Striking off Company Name under Companies Act, 2013: ALL CS and Companies Need to Know

Striking off refers to the removal of a company’s name from the Register of Companies maintained by the Registrar of Companies (RoC). Once struck off, the company ceases to exist as a legal entity and cannot undertake any business operations. This is distinct from winding up, which is a more elaborate process involving liquidation of assets and settlement of debts.

The provisions for striking off are contained in Sections 248 to 252 of the Companies Act, 2013 and the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. These sections lay down the grounds, procedures, and consequences of striking off.

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MODES OF STRIKING OFF

There are two principal ways a company can be struck off:

A. Compulsory Striking Off (by RoC) – Section 248(1)

The RoC may, on its own motion, remove the name of a company if:

• The company has failed to commence business within one year of incorporation.
• The company is not carrying on any business or operation for two immediately preceding financial years and has not applied for dormant status.
• The subscribers to the memorandum have not paid the subscription amount and a declaration to this effect has not been filed within 180 days of incorporation.
• The company is not carrying on any business or operation as revealed after physical verification.

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B. Voluntary Striking Off (by Company) – Section 248(2)

A company may apply to the RoC for striking off its name if it has:

• Not commenced business within one year of incorporation, or
• Not carried on any business or operation for the preceding two financial years and has not applied for dormant status.

RESTRICTIONS AND INELIGIBILITY TO STRIKE OFF NAME

A company cannot apply for striking off if, in the last three months, it has:

• Changed its name or shifted its registered office from one state to another.
• Made a disposal for the value of property or rights held (other than in the normal course of business).
• Engaged in any activity other than what is necessary for making an application for striking off, concluding affairs, or complying with statutory requirements.
• Applied for a compromise or arrangement and the matter is pending.
• Is being wound up under the Companies Act or Insolvency and Bankruptcy Code.

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PREREQUISITES FOR STRIKING OFF

Before applying, the company must:

• Settle all its liabilities.
• Obtain consent from 75% of its shareholders (in terms of paid-up share capital).
• Ensure that all statutory filings up to the date of application are completed.
• Close all bank accounts in the company’s name.
• Prepare a statement of accounts not older than 30 days from the date of application, certified by a Chartered Accountant.

PROCEDURE FOR VOLUNTARY STRIKE OFF

1. Board Meeting: Convene a Board Meeting to approve the proposal for striking off and call an Extraordinary General Meeting (EGM).
2. Shareholders’ Approval: Hold the EGM and pass a special resolution with at least 75% majority.
3. Settle Liabilities: Settle all outstanding liabilities and obtain No Objection Certificates (NOCs) from creditors, if any.
4. Prepare Documentation

• Indemnity bond (in Form STK-3) by every director.
• Affidavit (in Form STK-4) by every director.
• Statement of accounts certified by a Chartered Accountant.
• Copy of special resolution.
• NOC from regulatory authorities, if applicable.

5. Filing Application (Form STK-2): File Form STK-2 online with the RoC, attaching all required documents and paying the prescribed fee.

6. Scrutiny by RoC: The RoC examines the application. If satisfied, a public notice is issued inviting objections from the public, creditors, and other stakeholders.

7. Publication of Notice: Notice is published on the MCA website, in the Official Gazette, and in a leading English and regional newspaper.

8. Striking Off Order: If no objections are received within 30 days, the RoC strikes off the company’s name and publishes a notice in the Official Gazette. The company stands dissolved from the date of publication.

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COMPULSORY STRIKE OFF BY ROC – PROCEDURES

If the RoC initiates the process, the following steps are followed:

• RoC sends a notice (Form STK-1) to the company and its directors, stating the intention to remove the company’s name and seeking representations within 30 days.
• After considering representations and objections, if any, the RoC proceeds to strike off the name and publishes the notice.

ROLE OF COMPANY SECRETARY

A Company Secretary plays a role in:

• Advising the board on compliance and legal consequences.
• Ensuring all statutory requirements are met.
• Preparing and vetting documents.
• Liaising with the RoC and other authorities.
• Ensuring transparent communication with stakeholders.

Also read: Non-Appointment of Woman Director u/s 149(1) of Companies Act: Recent Judicial Trends and MCA Crackdowns

EFFECTS AND CONSEQUENCES OF STRIKING OFF

• The company ceases to exist as a legal entity.
• The Certificate of Incorporation is deemed cancelled.
• The company’s assets, if any, vest with the Central Government.
• Directors and officers remain liable for any undisclosed liabilities or fraud.
• The company’s name becomes available for new registration.

RESTORATION OF NAME

If aggrieved by the striking off, the company, its members, creditors, or workmen can apply to the National Company Law Tribunal (NCLT) for restoration within three years (for company/creditors/workmen) or twenty years (for Registrar). The NCLT may order restoration if it is satisfied that the company was carrying on business or it is just to restore its name.

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COMPANIES NOT ELIGIBLE FOR STRIKE OFF

The following categories of companies cannot be struck off from the Register of Companies:

1. Listed Companies
2. Delisted Companies (due to non-compliance with listing regulations, statutory laws, or the listing agreement)
3. Vanishing Companies
4. Companies under inspection or investigation, where such proceedings are pending, ongoing, or completed but prosecutions are still pending in court
5. Companies that have not responded to regulatory notices
6. Companies that have not complied with follow-up instructions issued under Section 208 of the Companies Act
7. Companies with pending prosecutions under any of the above circumstances
8. Companies against which any prosecution is pending in a court of law
9. Companies with pending compounding applications before competent authorities
10. Companies that have accepted public deposits which remain unpaid
11. Companies with unsatisfied charges on record
12. Section 25 companies under the Companies Act, 1956 or Section 8 companies under the Companies Act, 2013 (i.e., not-for-profit companies)

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LIST OF FORMS REQUIRED FOR STRIKE OFF BY COMPANIES

1. E-form MGT-14 (if applicable)

• Purpose: Filing of the special resolution passed by shareholders for strike off.
• When Required: If a special resolution is passed in an Extraordinary General Meeting (EGM), MGT-14 must be filed within 30 days of passing the resolution. However, this step is optional if shareholder consent is obtained in writing instead of a formal meeting

2. E-form STK-2

• Purpose: Main application form for striking off the company’s name from the Register of Companies.
• Who Files: Filed by the company after passing the necessary board and shareholder resolutions.
• Fee: ₹10,000

3. Enclosures/Attachments to Form STK-2

The following documents must be attached to STK-2:

• Indemnity Bond (Form STK-3): Duly notarized and signed by all directors.
• Affidavit (Form STK-4): Duly notarized and signed by all directors individually.
• Statement of Accounts (Form STK-8): Showing assets and liabilities, certified by a Chartered Accountant, and not older than 30 days from the date of application.
• Copy of Special Resolution: Certified true copy of the resolution passed by shareholders.
• Copy of Board Resolution: Approving the strike-off application and authorizing a director to file the application.
• No Objection Certificate (NOC): From creditors or regulatory authorities, if applicable.
• Statement regarding pending litigations: Details of any ongoing legal proceedings involving the company.
• Bank Account Closure Certificate: Proof that all company bank accounts have been closed.
• Any other relevant documents: As required based on company circumstances or as requested by the RoC.

Complete Clause by Clause Checklist for Form 3CD – CLICK HERE

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SUMMARY TABLE OF IMPORTANT FORMS

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