Step-by-Step Process for Strike Off of a Company

Strike off is the process by which the Registrar of Companies (ROC) removes a company's name from the register of companies, effectively ending its legal existence. You should use this process when your company has not commenced business within one year of incorporation, has not carried on business for two preceding financial years, or is not carrying on any business or operation. The Companies Act, 2013, under Section 248, provides the legal framework for this procedure.

Strike off is a simpler and less expensive alternative to winding up or liquidation. It is suitable for companies that have no assets, no liabilities, and no pending legal proceedings. The process is governed by the Ministry of Corporate Affairs (MCA) and is handled through the ROC. You cannot use strike off if your company has any outstanding debts, pending tax dues, or ongoing litigation.

A company is eligible for strike off if it meets specific conditions under Section 248 of the Companies Act, 2013. The company must not have carried 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. Alternatively, the company must have failed to commence its business within one year of its incorporation.

The company must also have no assets or liabilities at the time of application. All returns, including annual returns and financial statements, must be filed up to the end of the financial year preceding the application. The company must not have any pending legal proceedings, and it must not have any outstanding tax liabilities with the Income Tax Department, GST authorities, or other regulatory bodies. If the company has any secured creditors, their consent is required.

Before filing the application, you must prepare several documents. The board of directors must pass a resolution authorising the strike off and appointing an authorised representative. You need to file Form STK-2, which is the application for removal of name of the company, along with the prescribed fee. The form requires details of the company, its directors, and a declaration that the company has no assets or liabilities.

You must also file an indemnity bond, a statement of accounts showing nil assets and liabilities, and an affidavit by each director confirming the company's status. The company must have filed all pending annual returns (Form MGT-7) and financial statements (Form AOC-4) up to the end of the financial year preceding the application. If the company has any secured creditors, you need their written consent. All documents must be digitally signed by the authorised representative and a practising professional (CA, CS, or CMA).

The process begins with a board meeting where directors pass a resolution for strike off. Step one: File all pending annual returns and financial statements with the ROC. Step two: Prepare the statement of accounts showing nil assets and liabilities as on the date of application. Step three: Obtain indemnity bonds and affidavits from all directors. Step four: File Form STK-2 on the MCA portal along with all attachments and the prescribed fee.

After filing, the ROC examines the application. If satisfied, the ROC issues a notice in Form STK-5, giving 30 days for objections. The ROC also publishes a notice in the Official Gazette and on the MCA website. If no objections are received, the ROC passes an order striking off the company's name. The company ceases to exist from the date of the Gazette notification. The entire process typically takes 3 to 6 months, depending on the ROC's workload and the completeness of the application.

Once the ROC approves the strike off, the company's name is removed from the register, and the company ceases to exist as a legal entity. The ROC issues a certificate of strike off, and the company's name is published in the Official Gazette. The directors are relieved of their duties, and the company's bank accounts must be closed. Any remaining assets, if discovered later, vest with the Central Government.

However, there are important consequences. The directors remain personally liable for any debts or liabilities incurred before the strike off. The ROC can restore the company's name within 20 years if it finds that the strike off was obtained by fraud or misrepresentation. The directors may also face penalties under Section 448 for making false statements. Additionally, the directors of a struck-off company cannot be appointed as directors of another company for five years without the approval of the ROC.

If your company meets the eligibility criteria and you want to proceed with strike off, gather the required documents and consult a company secretary or chartered accountant. They can help you prepare the application and ensure compliance with all legal requirements.

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This page provides preliminary information. It is not legal advice. For your matter, consult a qualified professional.