{"id":40885,"date":"2022-03-05T12:55:42","date_gmt":"2022-03-05T07:25:42","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=40885"},"modified":"2022-03-05T12:57:19","modified_gmt":"2022-03-05T07:27:19","slug":"strike-off-company-provisions-and-norms","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/","title":{"rendered":"Strike Off Company: Provisions and Norms"},"content":{"rendered":"\n<p>The process relating to striking off is\nan optional mechanism to wind up a company in India. The Companies Act provides\ntwo modes of strike-off: strike off by the RoC u\/s Section 248(1) of the\nCompanies Act 2013 &amp; strike off by a company on its own accord u\/s 248(2)\nof the Companies Act, 2013. The write-up discusses the notion of a strike off\nof a company relating to these provisions. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/#Conditions_for_Strike_off_under_governing_legislation\" >Conditions for Strike off under governing legislation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/#What_do_you_mean_by_the_term_Dormant_Company\" >What do you mean by the term Dormant Company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/#Strike_off_by_Registrar_of_Company\" >Strike off by Registrar of Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/#Strike_off_on_the_Companys_Accord\" >Strike off on the Company&#8217;s Accord<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/#Checklist_for_Striking_off_companys_name\" >Checklist for Striking off company&#8217;s name<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/#Furnishing_of_Application_and_Documentations\" >Furnishing of Application and\nDocumentations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/#Implications_of_Dissolvement\" >Implications of Dissolvement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/#Limitations_around_Applications_for_Strike_off\" >Limitations around Applications for Strike off<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/#Non-Qualifying_Companies_for_Strike_off\" >Non-Qualifying Companies for Strike off<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/corpbiz.io\/learning\/strike-off-company-provisions-and-norms\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_for_Strike_off_under_governing_legislation\"><\/span>Conditions for Strike off under governing legislation <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The norm about strike-off could be\nenacted based on the given conditions: <\/p>\n\n\n\n<ul><li>The company has not started its operation within one year of its incorporation.<\/li><li>The company has not performed any business undertakings for the preceding two FYs, for which it has not requested for the <a href=\"https:\/\/corpbiz.io\/learning\/conversion-of-dormant-company-into-active-company\"><strong>Dormant Company <\/strong><\/a>status u\/s 455 of the Act.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_do_you_mean_by_the_term_Dormant_Company\"><\/span>What do you mean by the term Dormant Company?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term dormant, the general, implies\ninoperative or inactive. Likewise, a company is tagged as dormant if it has\nbeen incorporated under the Companies Act for a future project or holds\nintellectual property or assets but is not executing any significant accounting\ntransactions.<\/p>\n\n\n\n<p>To gain the classification, though, the\ncompany should file a prescribed application to the Registrar. The notion of\ndormancy was appended to the corporate norms in the Companies Act of 2013.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Strike_off_by_Registrar_of_Company\"><\/span>Strike off by Registrar of Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Registrar of Companies, i.e. RoC, may\nroll out a notification to the Companies along with its key officials such as\nDirector in form STK 1 if he has a viable reason as mentioned above.<\/p>\n\n\n\n<p>Such a notice would inform the relevant\nentities of removing its name from the record and prompt it to send its\nofficials with the standard documentation within 30 days of the issuance of\nsuch notification. This process is also known as Compulsory removal of name\nfrom the authority&#8217;s register. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Strike_off_on_the_Companys_Accord\"><\/span>Strike off on the Company&#8217;s Accord<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A company may file an application to the\nROC via form STK 2 post addressing all its liabilities. This could be performed\nvia approving a special resolution, which must be validated by 75 % of its\nmembers. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Checklist_for_Striking_off_companys_name\"><\/span>Checklist for Striking off company&#8217;s name<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Companies may opt for a strike-off by\nfollowing the given procedures; <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1: The Holding of Board Meeting<\/h3>\n\n\n\n<p>The passing of board resolutions has been\nmandated for key decisions in the corporate landscape. A resolution under this\nprovision could be approved by the company via board meeting, after which any\nof its directors will be appointed to apply for strike off procedure.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2: Closing off Liabilities<\/h3>\n\n\n\n<p>A company seeking to strike off must have\naddressed all its liabilities.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3: Holding of General Meeting<\/h3>\n\n\n\n<p>A shareholders&#8217; general meeting should be\nheld for passing a resolution relating to striking off the name of the company.<\/p>\n\n\n\n<p>This resolution must have the consent of\n75 per cent of its members according to the company&#8217;s paid-up share capital. <\/p>\n\n\n\n<p>Post this; the company would be required\nto file application MGT-14 within a time frame of thirty days.<\/p>\n\n\n\n<p><strong><em>Note \u2013 if the company falls under another\ngoverning authority, then the permission of such authority should be obtained\nfor this purpose. <\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Furnishing_of_Application_and_Documentations\"><\/span>Furnishing of Application and\nDocumentations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Companies aiming to strike off\nshould apply for the RoC, i.e. <em>Registrar of Companies. The said application\nmust be attached with the given documentation: <\/em><\/p>\n\n\n\n<ul><li>Indemnity\nbond certified by all directors. <\/li><li>A\nstatement of liabilities reflecting all the assets as well as liabilities. It\nmust be certified by practising CA. <\/li><li>An\naffidavit by all the company&#8217;s directors in form STK 4. <\/li><li>CTC\nof special resolution enclosing the signature of every director. <\/li><li>A\nstatement relating to any due legal proceeding w.r.t company <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Implications_of_Dissolvement\"><\/span>Implications of Dissolvement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If a company confirms its dissolvement,\nit will stop its operation from the date of such dissolvement, &amp; the\nIncorporation certificate granted to it by the Roc shall be considered to be\ncancelled, except for the discharge of any prevailing obligations or\nliabilities. <\/p>\n\n\n\n<p>Furthermore, any of the prevailing\nobligations of the directors, and officials who had administered it\ndirectly\/indirectly &amp; of every company&#8217;s member so dissolved, would\ncontinue to be enforced post dissolvement. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Limitations_around_Applications_for_Strike_off\"><\/span>Limitations around Applications for Strike off<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Companies are not permitted for filing\napplications relating to strike-off if at any instance during the last three\nmonths, it has: <\/p>\n\n\n\n<ul><li>Changed\nits registered name or altered its registered office to another state;<\/li><li>Made\ndisposal for the property&#8217;s valuation or rights held by it (subject to\nconditions);<\/li><li>Involved\nwith any other undertakings other than core operations for applying the governing\nprovisions, and so on;<\/li><li>Applied\nto the Tribunal for the conferring of Arrangement or Compromise, and Tribunal\nhas not yet forwarded an agreement for the same;<\/li><li>Been\nwound up as per Chapter XX, whether voluntarily as per Insolvency and\nBankruptcy Code (IBC), 2016, or by the Tribunal;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non-Qualifying_Companies_for_Strike_off\"><\/span>Non-Qualifying Companies for Strike off<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The companies mentioned below do not\nqualify for the strike off&#8217;s provisions: <\/em><\/strong><\/p>\n\n\n\n<ul><li>Companies delisted owing to non-compliance with statutory laws, listing norms, listing agreements. <\/li><li>Companies listed for investigation or inspection \u2013 if such directive is being performed\/due\/completed but the prosecutions relating to such inspection are pending in the honorable court. <\/li><li>Companies that failed to reply to notices of select provisions<\/li><li>Companies that failed to facilitate the follow-up instructions on any report u\/s 208 of the Act<\/li><li>If the prosecutions relating to the norms above are due in the honorable court. <\/li><li>Companies against which any case relating to prosecution is due in the honorable court. <\/li><li>Companies whose application relating to compounding is due before the concerned authority for compounding the felonies committee by it any of its officials in default. <\/li><li>Companies having any due public deposits. <\/li><li>Companies having any cases which remain to be satisfactory<\/li><li>Companies registered u\/s 25 of the <strong>Companies Act, 1956<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Companies_Act_1956\"><strong>[1]<\/strong><\/a><\/sup> or Section 8 of the Act. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As you can see, the legalities around striking off a company in India is quite complicated and revolve around hefty paperwork. One must remain on point with the compliances mentioned above to avoid delays or errors in the striking off process. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/cost-audit-meaning-applicability-and-provisions\/\">Cost audit: Meaning, Applicability and Provisions<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The process relating to striking off is an optional mechanism to wind up a company in India. The Companies Act provides two modes of strike-off: strike off by the RoC u\/s Section 248(1) of the Companies Act 2013 &amp; strike off by a company on its own accord u\/s 248(2) of the Companies Act, 2013. [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":40887,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120],"tags":[2166],"acf":{"service_id":"321"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":4990,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40885"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=40885"}],"version-history":[{"count":8,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40885\/revisions"}],"predecessor-version":[{"id":40894,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40885\/revisions\/40894"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/40887"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=40885"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=40885"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=40885"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}