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Company Closure in Surat

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    Company Closure

    What is Strike Off?

    Strike Off pertains to the removal of a company’s name from the Register of Companies that is kept by the Registrar of Companies (ROC). It is, for all intents and purposes, closing the company down, and in this case, the company will cease to exist and will no longer be able to conduct any further business activities. 

    Why Is a Company Strike Off?

    A company can be struck off for a variety of reasons, including: 

    Failure to Commence Business:

    When a company is unable to commence business within a year of incorporation. 

    Inactivity for two consecutive financial years:

    Wherein a company never conducted any activity of business over the last two financial years nor has it sought an application in Dormant Company under Section 455 of Companies Act, 2013. 

    Types of Strike Off

    There are two ways a company can undergo strike off:

    • Strike Off by ROC (Section 248(1)): A business is removed from register of companies if it qualifies for strike off and is in the hands of the Registrar of Companies for removal.
    • Voluntary Strike Off by the Company (Section 248(2)): A company is permitted to seek strike off provided it adheres to the relevant procedure.

    How to Strike Off a Company?

    The process for voluntary strike off involves several steps:

    Step 1: Board Meeting

    • The company must hold a Board Meeting to pass a resolution for striking off the company’s name.  
    • A director is authorized to apply to the ROC for the strike-off process.

    Step 2: Clearing Liabilities

    • Before proceeding, the company must clear all outstanding liabilities, including debts and taxes. 

    Step 3: General Meeting & Shareholder Approval

    • A General Meeting is conducted where at least 75% of shareholders (based on paid-up share capital) must approve the strike-off resolution. 
    • The company must file E-form MGT-14 within 30 days of passing the resolution. 

    Step 4: Approval from Regulatory Authorities

    • If the company is regulated by other authorities (such as SEBI or RBI), prior approval from the respective authority is required. 

    Step 5: Filing Application with ROC

    • The company must submit an application in Form STK-2, along with the following documents: 
    • Indemnity Bond (Form STK-3): Signed and notarized by all directors. 
    • Statement of Accounts: Showing assets and liabilities, certified by a Chartered Accountant, not older than 30 days from the application date. 
    • Affidavit (Form STK-4): Signed by all directors. 
    • Certified Copy of Special Resolution: Duly signed by directors. 
    • Pending Litigation Statement: Details of any ongoing legal matters involving the company. 

    What Happens After the Application is Submitted?

    Once the ROC receives the application, it follows a structured process: 

    1. Public Notice (STK-6):

    The ROC publishes a public notice about the proposed strike off.

    2. Objection Period:

    Any objections must be submitted within 30 days.

    3. Publication in Newspapers:

    The notice is published in an English and vernacular newspaper, as well as on the MCA website and Official Gazette.

    4. Regulatory Authority Notification:

    Tax and excise authorities are informed, and they may raise objections. 

    5. Final Strike Off (STK-7):

    If no objections arise, the ROC strikes off the company’s name and publishes the final notice in the Official Gazette.

    6. Dissolution:

    Once published, the company stands legally dissolved, and its details are updated on the MCA website.

    FAQs on Company Strike Off

    1. If a company’s name has been struck off, can it be restored now?

    The National Company Law Tribunal (NCLT) allows companies to apply for revival after 20 years.  

    2. How does a company’s strike off affect their assets?

    The government will take everything else after a company is dissolved.

    3. Can creditors take actions against a struck off company?

    Yes, but only to the extent they can pursue company restoration for recovery of dues.  

    4. How long does the process of strike-off take on average?

    It typically takes anywhere from 3 to 6 months depending on whether there are any approvals or objections.

    5. Prior to strike off, is it necessary to file all financial statements?

    Yes, the company will need to file all pending financial statements and annual returns before the application.