The Ministry of Corporate Affairs has launched STK 2 form for removing the company’s name from the register of companies. This removal process refers to the winding up of a company. The availability of the STK 2 form has been in effect since the 5th of April, 2017. This write-up takes a brief look at the legalities around this form.
Company Name Removal from the Register of Companies
The MCA introduced Section 248 to 252 of the Companies Act, 2013 in Dec 2016 to underpin the legal framework for removing company names from the Register of Companies.
Section 248 to 252 vests the ROC with the given powers for the removal of company’s name from the register of companies, in case Registrar has a legit cause to believe that;
- The company has failed to undertake its business activities within one year of its incorporation;
- The company is not serving any business operation for two years, immediately past FYs. It has not filed any application for securing the status of the dormant company.
If such is the case, the ROC has the right to discard the company’s name from the register of companies by sharing notification to the company and all the directors concerned. The notification from the Registrar would reflect the ROC’s intent to discard the company’s name from the register of companies and direct the company to share representations and copies of the applicable documentation within 30 days from the notification date.
Voluntarily Removal of Company Name via STK 2 Form
This process for removing an entity name can also be imitated by filing STK 2 form. To file this form, the company must be free from all liabilities and execute a special resolution with the permission of 75 per cent of members in terms of paid-up share capital.
If the company falls under a special Act, consent of the regulatory body constituted under such an Act must be secured and attested with the application.
Closing of Company via STK 2 Form
After filing STK 2 form, the ROC shall confirm whether the company has made sufficient provision to realise all the outstanding amounts and from the payment of its obligations and liabilities within a reasonable time.
If necessary, the ROC can also demand undertaking from the director concerned or other officials administering the company’s management.
After addressing the said conditions, the Registrar would issue a notice publically regarding the intended closure of the entity. After the expiration of the time cited in the public notice, the Registrar can strike off the entity name from the register of companies. Further, the ROC shall public notice relating to the strike-off of the company’s name in the Official Gazette.
On publication of such a notice, a company is held to be dissolved.
Requisites for filing STK 2 Form
All types of entities like OPC, public limited company, private ltd company can apply for company’s closure via this form. The following are the standard documents that should be annexed with the STK 2 form.
- Indemnity bond notarised by company’s director in STK 3 form;
- A statement of accounts reflecting the company’s assets and liabilities made up to a day, not surpassing 30 days before the application date and certified by a practising Chartered Accountant.
- An affidavit in form STK 4 furnished by the director concerned
- A copy relating to special resolution approved by every director or 75 % of the members regarding paid-up share capital as on the application date.
- A statement concerning pending litigations, if any, involving the company.
In STK 2 form, the MD or Company’s Director is mandated to declare that:
- There is no inspection ordered and performed or yet to be performed or being performed against the company, and where inspections have been performed, no prosecution is due in the court of law arising out of such activities.
- The company neither has any public deposits which are due, nor it is in default when it comes to repayment or interest thereon;
- The company does not possess any secured, unsecured, or outstanding loans,
- The company is free from any outstanding amount arising out of VAT, income tax, excise duty, service tax, etc. payable to the concerned tax authorities.
- All other company’s liabilities have been entirely addressed;
- All the conditions of the Companies Acts relating to the removal of the company’s name from the register of companies and concerns from the register of companies have been met;
If a company meets any of the given requirements, STK 2 form cannot be filed:
- The entity altered its name or shifted its registered office to another state prior to 3 months of filing the STK 2 form;
- The company disposed of rights or property that was under its possession prior to 3 months of filing the STK 2 form. This provision does not encompass trade wherein disposal of property occurs for a gain during the ordinary course of trading or undertaking business;
- The company is involved with any other undertaking except from one which is cited in the MOA prior to 3 months of filing the STK 2 form
- The company has filed an application before the Tribunal to authorise an arrangement or compromise, and the matter is still pending.
- The company is being wound up as per the provisions of the Companies Act, 2013 or Insolvency and Bankruptcy Code, 2016.
Certification of Form
STK 2 form must get the approval of practising CA or CS or Cost accountant
Outcomes of Name Removal from the Register of Companies
If the STK-2 form is filed and receives the ROC’s approval, the company would be dissolved according to the section 248 of the Companies Act, 2013. Moreover, the business would cease to perform any undertaking, and the Incorporation certificate issued to it shall be considered to have been revoked from such date- except to realise outstanding amount and for the payment of the company’s liabilities.
Also, if a company is closed via STK 2 form, the liability of all key officials such as the director, a manager who was exercising any power conferred by the management, and of every member would continue to exist. It can be enforced as of if the entity had not been dissolved.
STK 2 form is mandatory for companies no longer interested in carrying out business activities and wants to cease their existence in a legalized way. Ministry of Corporate Affairs released this form to simplify the winding-up process, which otherwise is a complicated affair and attracts tons of paperwork.
Read our Article:Types of companies under Companies Act, 2013