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FAQs on Strike off of Company in India

Explore FAQs on the process of company strike-off in India, covering provisions, reasons, penalties, and essential steps, providing valuable insights for businesses.

Closing down a company in India is a significant decision that involves several legal, procedural, and financial aspects. If you’re considering striking off your company, you likely have a host of questions regarding the process, implications, and more. 

In this comprehensive guide, we’ll answer the ten most frequently asked questions about the strike-off of a company in India.

FAQs on Strike off of Company in India

1. What does 'Strike off of a Company' mean?

Striking off a company refers to the process of removing a company's name from the Register of Companies (RoC). It signifies the company's closure and its legal existence coming to an end.

2. Under which provision can a company be struck off in India?

The strike-off of a company in India is governed by Section 248 of the Companies Act, 2013, and the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

3. Are there different methods for striking off a company?

Yes, there are two primary methods: voluntary strike-off, initiated by the company, and involuntary strike-off, initiated by the Registrar of Companies (RoC).

4. What are the primary reasons for a company to be struck off?

Companies can be struck off for reasons such as non-operation for a specified period, failure to commence business within one year of incorporation, or non-filing of financial statements and annual returns with the RoC.

5. Is there a way to oppose the strike-off notice issued by the RoC?

Yes, a company can oppose the strike-off notice by providing valid reasons and submitting necessary documents to the RoC. If the RoC is satisfied, they may withdraw the strike-off notice.

6. How is voluntary strike-off different from an involuntary one?

A voluntary strike-off is initiated by the company itself when it wishes to cease operations, while an involuntary strike-off is initiated by the RoC due to non-compliance or non-operation.

7. Are there any penalties if a company doesn’t apply for strike-off but remains non-functional?

Yes, companies that remain non-functional but do not apply for strike-off may face penalties and liabilities, including fines and legal action against directors.

8. What happens to the liabilities of the directors post-strike-off?

After the strike-off, the liabilities of the directors may continue if they are found guilty of any wrongdoing during the company's operation. They may be held personally responsible for the company's debts and obligations.

9. What are the main steps to close a Pvt. Ltd. Co.?

The main steps to close a Private Limited Company include conducting board meetings, passing special resolutions, clearing liabilities, obtaining NOCs, filing necessary documents, and complying with RoC regulations.

10. Can a struck-off company still trade?

No, once a company is struck off, it loses its legal entity status and cannot engage in any trading or business activities. Any such activities may lead to adverse legal consequences.

Conclusion

Striking off a company in India is a process that should be approached with careful consideration of legal requirements and implications. Understanding the provisions, reasons, and steps involved is crucial for a smooth closure. 

If you’re contemplating striking off your company, consult with legal experts from Vakilsearch to navigate the process effectively. Connect with us today!

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About the Author

Varsha Mahendra Singh, Business Legal Analyst, specialises in corporate compliance, legal research, and risk management. With experience conducting compliance audits and assessing legal risks, she helps businesses build strong frameworks. Her expertise supports efficient navigation of regulatory requirements, ensuring organisations align with legal standards while addressing potential challenges effectively.

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