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Strike off/winding up of Company
When a Company gets incorporated its name is entered in the official registry of the ROC and can’t be removed unless one applies for it or it is ordered by law. If the owner of the Company fails to get its business started, or if its annual returns aren’t submitted for two consecutive immediately previous financial years then one can apply for Striking off the name of the Company. Striking off is an easy way to shut down its operations. The Registrar of Companies can initiate the Process on its own, or the company itself can apply for its name to be struck off from the official Register of the Registrar of Companies. According to the Companies Act 2013, there are specific steps and procedures that need to be followed in order to do this. It’s a fast way to dissolve a business, making it simpler and cost-effective.
Basic Conditions for Company to go for Strike off:
The company can apply to the ROC for removing its name after obtaining the Consent of at least 75% of its Shareholders and extinguishing all its liabilities on any of the following grounds:
- The Company has failed to start its business operations within one year of its incorporation;
- The company is inoperative or does not carry out any of its business operations for two preceding financial years and has not filed an application within such period for getting the status of a dormant company under Section 455 of the Act;
- The subscription money is not received by the Company and a declaration pertaining to the same has not been filed in form INC – 20A within 180 days of incorporation;
Restrictions on Voluntary Strike off
The Companies are restricted from submitting strike-off applications if, at any point over the previous three months, the Company:
- Has changed its name or
- has shifted its registered office from one state to another; or
- has made a disposal for value of property or rights held by it, immediately before cessation of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business; or
- has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement; or
- has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
- is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy Code, 2016.
Documents and Details Required
- Consent of 75% shareholders and NOC from Creditors (*Draft will be provided from our team)
- A statement of liabilities comprising all assets and liabilities of the companies (certified by a Chartered Accountant). (*Draft will be provided from our team)
- AOC-4 and MGT-7 for last 2 Financial Years
- Income Tax Returns for the last 3 financial years.
- Identity and Residential Proof of all the Directors
- MOA and AOA of the Company
- Details of any pending litigations with respect to the Company, if any.
- Bank Account Closure Letter
- Details of Shareholders till date.
- Authority Letter and Consent to make an Application and Affidavits – Duly signed by all the Directors and Shareholders (* Draft will be provided from our team)
Process for filing Strike off Application
- Passing of Board Resolution: The first step is to conduct a Meeting of Board of Directors of the Company and passing thereat a resolution for approving the strike off of the Company and authorising any Director to submit an application for the strike-off process shall be passed.
- Paying off Debts: A business that wants to be struck off must have taken care of all of its responsibilities and should have made proper arrangements for paying off its Creditors.
- Obtaining Shareholders Consent: A Special resolution for strike off of the Company shall be approved at a general meeting of shareholders. It must be noted that 75% of the Company’s shareholders must approve this resolution. After this, the resolution shall be submitted to the ROC in e-form MGT-14 within thirty days.
- Approval from Govt. Authority: Approval from the appropriate Govt. Authority shall be obtained, if the Company is registered under any such Authority
- Filing of Strike off Application in e-form STK – 2: An application to the RoC in e-form STK-2 shall be submitted along with requisite documents for initiating the strike off of the Company.
Implication of Dissolvement
If a company acknowledges its dissolvement, it must stop operating as a business as of that date, and the Certificate of Incorporation it received from the ROC is presumed to have been revoked, with the exception of any outstanding debts or obligations. In addition, when the Corporation was dissolved, any outstanding corporate obligations of the directors, officers who had managed it directly or indirectly, and each member of the Company would still be enforced.
OUR BLOGS
- What are ways to get a Company to strike off?
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A company can get strike off in the following two ways:-
- By Registrar of Companies Suo Moto, or
- By Company itself through Voluntary Strike Off Is it necessary to pay off all the liabilities before filing the strike-off application?
Ans. A company proceeding for strike-off must have closed off all its liabilities before filing the application with ROC. - What is the conditions for getting a company is struck off?
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The company can be struck off upon fulfilling any of the following conditions:
- When a company has failed to commence its business within one year of its incorporation; or
- When a company is not actively carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a Dormant Company.
- The subscription money is not received by the Company and a declaration pertaining to the same has not been filed in form INC – 20A within 180 days of incorporation
- Can a struck-off company continue its business operations?
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When a company is struck off, its name is removed from the Register of the ROC and it can not continue its business operations, sell its assets or make payments or even it can not get involved in any other profit-making activities.
- Can the name of the Company be available after its Strike-off?
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The name of the strike-off company would be made available for new companies to use.
