Striking off a company’s name is an alternative method for closing down its operations. The Registrar of Companies (ROC) has the authority to issue a notice to remove a company’s name from the Register of Companies for specific reasons. Alternatively, the company itself can request the ROC to strike off its name from the register.

Sections 248 to 252 of the Companies Act, 2013, outline the process for striking off a company’s name, either by the ROC or through voluntary application by the company. Striking off a company means shutting down a non-operational business in a quicker, more straightforward manner. It is considered the easiest way to dissolve a defunct company.

Voluntary Application for Striking Off a Company

A company can file an application to the ROC to remove its name from the Register of Companies by passing a special resolution or securing the approval of 75% of its members (based on paid-up capital). This application can be made after settling all the company’s liabilities if any of the following conditions are met:

• The company has failed to start business activities within a year of incorporation.
• The company has been inactive or non-operational for the previous two financial years and has not applied for dormant status under Section 455 of the Companies Act during that time.

Once the application is submitted, the ROC will issue a public notice in accordance with the procedure laid down in the Act. This notice serves as an official declaration of the company’s dissolution process.

This streamlined approach allows for the efficient closure of companies that are no longer in operation.

Restrictions on Filing a Voluntary Application to Strike Off a Company

A company is restricted from applying to have its name struck off the Register of Companies if, in the last three months, it has:

• Disposed of property or rights for value before ceasing operations, except when done in the normal course of business for profit.
• Relocated its registered office to a different state or changed its name.
• Submitted an application to the National Company Law Tribunal (NCLT) for approval of a scheme of arrangement or compromise, and the matter is still pending.
• Conducted activities beyond what is necessary for submitting the strike-off application, meeting statutory requirements, or finalizing the company’s affairs.
• Been subject to a winding-up process under Chapter XX of the Companies Act, either voluntarily or through the Tribunal.

If a company applies for striking off in violation of these conditions, it may face a penalty of up to Rs. 1 lakh.

Striking Off a Company’s Name by the ROC

The Registrar of Companies (ROC) may send a notice of intent to strike off a company’s name from the Register of Companies if there is a valid reason to believe that:

• The company has failed to commence business within one year of incorporation.
• The company has been inactive or not conducted any business for the previous two financial years and has not applied for dormant status under Section 455 of the Companies Act.

Upon issuing the notice, the ROC will provide the company with 30 days to submit its representations along with the relevant documents.

Procedure for Striking Off a Company’s Name

Once the ROC issues a strike-off notice or receives an application from the company to remove its name, the notice must be published in the Official Gazette to notify the public. If the company does not provide sufficient reasons to prevent the strike-off within the specified time, the ROC will proceed with the removal of the company’s name from the Register of Companies.

After striking off the company name, a dissolution notice will be published in the Official Gazette, and the company will be considered dissolved as of the publication date.

Before issuing the dissolution order, the ROC must ensure that provisions have been made for settling the company’s liabilities and realizing its due amounts. The ROC will also secure necessary undertakings from the directors or persons in charge of the company’s management.

Despite the company’s dissolution, its assets will still be available to meet any remaining obligations or liabilities. Additionally, the responsibilities of the company’s directors, managers, or other officers will continue to be enforceable as if the company had not been dissolved.

Effect of a Company Being Notified as Dissolved

Once a company is dissolved under Section 248 of the Companies Act, and the notice is published in the Official Gazette, the company ceases to exist from the date specified in the notice. From that point, the Certificate of Incorporation issued by the Registrar of Companies (ROC) is considered cancelled. However, even after dissolution, the Certificate of Incorporation remains valid for settling the company’s liabilities, collecting dues, and fulfilling any remaining obligations.

Appeal to Tribunal Against Company Dissolution

If any person is aggrieved by the ROC’s decision to dissolve a company under Section 248, they have the right to appeal to the National Company Law Tribunal (NCLT) within three years of the order. If the Tribunal finds that the company’s removal from the register was not justified, it may pass an order to restore the company’s name in the Register of Companies. Before making this decision, the Tribunal must provide an opportunity for the ROC, the company, and other relevant parties to present their representations.

The company is required to submit a copy of the Tribunal’s order to the ROC within 30 days of the order date. Upon receiving the order, the ROC will restore the company’s name to the Register of Companies and issue a new Certificate of Incorporation.

Additionally, the ROC may apply to the Tribunal for the restoration of a company’s name if it believes the name was struck off due to incorrect information provided by the company or its directors, or if the name was removed by mistake. The ROC can request restoration within three years of the dissolution date if such an error is identified.