Many a time it happen that the continuation of business is not a good option and the closure of the same is the last option as left with the entrepreneur due to its market shrinkage, bad financial health, inability to compete with the brands, and product quality degradation etc. In such a situation it is better to wind up the business instead of trying to survive as survival may result in adding extra cost and unnecessary financial burden on the Company. Closing or shutting down a company which is registered under Companies Act, 2013 is termed as strike off i.e. Striking off the name of the Company from the records of Registrar of Companies.
Companies can make application for strike off on their own if the management finds it beneficial to close the Company, it is called as Strike off by the Company on its own.
Criteria for Voluntary Strike off
As per section 248 of the Act a company can make an application to the Registrar only if following conditions are satisfied:
Procedure for striking off the Company
Company shall call board meeting of directors to consider proposal of striking off of Companies and discuss the proposal considering financial status and operations of the Company
- Call Extra Ordinary General Meeting/Annual General Meeting to accord approval of members through special resolution for striking off of the Company
- If Company is registered under any other authority it shall take prior approval of such authority like RBI, IRDA etc
- After approval of members and post approval of authorities (if any), Company will file E Form STK 2 with the Registrar of Companies
- In case the company is meeting the cretaria of voluntary strike off (fast track strike off), then the Registrar of companies will publish a notice in the Official Gazette and in newspaper (leading English and vernacular language where registered office of Company is situated) for the information of the general public in Form of STK-6
- Registrar will again also publish a notice in the Official Gazette for the information of the general public in STK-7
What is included in this
- Preparation of documents
- Filing of strike off form
- Minutes of the Meeting
- Laisioning with department
- 24/7 help to assist you
- Time to time update(s)
1. What is Compulsory/Mandatory Strike Off:
Companies Act, 2013 had empowered Registrar of Companies to strike off companies which in opinion of the Registrar are not functioning or created for a malafide intention. To read more about compulsory strike off click here.
2. Can a listed company file application for strike off?
No, as per rule 3 of the Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016 following categories of companies shall not be removed from the register of companies:
Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory law
Companies where inspection or investigation are pending in the Court.
Companies where any prosecution ,inquiry or scrutiny, if any, is pending with the Court arising out non-compliance of provisions of the Act or Companies Act, 1956 ;
Companies against which any prosecution for an offence is pending in any court;
Companies whose application for compounding is pending before the competent authority for compounding the offences committed by the company or any of its officers in default;
Companies, which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
Companies having charges which are pending for satisfaction; and
Companies registered under section 8 of Companies Act, 2013 or section 25 of erstwhile Companies Act, 1956
3. Can struck off company can be resotred?
Yes, Section 252 of Companies Act, 2013 states the provision where a struck off company can be restored after making an appeal to National Company Law Tribunal (NCLT).
4. What is STK 2
STK 2 is a E Form to be filed by Company for application of Strike off.
5. What are the restrictions on making Strike off application?
As per section 249 of the Act, An application on behalf of a company shall not be made if, at any time in the previous three months, the company:
- has changed its name or shifted its registered office from one State to another
- has made a disposal for value of property or rights held by it, immediately before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business;
- has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section,
- has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
- is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy Code, 2016
6. Can a company be strike off, if they have the bank account?
No, all the baking accounts need to be closed mandatorily, and the overall effect in statement of asset and liabilities needs to have NIL balance.