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Removal of Name or Company Strike Off: Regulatory & Procedural Overview

Explore the Indian process of removing a company's name from the register and simplifying business exit. Learn about regulations, procedures, and Vakilsearch's services.

In the dynamic world of business, there comes a time when a company may need to bid adieu to its operations. Whether it’s due to a change in business strategy, financial challenges, or simply the end of a venture, the Indian government offers a structured process known as “Removal of Name” or “Company Strike Off” to dissolve a company legally and efficiently.

In this guide, we will provide you with a comprehensive overview of the regulatory and procedural aspects of this process.

Understanding the Role of MCA

The Ministry of Corporate Affairs in India has been continuously working towards making it easier for businesses to operate and exit when necessary. One significant step in this direction was the notification of the “Removal of Names of Companies from the Register of Companies” and “The Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016,” which came into effect on 26th December 2016. This laid the foundation for streamlining the exit process.

Centralized Processing for Faster Exits

In a recent development, the Ministry of Corporate Affairs, through a notification dated 17th March 2023, established the C-PACE Centre for Processing Accelerated Corporate Exit. This centralization of the strike-off process aims to simplify and expedite the exit process for companies, aligning with the government’s objective of enhancing the ease of doing business in India.

Modes of Removal

Under Section 248 of the Companies Act, 2013, there are two primary modes for the removal of a company’s name:

  1. Voluntary Strike Off by the Company Management

   – Company management can opt for this mode when they decide to cease business operations.

   – Certain eligibility criteria must be met, such as no pending prosecutions, unresolved charges, or outstanding public deposits.

  1. Strike Off by the Registrar of Companies (RoC)

   – RoC can initiate strike off proceedings if the company fails to commence business, doesn’t operate for two consecutive financial years, or doesn’t file the required documents.

   – The RoC follows a formal notice and objection process before striking off a company.

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Procedures for Voluntary Removal

The voluntary removal process involves several crucial steps:

   – Convene a Board Meeting for approval.

   – Call for an Extraordinary General Meeting (EGM) to attain shareholder approval.

   – File an application in Form SKT-2 with necessary attachments.

   – Undertakings by directors and compliance with Section 249 of the Companies Act, 2013.

   – Certification by Chartered Accountants, Company Secretaries, or Cost Accountants.

   – Publication of notices and objection period.

   – Dissolution of the company.

Strike Off by RoC

The RoC can initiate strike off proceedings if the company:

   – Fails to commence business within one year.

   – Doesn’t operate for two consecutive financial years without filing for dormant status.

   – Doesn’t file Form INC 20A within 180 days.

   – Engages in activities not mentioned in the Memorandum of Association.

   – Is under liquidation.

Get Expert Advice!

Vakilsearch, a trusted name in legal services, offers assistance in various aspects of company strike off, including property registration, income tax return (ITR) filing, and property transfer services. 

By connecting the dots between regulatory requirements and practical solutions, Vakilsearch makes the process smoother for businesses seeking to strike off their names from the register.

Frequently Asked Questions (FAQs)

Can a company under investigation or prosecution apply for voluntary strike off?

No, companies facing investigation, prosecution, or other regulatory actions cannot apply for voluntary strike off until these issues are resolved.

Is there a time limit for companies to commence business after incorporation?

Yes, companies must commence business within one year of incorporation to avoid potential strike off by the Registrar of Companies.

How long does the entire strike off process usually take?

The duration varies but generally takes a few months, considering the formalities, notices, and objections involved.

Can a struck-off company be restored?

Yes, a struck-off company can be restored by filing an application with the National Company Law Tribunal (NCLT) within 20 years of strike-off.

What documents are required for voluntary strike-off?

Documents required for voluntary strike-off include board resolutions, special resolutions, NOCs from creditors, and indemnity bonds.

The Takeaway

The removal of a company’s name from the register or company strike off is a well-structured process in India. With the government’s efforts to centralize and simplify the procedure, businesses can navigate this exit route efficiently. 

Vakilsearch’s experts further ease the transition, offering support in various legal aspects, making them a reliable partner for businesses during this critical phase of their journey.

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