Nowadays, the process of Incorporation of Company has been eased out. However, on the other hand, with an increase in the number of compliances and regulations with heavy penalties for delay, Companies look for options for the exit from the business. Keeping the situations of Companies in mind, the Government has provided specific exit routes for the closure of the Companies. The closure of Companies can be done with the fulfillment of specific documentation and conditions as prescribed by the rules and regulations. Under Companies Act, 2013, the provisions relating to the Power of Registrar for Removal of Name of Company from Register of Companies are provided under Section 248 of the Act. In the article, we will discuss the procedure for Removal of Name of Company and the Power of Registrar for Removal of Name of Company from the Register of Companies.
What are the conditions before the Removal of Name of Company from Register of Companies by Registrar?
The conditions before the Removal of Name of Company from Register of Companies by Registrar of Companies (ROC) are as follows:
- The Registrar of Companies (ROC) should send the notice to all the Directors stating the intention for the Removal the name of Company from the Register of Companies.
- The Directors should send the reply of notice sent by the Registrar of Companies (ROC) with a copy of relevant documents.
- All assets and liabilities of the Company should be extinguished before the Removal of Name of Company from Register of Companies.
- No pending litigations should be there against the Company.
- A Special Resolution should be passed in the Extraordinary General Meeting or consent of 75% of the shareholders in terms of the paid-up capital should be given for the Removal of Name of Company from Register of Company.
- In the year when the Company ceased to carry on business or operations, the annual returns and financial statements should be filed up till the end of that financial year.
What are the modes for the Removal of Name of Company from Register of Companies?
The different modes for the Removal of Name of Company from Register of Companies are as follows:
The Removal of Name of Company from Register of Companies by Registrar
Under Section 248(1) the Register of Companies can Suo moto on the following grounds can go for Removal of Name of Company from Register of Companies:
- That the Company within 1 year of Incorporation has failed to commence its business
- Within 180 days of the Incorporation of Company subscribers to the Memorandum of Association (MoA) of Company have not paid the subscription. Furthermore, no declaration to this effect under Section 11(1) of the Companies Act, 2013, has been filed by the Company within 180 days of Incorporation of Company.
- For a period of two preceding financial years, the Company has been carrying on no operation or business. Furthermore, no application for obtaining the dormant status under Section 455 of the Companies Act, 2013, has been made in such two financial years.
Removal of Name of Company from Register of Companies by Company on its own accord
Section 248(2) of Companies Act, 2013, provided that a Company on its own accord can go for the Removal of Name of Company from Register of Companies. The Company can make an application to the Registrar of Companies for the Removal of Name of Company on all or any of the grounds specified in Section 248(1) of Companies Act, 2013[1]. The Company must extinguish all its assets and liabilities before making an application. The consent of all shareholders is needed to go further for filing the application for Removal of Name of Company from Register of Companies.
The Registrar of Companies (ROC), on receipt of the application from the Company, can cause a public notice for the same in the manner prescribed. If a company is regulated under any Special Act, an approval in the form of No objection Certificate (NOC) should be obtained from the regulatory body established under the Special Act.
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What is the Procedure for Removal of Name of Company from Register of Companies by Registrar?
The procedure of Removal of Name of Company from Register of Companies by Registrar are as follows:
- The Registrar of Companies (ROC) should give notice for Removal of Name of Company to all the Directors of Company in writing in Form SKT-1 at the addresses available in records by registered post or by speed post.
- The notice should contain the reasons for the Removal of Name of the Company. The notice shall also seek representations against the action proposed by the Registrar. The Directors should give the representations within 30 days from the date of the notice with the relevant documents as prescribed.
- The notice issued should be published in Form STK-5, Form SKT-6, and also in the Official Gazette to inform the general public.
- After the expiry of the time mentioned in the notice, the Registrar of Companies can remove the name of Company from Register of Companies. The Registrar of Companies (ROC) should also publish the same in the Official Gazette, and on publication in Official Gazette, the Company should stand dissolve.
- The Registrar of Companies should satisfy himself/herself that adequate provisions have been made for discharging all the liabilities and obligations and realizing all amounts due to Company within a reasonable time by the Company before passing an order under Section 248(5) of the Companies Act, 2013. In case if it is necessary, the Registrar of Companies can take some undertaking from the persons in charge of the management of Company, or Directors, or Managing Directors.
- After Removal of Name of Company, the Registrar of Companies should cause a notice of Removal of Name of Company to be published in Official Gazette in Form SKT-7, and the same should be published on the website of Ministry of Corporate Affairs (MCA).
What is the Procedure for Removal of Name of Company from Register of Companies by Company on its Own Accord?
The procedure of Removal of Name of Company from the Register of Companies by Company are as follows:
Convene Board Meeting
- A Board Meeting will be called, and a Board Resolution for Removal of Name of Company from Register of Companies will be passed. The Board Resolution will be subject to the approval of the members of the Company.
Call for Extraordinary General Meeting
- A notice for Extraordinary General Meeting will be sent to all the Shareholders with a copy of the notice passed in the Board Meeting. The notice of Extraordinary General Meeting should be sent at least 21 days prior to the date of the Extraordinary General Meeting.
Hold Extraordinary General Meeting
- An Extraordinary General Meeting should be held for obtaining the shareholder’s approval for the Removal of Name by passing a Special Resolution or obtaining shareholder’s approval by getting the consent of 75% of members in terms of paid-up share capital of the Company.
File Application to Registrar of Companies
- The application for Removal of Name of Company should be filed by the Company in Form SKT-2 and should be signed by the Directors of Company. The following attachments should be made with Form SKT-2:
- The Indemnity Bond in Form SKT-3 duly notarized by the Director of Company.
- No Objection Certificate (NOC) from the regulatory authorities under which the Company may be registered.
- A statement of account in Form SKT-8 stating the assets and liabilities of the Company. The statement should be made within 30 days from the application. The statement should be certified by a certified Chartered Accountant (CA).
- Every Director should give an Affidavit in Form SKT-4.
- The Copy of Special Resolution passed in Extraordinary General Meeting or consent of 75% members of Company in terms of paid-up share capital of Company.
- A Statement, if any, regarding the pending litigations in court involving the Company.
Certification by CA/CS/CMA
- The Form SKT-2 should be certified by Chartered Accountant, Company Secretary, or Cost Accountant in whole-time practice.
Publication of Notice and Objections
- The Registrar of Companies (ROC) will publish a notice to invite any objections against the proposed Removal of Name of Company. The objection should be sent to the Registrar of Companies (ROC) within 30 days from the date of publication of the notice.
- The notice for Removal of Name of Company should be placed on the official website of the Ministry of Corporate Affairs (MCA). The publication should be done in the Official Gazette, or a leading English newspaper and at least in one vernacular language newspaper where the Company’s registered office is situated.
- The Registrar of Companies should also inform the concerned regulatory authorities which regulate the Company, about the proposed notice for Removal of Name of Company from him/her, and seek any objections from them.
Undertaking by Directors
- The Registrar of Companies (ROC) should satisfy himself/herself that adequate provisions have been made for discharging all the liabilities and obligations and realizing all amounts due to Company within a reasonable time by the Company. In case if it is necessary, the Registrar of Companies can take some undertaking from the persons in charge of the management of Company, or Directors, or Managing Directors of Company.
- The liability of the Director, manager, or other members of the Company should continue even after the dissolution of the Company.
- For the payment or discharging of liabilities of Company, the assets of the Company can be made available even after the order for the Removal of Company Name from Register of Companies (ROC).
Dissolution of Company
- The Registrar of Companies (ROC), after apprising of all the consequences, should go for Removal of Name of Company from Register of Companies and should publish a notice of Removal in the Official Gazette in Form SKT-7.
- After publication in the Official Gazette, the Company shall stand dissolved from the date mention in there.
What Companies are excluded from Removal of Name of Company from Register of Companies?
Under the Rule 3 of Companies (Removal of Names of Companies from Register of Companies) Rules, 2016, provides the list of such companies that are excluded from Removal from Register of Companies by the Registrar of Companies. The list of Companies excluded are as follows:
- Listed Companies;
- The Companies which have been delisted due to non-compliance of any listing regulation or any listing agreement or any other statutory law;
- The Vanishing Companies;
- The Companies which have accepted public deposits, which are either outstanding public deposits or have defaulted in repayment of public deposits;
- The Companies where investigation or inspection is ordered and are pending in court;
- The Companies whose charge are pending for satisfaction;
- The Companies whose compounding application is pending with the competent authority;
- The Companies against whom prosecution for an offense is pending;
- The Companies whose actions are pending before the court under Section 206 or Section 207 or Section 208 of the Companies Act, 2013;
- The Companies registered under Section 8 of the Companies Act, 2013.
Conclusion
Under Section 248 of Companies Act, 2013, the Power of Registrar for Removal of Name of Company from Register of Companies (ROC) is provided. The Registrar can go for the Removal of Name by itself, or the Company can itself go for Removal of Name. Unlike other methods, the mode prescribed under Section 248 of the Companies Act, 2013, is the most efficient and speedy way for the closure of the Company. The Registrar of Companies (ROC) plays a vital role in the closure of the Company. Hence, the Company should take due care while making replies to the notices of the Registrar of Companies (ROC). The process of closing of Company under Section 248 of the Companies Act, 2013, is lengthy and long-lasting. We at Corpbiz have skillful and experienced professionals to help you in the process. Our professionals will assist you and help you with your process. Our professionals will ensure the successful and timely completion of your work.
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