Uncover the intricacies of reviving struck-off companies, from legal grounds to procedural nuances. Discover the benefits and challenges.
In the dynamic landscape of business, companies often face ups and downs, and there may come a time when a company is struck off the records. Striking off a company’s name signifies its temporary closure or removal from the Register of Companies by the Registrar, following the provisions of the Companies Act, 2013.
While this process serves as an alternative to formal winding up, companies have the opportunity to revive themselves within a specific timeframe. In this comprehensive guide, we will delve into the challenges associated with the revival of struck-off companies in India, including legal grounds, required documents, and the impact of the Companies Fresh Start Scheme 2020.
Understanding Strike-Off: An Overview
Temporary Closure and Removal:
Strike-off signifies the temporary closure of a company or the erasure of its name from the Registrar’s list of active companies. This action is taken in accordance with the provisions of the Companies Act, 2013, offering an alternative to the formal winding-up process.
Limited Revival Window:
A struck-off company can seek revival within a span of twenty years from the date of strike-off. This period offers an opportunity for promoters, shareholders, and stakeholders to initiate the revival process.
Legal Grounds for Revival
The revival of a strike-off company is contingent on several legal grounds. These include
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Possession of Immovable Property:
Companies holding immovable property can make a case for revival, demonstrating their active and ongoing nature.
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Compliance with Statutory Authorities:
Adherence to tax and regulatory authorities, including GST, Income Tax, and Provident Fund, showcases the company’s commitment to its obligations.
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Active Financial Transactions:
Evidence of ongoing financial transactions through bank statements is a critical indicator of a company’s continued operations.
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Renewal of Licenses:
Companies renewing essential licenses, such as FSSAI or Excise licenses, provide further evidence of their operational status.
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Other Pertinent Documents:
Depending on the specific circumstances, additional documents may be required to substantiate the company’s active status.
Revival through Companies Fresh Start Scheme (CFSS-2020)
The Companies Fresh Start Scheme 2020 (CFSS-2020) brought a ray of hope for companies facing the challenges of revival. Under this scheme, which was introduced amid the COVID-19 pandemic, the government waived hefty penalties and additional fees associated with filing annual returns. This made the revival of struck-off companies a more feasible option, as it offered a chance to bring businesses back to life without the burden of excessive financial penalties.
Challenges in the Revival Process
While the Companies Fresh Start Scheme 2020 eased some of the financial burdens, reviving a struck-off company still presents several challenges:
Compliance with Pending Obligations
Reviving a company requires compliance with pending obligations, including the filing of overdue returns and financial statements. This process can be daunting, especially if a company has a backlog of financial and regulatory filings.
Documentation Requirements
To initiate the revival process, specific documents must be submitted to the Tribunal, including a certified copy of the order for revival and various financial and legal documents, similar to the detailed documentation required during online company registration. Gathering and organizing these documents can be time-consuming and complex.
Legal Procedures and Tribunal Hearings
The revival process involves legal procedures and hearings before the National Company Law Tribunal (NCLT). Navigating these legal aspects can be challenging without the guidance of legal experts.
Financial Constraints
Struck-off companies often face financial constraints, which can hinder their ability to pay the requisite fees and meet the financial obligations necessary for revival.
Expert assistance from Vakilsearch can be invaluable in navigating these challenges, ensuring a smooth and compliant revival process. By leveraging expert guidance, stakeholders can maximize their chances of successfully reviving a struck-off company and safeguarding their financial interests.
Vakilsearch: Expert Assistance for Revival
For seamless assistance in reviving struck-off companies, Vakilsearch offers specialized expertise. With a structured approach and in-depth knowledge of the legal framework, Vakilsearch facilitates the entire revival process, ensuring compliance with all regulatory requirements.
FAQs (Frequently Asked Questions)
Can a struck-off company be revived after twenty years?
No, the revival window is limited to twenty years from the date of strike-off. After this period, revival is not possible.
Are there any penalties associated with filing for company revival?
The CFSS-2020 scheme offers relief from hefty penalties, making it an attractive option for revival.
Can a company be revived if it had outstanding tax liabilities before strike-off?
Yes, companies can seek revival even if they had outstanding tax liabilities, provided they comply with statutory requirements during the revival process.
