Strike Off and Restoration of Name of the Non-working Company and LLP

Strike Off and Restoration of Name of the Non-working Company and LLP

Relevant Sections and Rules

  • Chapter XVIII of Companies Act, 2013
  • Section 248 to 252 of the Companies Act, 2013
  • Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016

Ways of Stinking off of Companies

  • By ROC suo-moto (under Sub-Section 1 of Section 248 read with Rule 3)
  • By application of company for removal of name/strike off of Company (under Sub-Section 2 of Section 248 read with Rule 4)

Suo-Moto Power of Registrar to Remove the Name of Company

According to Section 248(1), when the registrar has reason to believe that:-

  • a company has failed to commence its business within 1 year of its incorporation or;
  • a company is not carrying on any business or operation for a period of 2 immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455 or
  • the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within 180 days of its incorporation under section 10A; or
  • the company is not carrying on any business or operations, as revealed after the physical verification carried out under section 12(9).

he shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of 30 days from the date of the notice.

Further, according to Section 4(5), when after reservation of the company’s name it is found that the name was applied by furnishing wrong or incorrect information, the Registrar may –

  • in case where company is incorporated,
    • after giving the company an opportunity of being heard,

can take action for striking off the name of the company from the register of companies.

Also, according to Section 7(7),

  • where a company has been incorporated by furnishing any false or incorrect information,

the Tribunal may pass such orders as it thinks fit including

  • removal of name from register or
  • making the liability of the members as unlimited or
  • pass an order for the winding up of the company.

According to Rule 3 of Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016,

  • The Registrar shall give a notice in writing in Form STK 1 which shall be sent to all the directors of the company at the addresses available on record, by registered post with acknowledgement due or by speed post.
  • The notice
    • shall contain the reasons on which the name of the company is to be removed from the register of companies and
    • shall 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 30 days from the date of the notice.

According to Section 248(4), read with Rule 7 of Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, the notice under section 248(1) shall be published in Form STK 5 and be-

  • placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;
  • published in the Official Gazette;

    Further, such notice shall be published in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated (in Form STK 5A). 

According to Section 248(5) read with Rule 9 of Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016,

  • At the expiry of the time mentioned in the notice, the ROC may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette in Form STK 7, and on the publication in the Official Gazette of this notice, the company shall stand dissolved.
  • The same notice shall also be placed on the official website of the Ministry of Corporate Affairs.

According to Section 248(6),

  • The Registrar, before passing an order under sub-section (5), shall satisfy himself that
    • sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and,
    • if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company.

But in spite of the undertakings referred to in this sub-section, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies.

According to Section 248(7),

  • 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 sub-section (5), shall continue and may be enforced as if the company had not been dissolved.

According to Section 248(8),

  • Nothing in this section shall affect the power of the Tribunal to wind up a company the name of which has been struck off from the register of companies.

Companies which can’t be removed by Registrar
According to Rule 3 of Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 following companies are not eligible for taking action by the Registrar:-

  • Listed companies;
  • Companies that have been delisted due to non-compliance of listing agreement or any other statutory laws;
  • Vanishing companies;
  • Companies where inspection or investigation is ordered and being carried out or to be taken up or where completed prosecutions arising out of such inspection or investigation or pending in the Court;
  • Companies where notices under section 206 or section 207 of the Act have been issued by the Registrar or Inspector and reply thereto is pending or report under section 208 has not yet been submitted or follow up of instructions on report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the Court
  • Companies against which prosecution for non-compoundable offence is pending in Court;
  • Companies whose application for compounding is pending before the competent authority for compounding the offences committed by the company or any of its officers in default
  • companies, which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
  • companies having charges which are pending for satisfaction; and
  • companies registered under section 25 of the Companies Act, 1956 or section 8 of the Act.

Note: Vanishing Company means a company,

  • registered under the Companies Act and listed with Stock Exchange

which

  • has failed to file its returns with Registered of Companies and Stock Exchange for a consecutive period of 2 years, and
  • is not maintaining its registered office at the address notified with the Registrar of Companies or Stock Exchange and none of its Directors are traceable.

Removal of Name of Company by ROC on the Application made by Company

Circumstances where company can apply for the removal of name [Section 248(2)]
Without contravening the provisions of section 248 (1), a company may,

  • after extinguishing all its liabilities,
  • by
    • a special resolution or
    • consent of 75% 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 section 248 (1) and the Registrar shall, on receipt of such application, cause a public notice to be issued in Form STK-6.

Note:

  • In the case of a company regulated under a special Act, approval of the regulatory body constituted or established under that Act shall also be obtained and enclosed with the application.

According to Rule 4 of Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016:

  1. An application for removal of name of the company under section 248(2) shall be made in Form STK-2 along with the fee of Rs. 10000.
    Provided that no application in Form No. STK-2 shall be filed by a company unless it has filed overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return), up to the end of the financial year in which the company ceased to carry its business operations:
    Provided further that in case a company intends to file Form No. STK-2 after the action under sub-section (1) of section 248 has been initiated by the Registrar, it shall file all pending overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return) before filing Form No. STK-2:
    Provided also that once notice in Form No. STK-7 has been issued by the Registrar pursuant to the action initiated under sub-section (1) of section 248, a company shall not be allowed to file an application in Form No. STK-2.
  2. Every application under sub-rule (1) shall accompany a no objection certificate from appropriate Regulatory Authority concerned in respect of following companies, namely :-
CompaniesAuthorities
Companies conducting non-banking financial and investment activitiesRBI
Housing Finance CompaniesNational Housing Bank
Insurance CompaniesIRDA
Companies in the business of capital market intermediariesSEBI
Collective Investment Schemes (CIS)SEBI
Asset Management CompaniesAMC
Any other company which is regulated under any other lawAppropriate Authority

3. The application in Form STK 2 shall be accompanied by –

  1. indemnity bond duly notarised by every director in Form STK 3;
    Provided that in case of a –
  • Government company in which the entire paid up share capital is held by the Central Government, or by any State Government or Governments or by the Central Government and one or more State Governments; or
  • subsidiary of a Government company, referred to in clause (a), in which the entire paid up share capital is held by that Government company,
    a duly notarised indemnity bond in Form STK-3A shall be given by an authorised representative, not below the rank of Under Secretary or its equivalent, in the administrative Ministry or Department of the Government of India or the State Government, as the case may be, on behalf of the company;
  • a statement of accounts containing assets and liabilities of the company made up to a day, not more than 30 days before the date of application and certified by a Chartered Accountant;
  • An affidavit in Form STK 4 by every director of the company;
  • a copy of the special resolution duly certified by each of the directors of the company or consent of 75% of the members of the company in terms of paid up share capital as on the date of application;
  • a statement regarding pending litigations, if any, involving the company.

Note:

  • According to section 248(3), provisions of Section 248(2) doesn’t applies on Section 8 companies.
  • It means Section 8 Company cannot voluntarily apply for striking off the name from the Register.

Eligibility criteria for the company for making application [Section 249]
An application under section 248(2) on behalf of a company shall not be made if, at any time in the previous 3 months, the company—

  • has changed its name or shifted its registered office from one State to another
  • 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 or gain in the normal course of trading or otherwise carrying on of business;
  • 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;
  • 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.

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 1 lakh rupees.

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.

Effect of company notified as dissolved [Section 250]
Where a company stands dissolved under section 248, it shall on and from the date mentioned in the notice under sub-section (5) of that section cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.

Fraudulent application for removal of name [Section 251]

  1. Where it is found that an application by a company under sub-section (2) of section 248 has been made with the object of evading the liabilities of the company or with the intention to deceive the creditors or to defraud any other persons, the persons in charge of the management of the company shall, notwithstanding that the company has been notified as dissolved—
    • be jointly and severally liable to any person or persons who had incurred loss or damage as a result of the company being notified as dissolved; and
    • be punishable for fraud in the manner as provided in section 447.
  2. Without prejudice to the provisions contained in sub-section (1), the Registrar may also recommend prosecution of the persons responsible for the filing of an application under sub-section (2) of section 248.

Appeal to Tribunal [Section 252]

Power of Tribunal to restore the name of the Company
Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal within a period of 3 years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies.

Opportunity of Being Heard
Before passing any order under this section, the Tribunal shall give a reasonable opportunity of making representations and of being heard to the Registrar, the company and all the persons concerned.

Restoration of names if struck off inadvertently
If the Registrar is satisfied, that the name of the company has been struck off from the register of companies either inadvertently or on the basis of incorrect information furnished by the company or its directors, which requires restoration in the register of companies, he may within a period of 3 years from the date of passing of the order dissolving the company under section 248, file an application before the Tribunal seeking restoration of name of such company.

Order of Tribunal shall be filed with the Registrar
A copy of the order passed by the Tribunal shall be filed by the company with the Registrar within 30 days from the date of the order and on receipt of the order, the Registrar shall cause the name of the company to be restored in the register of companies and shall issue a fresh certificate of incorporation.

Application to Tribunal for restoration by Member, Creditor or workmen as the case may be
If a company, or any member or creditor or workman thereof feels aggrieved by the company having its name struck off from the register of companies, the Tribunal on an application made by the company, member, creditor or workman before the expiry of 20 years from the publication in the Official Gazette of the notice under sub-section (5) of section 248 may, if satisfied that

  • the company was, at the time of its name being struck off, carrying on business or in operation or
  • it is just that the name of the company be restored to the register of companies,

order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off from the register of companies.

Different forms under this chapter

Form No. STK 1
Notice by Registrar for removal of name of a company from the register of companies
[Pursuant to sub-section (1) of section 248 of the Companies Act, 2013 and rule 3 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

FORM NO. STK-2
Application by company to ROC for removing its name from register of companies
[Pursuant to Section 248(2) of Companies Act, 2013 and Rule 4(1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

Form No. STK – 3
Indemnity Bond (To be drawn on Stamp Paper of appropriate value)
(to be given individually or collectively by every director)
[Pursuant to clause (i) of sub-rule (3) of rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

FORM No. STK -4
AFFIDAVIT (to be given individually by every Director)
[Pursuant to sub section (2) of section 248 read with clause (iii) of sub-rule (3) of Rule 4]

FORM No. STK – 5
PUBLIC NOTICE
[Pursuant to sub-section (1) and sub-section (4) of section 248 of the Companies Act, 2013 and rule 7 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

FORM No. STK – 6
PUBLIC NOTICE
[Pursuant to sub-section (2) and sub-section (4) of section 248 of the Companies Act, 2013 and rule 7 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

FORM No. STK – 5A
PUBLIC NOTICE IN NEWSPAPER
[Pursuant to sub-section (1)/(2) and sub-section (4) of section 248 of the Companies Act, 2013 and rule 7 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

FORM No. STK – 7
NOTICE OF STRIKING OFF AND DISSOLUTION
[Pursuant to sub-section (5) of section 248 of the Companies Act, 2013 and rule 9 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

Strike Off and Restoration of name of LLP

Relevant Sections and Rules
Section 75 of the Limited Liability Partnership Act, 2008 read with Rule 37 of the Limited Liability Partnership Rules, 2009 deals with the provision for striking off the name of the Limited Liability Partnership from the Register of limited liability partnership.

Power of Registrar to strike defunct limited liability partnership off register [Section 75]
Where the Registrar has reasonable cause to believe that a limited liability partnership is not carrying on business or its operation, in accordance with the provisions of this Act, the name of limited liability partnership may be struck off the register of limited liability partnerships in such manner as may be prescribed:

Provided that the Registrar shall, before striking off the name of any limited liability partnership under this section, give such limited liability partnership a reasonable opportunity of being heard.

Striking Off Name of Defunct LLP [RULE 37]

  1. Where a LLP is not carrying on any business or operation –
  • for a period of 2 years or more and the Registrar has reasonable cause to believe the same, for the purpose of taking suo motu action for striking off the name of the LLP; or
  • for a period of 1 year or more and has made an application in Form 24 to the Registrar, with the consent of all partners of the LLP for striking off its name from the register,

the Registrar shall send a notice to the LLP and all its partners, of his intention to strike off the name of the LLP from the register and requesting them to send their representations along with copies of the relevant documents, if any, within a period of 1 month from the date of the notice:

Provided that no such notice by Registrar shall be required under clause (b):
Provided further that where the LLP is regulated under a special law, the application for removal of its name shall be accompanied by approval of the regulatory body constituted or established under that law.

(1A)  The limited liability partnership referred to in clause (b) of sub-rule (1) of rule 37 shall,—

  • file overdue returns in Form 8 and Form 11 up to the end of the financial year in which the limited liability partnership ceased to carry on its business or commercial operations before filing Form 24;
  • furnish in Form 24,—
    • a statement of account disclosing nil assets and nil liabilities, certified by a Chartered Accountant in practice made up to a date not earlier than thirty days of the date of filing of Form 24;
    • an affidavit signed by the designated partners, either jointly or severally, to the effect,—
      • that the Limited Liability Partnership has not commenced business or where it commenced business, it ceased to carry on such business from ………….(dd/mm/yyyy);
      • that the limited liability partnership has no liabilities and indemnifying any liability that may arise even after striking off its name from the Register;
      • that the Limited Liability Partnership has not opened any Bank Account and where it had opened, the said bank account has since been closed together with certificate(s) or statement from the respective bank demonstrating closure of Bank Account;
      • that the Limited Liability Partnership has not filed any Income-tax return where it has not carried on any business since its incorporation, if applicable.
  • a copy of the acknowledgement of the latest Income-tax return filed under the Income-tax Act,1961 (43 of 1961) and the rules made thereunder for the time being in force, where the limited liability partnership has carried out any business and has filed such return.
  • copy of the initial limited liability partnership agreement, if entered into and not filed, along with changes thereof in cases where the Limited Liability Partnership has not commenced business or commercial operations since its incorporation.

Explanation.—The date of cessation of commercial operation is the date from which the Limited Liability Partnership ceased to carry on its revenue generating business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue generating business.

2. A notice issued under sub-rule (1) or contents of an application made by the LLP shall also be placed on the website of the MCA for the information of the general public for a period of 1 month.

3. At the expiry of the time mentioned in the notice under sub-rule (1), or 1 month under sub-rule (2) above, the Registrar may, by an order,

    • unless cause to the contrary is shown by the LLP, or the Registrar is satisfied that the name should not be struck off from the register,

strike its name off the register, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the limited liability partnership shall stand dissolved.

4. The Registrar, before passing an order under sub-rule (3), shall, where he has sufficient cause to believe that the LLP has any asset or liability, satisfy himself that sufficient provision has been made for the realization of all amount due to the LLP and for the payment or discharge of its liabilities and obligations by the LLP within a reasonable time and, if necessary, obtain necessary undertakings from the designated partner or partner or other persons in charge of the management of the LLP:

Provided that notwithstanding the undertakings referred to in this sub-rule, the assets of the LLP shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the LLP from the register.

5. The liability, if any, of every designated partner of the LLP dissolved under sub-rule (3), shall continue and may be enforced as if the LLP had not been dissolved.

6.Nothing in this rule shall affect the power of the Tribunal to wind up a limited liability partnership the name of which has been struck off the register.

Restoration of the name of LLP
There is no relief provided in the Limited Liability Partnership Act, 2008 or in the Limited Liability Partnership Rules, 2009 to restore the name of the LLP in the Register, hence, the partners of such a LLP have to approach the jurisdictional High Court by filing writ petition under Article 226 of the Constitution of India for restoration of the name of the LLP in the Register of LLP.

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