate of incorporation, which was issued by the registrar of companies at the time of incorporation, will be cancelled by them from the date of dissolution. But the certificate of incorporation is valid for paying all liabilities and redeeming all the assets.
Procedure for Striking off a company
The following steps are required to follow for striking off the company: –
- Convey a board meeting by the authorized directors and pass a board resolution.
- Notice for the board meeting should be given 7 days before the meeting.
- Send notice for an annual general meeting or extraordinary general meeting if required.
- Have a special resolution through the general meeting.
- File MGT-14 with all the required documents and fees.
- File STK-2 will have all the required documents and fees.
After checking all the documents and fees, the registrar of companies will publish a public notice in the Official Gazette after fulfilling all the required conditions.
The period required for striking off a company from the registrar of companies
Once the application is made to the registrar of companies by file, e-forms MGT-14 and STK-2 with required fees, then ROC will verify all the documents then it will remove the name of the company. This whole procedure will take 3-4 months, but sometimes it takes more time to complete that procedure.
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Conclusion
Hope that the above information has informed you well about the full process of Striking Off a company and all the terminologies surrounding the same.
Odint Consulting works on providing the necessary information relating to every workaround of a company’s functions and helping you conduct legal business operations as well.
We offer a plethora of authentic services for companies aiming to run a business in India as well as in foreign countries like Singapore, the UK, the USA, the Netherlands, etc. We can help you with the Striking Off process, among many others you can check out on our website.
Read More: DS01 Form To Strike Off Company In UK
FAQ’s
When a company goes on strike off, then it is not able to operate trading and manufacturing or any other business activities. Its name will be removed from the registrar of companies.
No, if a company is applying for strike off, then it must have to clear all the liabilities; otherwise, it cannot be struck off.
In case of strike off the company, it has only 2 months from the date of submission of striking off application for submitting its objection on the same.
Yes, you can also make an application to strike off the company through online mode by using your company’s house account and authorization code.
