Striking Off A Company In India

A company is a legal entity incorporated by like-minded people to carry out a certain business with an intention to generate profits. Though all companies are incorporated with an intention to excel but some unforeseen events may lead to unfavorable conditions resulting in the need to close down the business. There are two ways to close a company i.e. winding up and strike off, but in this article, we shall discuss the procedure and formalities to close down a company through strike off by filing form STK-2. The relevant sections and rules discussed in this article are Section 248 and 249 of the Companies Act 2013 and The Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016.

Conditions for Voluntary Striking Off

A company after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent members in terms of paid-up share capital, file an application in the E-form STK-2 with the Registrar of Companies for removing the name of the company from the register of companies on all or any of the grounds mentioned below:

  1. A company has failed to commence its business within one year of its incorporation, OR
  2. A company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company

The Registrar shall, on receipt of the application for striking off in E-Form STK-2, cause a public notice to be issued in the prescribed manner. In case the company is regulated under a special Act, approval of the concerned regulatory body shall also be obtained and enclosed with the application.

Important Points for Striking Off

Before filing the application for striking off in E-Form STK-2 with the Registrar of Companies, following points shall be duly noted:

  1. The filing of the Annual return and Financials shall be completed till the Financial Year in which the company ceased to carry its business.
  2. In case the company is regulated under any special act or regulations then a NOC shall be obtained by such Regulator.
  3. There shall be no Liabilities and Asset of the company at the time of filing the application for Strike off.
  4. The company cannot file an application for striking off with the Registrar of Companies in case E-form INC-20A (Certificate of Commencement of Business) has not been filed.
  5. Application for striking off in E-Form STK-2 can also be submitted for Active Non-Compliant Companies.
  6. All the charges of the company shall be closed and settled before filing the application for striking off in E-Form STK-2.
  7. Application for striking off in E-Form STK-2 cannot be submitted for a Section 8 company.
  8. The Government fees for E-Form STK-2 is Rs 10,000/-.

Restrictions on Filing for Application of Striking Off

An application for striking off by a company shall not be made if, at any time in the previous three months, the company has—

  1. Changed its Name;
  2. Shifted its registered office from one State to another;
  3. 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 for gain in the normal course of trading or otherwise carrying on of business;
  4. 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;
  5. Made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded;
  6. Has applied for Winding up and is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy Code, 2016.”.

Mandatory Documents to be Filed with Application of Striking Off

  1. Indemnity bond duly notarized by every director in Form STK 3;
  2. A statement of accounts containing assets and liabilities of the company;
  3. An affidavit in Form STK 4 by every director of the company;
  4. A copy of the special resolution duly certified by each of the directors of the company or consent of seventy-five per cent of the members of the company in terms of paid up share capital as on the date of application;
  5. A statement regarding pending litigations involving the company (if any).
  6. NOC from the Concerned Regulator (if any)