Strike Off a Company – An Overview
Strike off Under Companies Act of 2013 is an official process for winding up a business. It involves the removal of its name from public records. Voluntary winding up of the company is done by filing a petition with the Registrar of Companies (ROC). Further, the company name is removed from the register by issuing a notice. The process is outlined in the Companies Act, 2013 allowing a straightforward dissolution.
Another way to end a company’s operations is by removing its name from public records. The Registrar of Companies (ROC) may issue a notice requesting the removal of a company name. Alternatively, the business might ask the ROC to strike its name from the register on its own behalf. Section 248 to 252 of the Companies Act of 2013 describes this procedure.
Voluntary Application to Strike Off a Company
A corporation may submit a special resolution or get the consent of 75% of its members (as determined by the paid-up capital) to have its name removed from the Register of Companies. This method is called voluntary application to strike off a company. After paying off all of its obligations, the firm may request to strike off the company on any of the following grounds:
- Within a year of establishment, the company fails or does not start operating
- The firm has not applied to be designated as a dormant company under Section 455 of the Act for the two financial years prior, during which time it has been inactive or has not conducted any activity
- After receiving the business’s request to have the company name removed, the ROC is required to issue a public notice as outlined by the Act.
Strike Off Company Name by ROC
- Valid Reasons for Removal: Failure to commence business within one year of incorporation or consecutive inactivity for two financial years
- Action by Registrar of Companies (ROC): Issues notice to company and directors for intention to remove/strike off company name
- Company’s Opportunity to Respond: Thirty-day period given from notice date to submit representations and relevant documents to ROC.
Documents Required for Strike off Company
The following Draft documents of strike off company is required for striking off the company:
- Board and shareholder resolutions
- Financial statements
- Tax clearance evidence
- Asset and liability statement
- Proof of dissolution or winding up
- Consent of creditors
- Consent of regulatory authorities
- Other jurisdiction-specific documents may be required
- It is advisable to consult legal professionals or government authorities for accurate and specific requirements.
Benefits of Strike Off Company
Cost Savings: Striking off a company can eliminate ongoing compliance costs, such as annual fees, audits, and filing requirements. This can be beneficial for companies that are no longer operating or generating revenue but still incurring expenses
Simplified Administration: Once a company is struck off, the administrative burden of maintaining company records, filing annual returns, and complying with regulatory requirements is lifted. This can reduce the administrative workload for the company directors or owners
Closure of Business: Striking off a company is often used as a way to formally close a business that is no longer active or profitable. It provides a clean and legal way to cease operations and wind up the affairs of the company
Privacy and Confidentiality: For companies that value privacy, striking off can remove their information from public records and databases, reducing the visibility of their business activities. This may be beneficial in cases where the owners wish to maintain a low profile or protect their personal information.
Procedure for Strike Off Company Name
Here is a step-by-step process follows for striking off a company under the Companies Act of 2013:
Step 1: Convene a Board Meeting
After conducting a board meeting where the board of directors will approve crucial transactions. Our team can help in authorising a director to apply to the Registrar of Companies (ROC), approving the strike-off of the company, and issuing a notice for an extraordinary general meeting.
Step 2: Liabilities Extinguishment
Once the board resolution is passed, we will ensure that any existing liabilities of the company are properly extinguished. It is essential to close the company’s financial obligations.
Step 3: Extraordinary General Meeting (EGM)
The EGM is a crucial step in obtaining shareholder approval for the closure of the company.
Step 4: Approval from Concerned Authorities
If any other regulatory authority oversees the company. We will help obtain the necessary approval from that authority. It ensures compliance with all regulatory requirements.
Step 5: Application to ROC
We will prepare and file the required forms with the ROC on behalf of the company. We will file Form MGT-14 within 30 days of passing the resolution, along with the prescribed fees. Additionally, we will file Form STK-2, which is necessary for strike-off.
Effect of Company Notified as Dissolved
Legal status of Strike off company has the following effects of firing a company:
- A corporation that has been dissolved in accordance with Section 248 of the Act ceases to exist as of the date stated in the notice published in the official gazette
- The ROC’s certificate of incorporation is regarded as invalid as of the date of dissolution. For the purposes of paying off the business’s debts, recovering unpaid sums owing to the firm, and carrying out its duties, the certificate of incorporation is still valid.
Strike-off Company Status
The strike-off company status refers to the state of a company that has undergone the process of striking off or dissolution. A company’s legal existence ends when it is struck off, which removes it from the official register of companies. Depending on the jurisdiction, the particular steps and language may change, but the overall idea stays the same. | Once a company is struck off, it is considered inactive and no longer legally operational. The strike-off status indicates that the company has ceased its business activities, and its assets, liabilities, and affairs are generally dealt with according to the laws and regulations of the jurisdiction.
