A Detailed Guide on the Strike Off of a Company

Companies need to register with the Registrar of Companies (the issuer of Certificate of Incorporation) to start their operations. After successful registration, the existence of a company can only cease if a registrar strikes off a company from the list of registered organisations. Striking off a company can occur due to various reasons.

Read on to know its meaning and everything related to it!

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What Is a Strike Off of a Company?

Striking off a company refers to the process of closing a defunct company by the ROC.

In other words, striking off a company means removing the name from the list of registered companies maintained by the Registered of Companies (ROC).

The Companies Act, 2013 provides two methods of strike-off. These are as follows:

Strike off by Registrar of Companies under Section 248(1) of Companies Act 2013
Strike off by a company on its own accord under Section 248(2) of Companies Act, 2013

Now that individuals know the meaning of a strike-off company, let’s focus on other important information.

What Are the Grounds for Strike Off a Company?

Striking off a company can occur on the following grounds:

A company that has not started its business within the first year of incorporation.
A company that has not pursued any business for the previous two financial years and even has not applied for the status of Dormant company under Section 455 of the Companies Act, 2013.

How Can Companies Pursue a Strike Off?

Once a company closes its liabilities, it must file an application to ROC in E-form STK-2. For this, a company must pass a special resolution where 75% of members must give their consent. Companies can voluntarily strike off by following the procedures mentioned below.

1. By Holding a Board Meeting

As stated earlier, passing Board Resolutions is mandatory for all important enactment in the corporate arena. To voluntarily strike off a company, it must pass this resolution through a Board Meeting. Next, any of the directors may file an application to ROC to complete the striking off process.

2. By Closing All Liabilities

A company willing to strike off needs to close all its liabilities.

3. By Holding a General Meeting

Companies must hold a general meeting to strike off the name from the list of a registered company. 75% of members must give their consent on the basis of the paid-up share capital of the company. Next, that company will have to file E-form MGT-14 within 30 days.

The application to strike off a company must be submitted along with these documents:

Indemnity Bond duly notarised by all the directors (via Form STK 3)
CTC of Special Resolution (duly signed by every director of the company)
An affidavit in Form STK 4 (by all the directors)
A statement of liabilities consisting of all assets and liabilities of the companies (certified by a Chartered Accountant)
A statement related to any pending litigations of the company

What Are the Restrictions on Voluntarily Applying for a Strike Off by a Company?

There are certain restrictions on companies in case they have done the following activities.

Altered the company name or shifted the office registered to it to another state within the country
Made disposal for the value of the property or the rights held by it (subject to conditions)
Prioritised any other activity except the essential one
Applied to the Tribunal for the approval of Arrangement or Compromise, and revert for the same is yet to arrive
Voluntarily wound up under Chapter XX, by the Tribunal or under Insolvency and Bankruptcy Code (IBC), 2016

Which Companies Do Not Qualify for the Provision of Strike Off?

Following is a list of companies that do not qualify for the provision of strike off.

Listed companies
Companies listed for inspection or investigation
Companies delisted on account of non-compliance with listing regulations, listing agreements or any other statutory laws
Vanishing companies
Companies accepting any outstanding public deposits
Companies that have any unconcluded charges
Companies with pending cases for prosecution in a Court of law
Companies that are yet to submit the follow-up instructions on any report under section 208 of the Act
Companies that are yet to respond to notices of select provisions
If the prosecutions related to the above two provisions are awaiting in a Court of law
Companies whose application for compounding is unsettled before the competent authority for compounding the offences committed by it or any of its officers in default
Companies registered under Section 25 of the Companies Act, 1956 or Section 8 of the Act

The above-mentioned sections thoroughly explain how to strike off a company. Companies willing to strike off their name from the list of registered companies must read the details carefully and apply accordingly.

Frequently Asked Questions

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What forms do individuals need to submit while striking off a company?

While striking off a company, individuals need to submit E-form MGT-14 and E-form STK-2.

What are the fees of E-form?

E-form MGT-14 has its usual associated fees, and E-form STK-2 has a fee of ₹ 10,000.