Introduction
Striking off a company refers to the process of removing a company’s name from the official register of companies maintained by the Registrar of Companies (RoC) in India. This effectively means that the company ceases to exist legally. The Companies Act, 2013, provides the framework for striking off defunct and inactive companies, ensuring that only active and compliant companies remain on the register.
Reasons for Striking Off
A company may seek to strike off its name from the register due to various reasons:
- Cessation of Business: The company has ceased its operations and has no plans to resume business.
- Inactivity: The company has been inactive for a period, typically two consecutive financial years, and has not made any significant accounting transactions.
- Voluntary Decision: The shareholders and directors may decide to voluntarily close the company for strategic reasons.
Legal Framework
The procedure for striking off companies is governed by:
- Section 248 of the Companies Act, 2013
- Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016
Process of Striking Off
- Eligibility Check: Ensure the company meets the criteria for striking off, such as not carrying on any business for two consecutive financial years.
- Board Resolution: Pass a resolution in a board meeting to strike off the company.
- Special Resolution or Consent: Obtain consent from shareholders through a special resolution, or secure consent from at least 75% of shareholders in terms of paid-up share capital.
- Application to RoC: File Form STK-2 with the RoC along with the necessary documents, such as:
– Board resolution
– Special resolution or consent of shareholders
– Statement of assets and liabilities certified by a Chartered Accountant
– Indemnity bond and affidavit by directors
– Copy of the latest financial statements
- Public Notice: The RoC will publish a public notice in the Official Gazette and a newspaper, inviting objections from stakeholders within 30 days.
- Striking Off: If no objections are received, the RoC will strike off the company’s name and publish a notice of dissolution in the Official Gazette.
Benefits of Striking Off
Cost Savings: Eliminates the costs associated with maintaining a non-operational company.
Legal Compliance: Ensures the company is compliant with legal requirements, avoiding penalties and legal issues.
Simplified Process: The process is straightforward and less cumbersome compared to other methods of winding up.
Clean Slate: Allows directors and shareholders to move on without the burden of an inactive company.
Conclusion
Striking off a company is an effective method to formally close a non-operational business in India. By following the legal framework provided by the Companies Act, 2013, companies can ensure a smooth and compliant exit from the register. For detailed guidance and professional assistance in the striking off process, contact our experts at SBR & Co. LLP. We provide comprehensive support to ensure a seamless and compliant procedure.
Feel free to reach out to us for more information and personalized assistance.