The Ministry of Corporate Affairs notified the provisions of Section 248 to 252 of the Companies Act, 2013 w.r.t. removal of names of companies from the Registrar of Companies on 26/12/2016. In reference to the same the Ministry of Corporate Affairs (MCA)/ Registrar of Companies (ROC) have issued Form STK-5 which is a Public Notice published by Registrar under Section 248(1) of Companies Act, 2013 stating the names of the companies which will be struck off if no response is received within 30 days of the Public Notice . The companies whose name has come up in STK-5 have to reply before 31st March. The Companies under STK – 5 have three options:
Option 1: To keep the company active:
Write a reply letter to ROC stating that the company will complete all the compliances till date and should complete the compliances as soon as possible.
Option 2: To strike off the company:
Write a reply letter to ROC stating that the company can be struck off by ROC.
Option 3: To apply for Condonation of Delay Scheme, 2018
NOTE: THE DETAILED NOTICE CAN BE READ ON OFFICIAL SITE OF THE MINISTRY OF CORPORATE AFFAIRS.
The following article states reasons, modes & restriction related to Strike Off of companies by ROC.
The provisions relating to Strike Off provide an opportunity to the defunct companies to get their names struck off from the records of the ROC. The underlined reasons for the strike off of company’s name from the ROC are:
- cessation of business activities
- Non-filing of accounts and other statutory requirements, or
- Non-response to the statutory agency’s mail sent to the firm’s official (registered) address.
There are two modes of strike off are:
- By ROC itself under Section 248(1) of the Act; and
- By way of filing application by the Company under Section 248(2)
STRIKE OFF BY ROC SUO MOTO UNDER SECTION 248(1) OF THE ACT:
The ROC initiate the process of Strike Off if the company has failed to commence its business within one year of its incorporation or had not been doing business or operation for last two financial years and has not applied with the ROC for the status of dormant company.
Procedure to be followed by ROC for strike off by its own motion ( Suo Moto)
- Serving of Notice: Notice should contain the reasons on which the name of the company is to be removed & seek representations, if any, against the proposed action from the company and its Directors along with the copies of relevant documents, if any, within a period of thirty days from the date of the notice.
- Publication of notice: On official website of the MCA, On Official Gazette; News Papers.
- Intimation to regulatory authorities: The Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over the company, about the proposed action of removal or striking off the names of such companies and seek objections, if any, to be furnished within 30 days of notice.
The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under this section, shall continue and may be enforced as if the company had not been dissolved.
BY WAY OF FILING APPLICATION BY THE COMPANY UNDER SECTION 248 (2)
A company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent. Members in terms of paid-up share capital, file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in sub-section (1) and the Registrar shall, on receipt of such application, is liable to issue a public notice in the prescribed manner.
RESTRICTIONS ON MAKING APPLICATION UNDER SCTION 248 IN CERTAIN SITUATIONS:
(1) An application under sub-section (2) of section 248 on behalf of a company shall not be made if, at any time in the previous three months, the company—
(a) Has changed its name or shifted its registered office from one State to another;
(b) Has made a disposal for value of property or rights held by it, immediately before cesser 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;
(c) 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;
(d) Has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
(e) Insolvency and Bankruptcy Code.
(2) If a company files an application under sub-section (2) of section 248 in violation of sub-section (1), it shall be punishable with fine which may extend to one lakh rupees.
(3) An application filed under sub-section (2) of section 248 shall be withdrawn by the company or rejected by the Registrar as soon as conditions under sub-section (1) are brought to his notice.
The section 248 to 252 under the Companies Act 1956 is more controlling in terms of authorizations and procedures. It is the speediest way to shut down a company as compare to other modes of winding up under the Companies Act. Even though the company can easily dissolve through this mode and its name removed from the ROC’s registers the liabilities continues on every director, officer and members of the company and may be enforced in the same manner as if the company had not been dissolved. In addition, by providing restoration provisions, the company which has been struck off may get a chance to restore its name in the register and get active with the permission of Tribunal even within 20 years of being struck off. Since the notification of the strike off provisions under the Act, the ROC became very active in sending notices to the companies which seems eligible for strike off under section 248(1) of the Act. The companies are required to take due care while making reply to such notices to the ROC and it should be kept in mind that strike off does not relieve the directors and members from their liabilities, if any, under the law.
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