Every promoter or founder of a firm has a primary goal of making a profit. However, not every day is the same, and circumstances may force a promoter or founder to make the difficult decision to close the company with a heavy heart.
There are now two methods for closing a business.
1. Terminate the business
2. Company dissolution
There is difference between both above methods, but in this article we will discuss about striking of company.
What does it mean to "strike off" a company name?
Striking off a firm simply implies quickly ending a defunct company. It is the most straightforward method of closing a business.
Corporations are governed by the Companies Act of 2013, which governs the striking off of companies under section 248.
What are some options for terminating a business?
A business can be struck off in two ways:
A) By the corporation as a voluntary strike-off
B)Registrar of Companies
Note that a Section 8 corporation cannot be struck out voluntarily.
Companies that want to strike must meet the following criteria.
The following businesses are eligible to be struck off:
A business that has not started operating within one year of its formation; or
A firm that has not carried on any business or operation for the two most recent financial years and has not applied for inactive company status under section 455.
Companies for whom Section 248 Strike Off is Not Applicable
The recommendations do not, for example, cover
Companies that have been delisted as a result of a violation of the listing regulations, listing agreement, or any other statutory provision;
vanishing businesses;
Companies where an inspection or investigation has been ordered and is being carried out, or where actions based on such orders have yet to be undertaken or concluded, but prosecutions originating from such inspections or investigations are still ongoing before the courts;
Companies to which the Registrar or Inspector has sent notices (under Section 234 of the Companies Act, 1956 (old Act) or Section 206 or Section 207 of the Act) and a response is pending;
Companies that are the subject of a criminal investigation in any court;
Companies whose compounding application is still pending;
Companies that have accepted public deposits that are either unpaid or for which the corporation is in default in repayment;
Charges that have yet to be satisfied by companies; and
Not-for-profit corporations registered under Section 25 or Section 8 of the Companies Act, 1956.
Checklist for Starting a Strike
The process is straightforward and follows these steps:-
I Authorize any firm officer or director to call a Board Meeting.
ii) At least seven (7) days before to the board meeting, send a notice of the meeting with a full agenda.
iii) Call a Board Meeting and have a Board Resolution passed.
iv) Notification of Annual General Meetings/Extraordinary General Meetings, if applicable
v) Call a General Meeting for the purpose of passing a Special Resolution.
vi) Submission of MGT-14 with all relevant attachments.
vii) Submission of the STK-2 and other relevant documentation.
viii) The Registrar of Companies will strike out the company after publishing a public notice if all of the attachments are in order and all of the conditions are met, and it is just and equitable to do so.
What are the documents that must be submitted with the forms?
After extinguishing all liabilities, a business may file an APPLICATION in Form STK-2 (which must be supported by certain necessary papers) and pay a fee of 5,000 rupees to have its name removed from the Register of Companies.
The following are the main components of such an application:
STK-2 is the application form.
INR 10,000/- for government filing fees
A copy of the Board resolution authorising the application's filing.
A statement of accounts from the Company showing zero assets and liabilities, dated no more than thirty days prior to the date of application and confirmed by a Chartered Accountant.
Special Resolution approval from the shareholders.
If a corporation is regulated by another authority, the consent of that body is also required.
Indemnity bond in Form No. STK-3 [to be given individually or collectively by the director(s)];
Affidavit in STK-4 format.
How long does it take to remove a firm name from the company register?
Once an application for striking off a business is filed using E-form STK-2, the concerned Registrar of Companies (ROC) will strike off the firm's name after validating the paperwork, which usually takes 3-4 months. If the Registrar of Companies (ROC) raises an objection, the process may take longer or the application may be rejected.
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