Discover the recent changes in company strike-off procedures in India, including the establishment of CPACE and mandatory financial filings. Stay informed with Vakilsearch.
In the dynamic landscape of corporate governance, regulations governing the closure of companies are continually evolving. Recently, the Ministry of Corporate Affairs (MCA) in India has introduced significant amendments to the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, impacting the process of striking off companies.
This article delves into the latest provisions and amendments, shedding light on the role of the Centre for Processing Accelerated Corporate Exit (CPACE) and the mandatory financial filings, while also addressing FAQs to provide a comprehensive understanding of company strike-off procedures in India.
Introduction to Company Strike-Off
Company strike-off, often referred to as company closure or winding up, is a legal process that involves removing a company’s name from the Register of Companies. This is typically done when a company is no longer operational or wishes to cease its business activities. In India, this process 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.
The Role of CPACE
The recent amendments have introduced a significant change in the administrative setup for company strike-offs. The Centre for Processing Accelerated Corporate Exit (CPACE) has been established to streamline and expedite the process.
CPACE acts as the Registrar of Companies (RoC) for the purpose of exercising functional jurisdiction related to the processing and disposal of strike-off applications (Form STK-2) and all associated matters under Section 248 of the Companies Act. Importantly, CPACE has territorial jurisdiction over India, ensuring uniformity in the process.
Filing Requirements and Provisions
4.a) Amendment Rules 2023:
The Amendment Rules 2023 brought about several key changes to the strike-off process:
Form STK-2 Application: Companies seeking strike-off must submit their applications in Form STK-2 to CPACE, accompanied by a fee of ten thousand rupees.
Attachment Requirements for Form STK-2: The following attachments are required for Form STK-2:
– A statement of account in Form STK 8 (not older than 30 days from the application date).
– Indemnity bond in Form STK-3 (collectively given by directors) or indemnity bonds by an authorized representative of the administrative Ministry/Department in Form STK-3A (as applicable).
– Copy of the order or No Objection Certificate (NOC) from the concerned regulatory authority.
– Copy of the relevant order for delisting, if applicable, from the concerned Stock Exchange.
– Affidavit in Form STK-4.
– Any other optional attachment, if required.
4.b) Second Amendment Rules 2023:
The Second Amendment Rules introduced additional provisions:
– Mandatory Financial Filings: A company cannot file an application for strike-off unless it has filed overdue financial statements under Section 137 and overdue annual returns under Section 92. These filings must be up to date until the end of the financial year in which the company ceased its business operations.
– Registrar’s Action: If the Registrar has initiated action against the company for name removal or issued a notice for publication for striking off the company from the register, the company can only apply for strike-off after filing pending financial statements and annual returns.
– Publication Notice: If the Registrar has published a notice for striking off the company’s name under Section 248(5) of the Companies Act, the company’s application for name removal is affected.
| In a constantly evolving regulatory environment, staying updated with these changes is crucial for businesses and professionals alike. By understanding the latest provisions and amendments, companies can navigate the strike-off process seamlessly and ensure compliance with the law. |
Conclusion
The recent amendments to the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, have ushered in a new era of company strike-offs in India.
With the establishment of CPACE and the reintroduction of mandatory financial filings, the process aims to be more efficient and compliant. Companies that wish to cease their operations can now look forward to quicker regulatory clearances thanks to the centralized CPACE.
For assistance with the company strike-off process connect with the experts at Vakilsearch today!
Frequently Asked Questions (FAQs)
What is CPACE, and how does it affect the strike-off process?
CPACE, the Centre for Processing Accelerated Corporate Exit, is the new administrative authority responsible for processing strike-off applications. It provides uniform jurisdiction across India, streamlining the process.
What are the mandatory financial filings required for strike-off?
To apply for strike-off, a company must have filed overdue financial statements under Section 137 and overdue annual returns under Section 92, up to the end of the financial year in which it ceased operations.
How can companies ensure compliance with the amended rules?
Companies should maintain up-to-date financial records, promptly respond to the Registrar's notices, and ensure they meet attachment requirements when applying for strike-off to avoid delays and complications in the process.
