Application by the company to ROC for removing its name from the Register of Companies

Introduction:

The procedure for forming a business has been simplified in recent years. Companies, on the other hand, are looking for ways to depart the business as a result of a growth in the number of compliances and laws with harsh consequences for non-compliance. The government has offered various exit routes for the liquidation of companies, keeping in mind the conditions of the companies. Companies can be closed by complying with necessary documentation and requirements as outlined in the rules and regulations. Section 248 of the Companies Act, 2013 contains provisions relating to the Registrar’s Power to Remove a Company’s Name from the Register of Companies.

E-Form

The filing of e-Form STK-2 is required by section 248(2) of the Companies Act, 2013 and rules 4, 5, 6, and 8 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

Section 248(2)

Without prejudice to the provisions of sub-section (1), a company may, after extinguishing all of its liabilities, file an application in the prescribed manner with the Registrar for removing the company’s name from the register of companies on all or any of the grounds specified in sub-section (1), by a special resolution or consent of seventy-five percent of its members in terms of paid-up share capital. The permission of the regulatory body constituted or established under that Act must also be sought and enclosed with the application in the event of a firm governed by a special Act.

Criteria for the Application

• When a company fails to start doing business within a year of its formation.
• Where the memorandum’s subscribers have not paid the subscription that they agreed to pay within 180 days of the company’s formation date and have also failed to file e-Form INC-20A for obtaining a Certificate of Commencement of Business;
• A company that has not carried on any business or operation for the previous two financial years and has not applied for inactive company status under section 455, and has not done so within that time.

Documents Required

• Every director must sign an indemnity bond in Form STK 3 that has been notarized.
• A statement of accounts in Form STK-8 covering the company’s assets and liabilities, made up to a day, not more than thirty days before the application date, and confirmed by a Chartered Accountant;
• Every company director signs an affidavit in Form STK 4;
• A copy of the special resolution duly certified by each of the company’s directors or the consent of 75% of the company’s members in terms of paid-up share capital as of the application date;
• A statement about any outstanding legal proceedings concerning the corporation;
• A copy of the most recent ITR;
• A copy of the company’s PAN;
• The Company’s most recent Form ADT 1 and its Challan;
• A copy of the Board’s strike-off resolution

Notice of Removal

The removal notice would be officially published in the Gazette for the general public’s information. The Company Registrar will delete the organization’s name from the MCA database after the time period specified in the notice has expired, and a notice will be published in the Official Gazette. Once the notification is officially published in the Gazette, the corporation will be dissolved. Even if the company is dissolved as described above, the tribunal retains the authority to wind up an entity whose name has been removed from the company registry.

Application for the removal (Rule four)

After extinguishing all of its liabilities by a special resolution or consent of seventy-five percent of its members in terms of paid-up share capital, a company may file an application in e-form STK 2 to the Registrar for the removal of its name from the register of companies. Section 248 must be filled out on Form STK-2 and accompanied by a charge of INR 5000. Every application submitted under this rule must be accompanied by a no-objection certificate from the appropriate Regulatory Authority for the following companies:

• Organizations that are required to perform or have done investment and non-banking financial activities under the Reserve Bank of India Act, 1935 or its Rules and Regulations
• Insurance firms as defined by the Insurance Act of 1938 and its rules and regulations
• Housing finance organisations are governed by the Housing Finance Companies Directions 2010, which are outlined in the National Housing Bank Act of 1987.
• Companies engaged in capital market intermediary activities as defined by the Securities and Exchange Board of India Act, 1992
• The Securities and Exchange Board of India Act, 1992 defines asset management businesses.
• Any other business that appears to be governed by any laws at the time of its operation

Restriction on Removal Application

• In the previous three months, an application for striking-off the firm’s name would not be made if the corporation had:
• It changed its name or even relocated its registered office address in India from one state to another.
• It made gain disposal of the worth of its property or rights possessed by it throughout the course of trading or even carrying on the business.
• Make an application to the tribunal seeking approval of a deal or a compromise without the matter being resolved.
• If the organisation was wound up voluntarily or by the Tribunal, it was done so under Chapter XX of the Companies Act, 2013.
• If the organisation makes an application to have its name removed in violation of the law, it will be fined approximately Rs. 1 lakh rupees.

Method for Submitting the application (Rule five)

• A director lawfully authorised by the Board to sign the application in Form STK 2 must sign it.
• If the director in question does not have a registered digital signature certificate, a physical copy of the form, filled out, must be manually signed by the director duly authorised in that capacity and attached to Form STK 2 when it is uploaded.

Certification of the Form (Rule six)

A Chartered Accountant in full-time practise, a Company Secretary in full-time practises, or a Cost Accountant in full-time practise, as applicable, must certify Form STK 2.

Foreign nationals or non-resident Indians (Rule eight)

If the person is a foreign national or a non-resident Indian, the indemnification bond and statement must be notarized, apostatized, or consularised for the purposes of these rules.

When will ROC be willing to clear the company’s name?

When:

• A business that has not started operating within one year of its incorporation;
• A corporation that has not achieved the status of dormant has not carried on any business or operation over the previous two financial years;
• The memorandum’s subscribers have not paid their subscriptions, and INC 20A has not been filled;
• According to the results of the physical verification, the corporation is not doing any business or operations.

When a company that has not obtained dormant status has not carried on any business or operation for two consecutive financial years, the ROC shall send a notice (in from STK 1) to the corporation and all of its managers, advising them of the ROC’s intent to remove the company’s name from the register of companies and requesting that they send their submissions, along with a fee, to the ROC.

Liabilities left by the company

• Even after the date of the order removing the company’s name from the register of companies, the company’s assets must be made available for the payment or discharge of all its liabilities and obligations.
• Every director, manager, or other officials who were exercising any management power, as well as every member of the company, shall continue to be liable and may be enforced as if the company had not been dissolved.

Companies whose names cannot be removed from the ROC’s Register

• Companies that are publicly traded;
• Vanishing corporations which is a publicly traded company that has missed two years of filing returns with the Registrar of companies and Stock Exchange is not maintaining. There are no traceable directors, and the company’s registered office is at the location provided to the Registrar of Companies and Stock Exchange. Corporations that have been delisted because to non-compliance with listing regulations, listing agreements, or other statutory laws;
• Companies where an inspection or investigation has been ordered and is being carried out, or where actions on such an order have yet to be undertaken or concluded, but prosecutions originating from such inspections or investigations are still ongoing before the courts;
• Companies where the Registrar or Inspector has issued notices under section 234 of the Companies Act, 1956 (1 of 1956), or sections 206 or 207 of the Act, and a reply is pending, or where a report under section 208 has not yet been submitted, or follow-up instructions on a report under section 208 are pending, or where any conviction that may result from such an investigation or scrutiny is still pending. Corporations against whom a criminal case is filed in any court;
• Companies whose application for compounding the offences committed by the firm or any of its officers in default is pending before the appropriate authority
• Companies that have taken public deposits and are either delinquent in repaying them or have defaulted in doing so;
• Firms with unpaid bills; and
• Firms incorporated under section 25 or section 8 of the Companies Act, 1956

How a company that has been struck off could be reinstated

Any corporation that has been struck off could be reinstated in the following ways:

• Any person aggrieved by a Registrar’s order notifying a company as dissolved under section 248 may file an appeal with the Tribunal within three years of the date of the Registrar’s order, and if the Tribunal finds that the removal of the company’s name from the register of companies is not justified in light of the absence of any of the grounds on which the company was dissolved, the company may well be restored 
• If a company, or any member, creditor, or employee of the company, feels aggrieved by the company’s name being struck off from the register of companies, the Tribunal, on an application made by the company, member, creditor, or employee before the expiration of twenty years, if satisfied that the company was carrying on business or in operation at the time its name was struck off,  the Tribunal may by the order give such other directions of restoration;
• The company must file a copy of the Tribunal’s order with the Registrar within thirty days after the date of the order, and upon receipt of the order, the Registrar will restore the company’s name to the register of companies and issue a new certificate of incorporation.

Conclusion

The Registrar can remove a name on his or her own, or the Company can remove a name on its own. Unlike other alternatives, the mode stipulated under Section 248 of the Companies Act, 2013, is the most efficient and timely option for the Company’s closure. The Registrar of Companies (ROC) is critical to the Company’s closure. As a result, the Company should exercise caution while responding to the Registrar of Companies’ notices (ROC). The process of closing a company under Section 248 of the Companies Act, 2013, is time-consuming and tedious.