MCA Amends Rules on Removal of Company Names, Relaxes Indemnity Requirement for Government Companies [Read Notification]

The Ministry of Corporate Affairs (MCA) amended the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 to make indemnity bonds easier for government companies. The notification comes into effect from the date of publication.

The amendment relates to Rule 4(3) of the 2016 Rules, which deals with applications by companies to remove their names from Register of Companies under Section 248 of the Companies Act, 2013.

Earlier, when a company applied for strike-off, all directors were required to submit indemnity bond in Form STK-3, take personal responsibility for any future liabilities.

MCA now introduces special provision for Government Companies and their subsidiaries.

Key changes introduce

Under amended rules:

• Government companies, including subsidiaries, where one or more directors are appointed or nominated by Central Government or State Government, no longer need individual directors sign indemnity bonds.

• Instead, an indemnity bond is furnished in Form STK-3A. The bond must be signed by an authorized representative of concerned government.

• The authorise officer must not be below a rank of Under Secretary or equivalent. The officer must belong to administrative Ministry or Department of Central or State Government, as applicable.

This shifts the responsibility for indemnity from individual government-nominated directors to the government department itself.

What remains unchanged

• The overall procedure for removal of a company’s name under Section 248 remains the same.

• Private companies and non-government companies must continue to submit indemnity bonds in Form STK-3.

• The relaxation applies only to government companies and their subsidiaries.

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