PROCEDURE  FOR REMOVAL OF COMPANY NAME/ CLOSURE OF COMPANY

Section 248 of the Companies Act, 2013 and Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016 contain provisions for removal of name of the company from the Register of Companies either suo-moto by the powers exercised by the Registrar of Companies or on an application filed by the Company.

Any Company which has not commenced its operations since incorporation or does not intend to carry on any further business activity may apply voluntarily for closure of the Company under sub-section (2) of Section 248 of the Companies Act, 2013 by filing Form STK-2 with the Registrar of Companies (ROC).

FILING OF FORM STK-2

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A Company shall make an application to ROC for removal of its name in Form STK-2 along with a fee of Rs.5000/- This form can be filed only by an Active Company or by a dormant company.

Exclusion:

A Section 8 Company cannot apply for removal of its name under Section 248 of the Companies Act, 2013.

GROUNDS FOR MAKING APPLICATION FOR CLOSURE

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As per Section 248(2) of the Companies Act, 2013, a Company can, after extinguishing all its liabilities, make an application to the Registrar of Companies (ROC) for removal of its name on any of the following grounds:

1. The Company has failed to commence its business within one year of its incorporation; or

2. The Company is not carrying on business or operation for a period of 2 immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company.

PRE-REQUISITES BEFORE FILING FORM STK-2

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1. Before filing the application for closure, the Company must extinguish all its liabilities.

2. Shareholders’ approval for closure of company is required to be obtained by way of special resolution.  Alternatively, the Company may obtain the written consent from the members holding minimum 75% of the paid-up capital in the Company.

3. No Objection certificate to be obtained from appropriate Regulatory Authority concerned in respect of following companies, namely :-

(i) companies which have conducted or conducting non-banking financial and investment activities as referred to in the Reserve Bank of India Act, 1934 (2 of 1934) or rules and regulations thereunder;

(ii) housing finance companies as referred to in the Housing Finance Companies (National Housing Bank) Directions, 2010 issued under the National Housing Bank Act, 1987 (53 of 1987);

(iii) insurance companies as referred to in the Insurance Act, 1938 (4 of 1938) or rules and regulations thereunder;

(iv) companies in the business of capital market intermediaries/ companies engaged in collective investment schemes/ asset management companies as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

(v) any other company which is regulated under any other law for the time being in force.

PROCEDURE FOR CLOSURE

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1. Issue notice to all Directors for convening the Board meeting at least 7 days before the date of the meeting.

2. Convene the Board meeting and pass necessary resolutions:

- approving the closure of the Company and filing application with ROC.

- authorizing Director(s) to sign Form STK-2 and other papers and documents.

- Fixing the day, date and time for holding Extra-Ordinary General Meeting (EGM).

- Approval of notice convening EGM.

3. Issue EGM notice to every member, Director and Auditor(s) of the Company.

4. Hold the EGM and obtain shareholders’ approval for Company closure by way of special resolution.

5. File MGT-14 with the ROC.

6. A Company need not follow the steps at serial nos. 2(c), 2(d), 3, 4 and 5 if written consent of members holding at least 75% of the paid-up capital is obtained.

7. File Form STK-2 with the ROC along with the necessary attachments.

8. After receiving the application and on satisfied that the application is in order, the ROC will issue a public notice in Form STK-5 inviting objections, if any, from the stakeholders within 30 days from the date of publication of the notice.

9. Form STK-5 will be published in the Official Gazette and 2 newspapers (English and vernacular language) and also placed on the official website of the Ministry of Corporate Affairs.

10. The Registrar of Companies will, simultaneously intimate the concerned regulatory authorities regulating the company, viz,  the Income-tax  authorities, central excise authorities and service-tax authorities  having jurisdiction over the company, about the proposed action of removal or striking off the names of such companies and seek objections, if any, to be furnished within a period of thirty days from the date of issue  of the letter of intimation and if no objections are received within thirty days from the respective authority, it shall be presumed that they have no objections to the proposed action of striking off or removal of name. 

11. At the expiry of the time mentioned in the notice, the Registrar will, unless cause to the contrary is shown, strike off the Company name from the Register of Companies, and also publish notice thereof in the Official Gazette in Form STK-7 and on the publication in the Official Gazette of this notice, the company shall stand dissolved. The Notice shall also be placed on the official website of the Ministry of Corporate Affairs. 

ATTACHMENTS TO FORM STK-2

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1. Indemnity Bond duly notarized (to be given individually or collectively by the director(s)) in Form STK-3.

2. A Statement of accounts containing assets and liabilities of the Company made up to a day, not more than thirty days before the date of application and certified by a Chartered Accountant;

3. An Affidavit in Form STK-4 by every director of the company.

4. Copy of the special resolution duly certified by each of the directors of the company or consent of 75% of the members of the company in terms of paid up share capital as on the date of application;

5. A Statement regarding pending litigations, if any, involving the company. 

6. Board resolution authorizing director to file application with ROC for Company closure.

7. Latest available ITR acknowledgement.

8. Copy of order of the concerned regulatory authority, if any, approving the filing of this application.

DIRECTOR NOT HAVING REGISTERED DSC

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Where the director concerned does not have a registered digital signature certificate, a physical copy of the form, duly filled in, shall be signed manually by the director duly authorised in that behalf and shall be attached with the Form STK-2 while uploading the form. 

CERTIFICATION OF FORM STK-2 BY PRACTISING PROFESSIONAL

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The Form STK 2 shall be certified by a Chartered Accountant in whole time practice or Company Secretary in whole time Practice or Cost Accountant in whole time practice, as the case may be.

EFFECT OF COMPANY STRUCK-OFF UNDER THIS SECTION

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A Company which stands dissolved under Section 248 shall, on and from the date mentioned in STK-7, cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.

There are many companies which after incorporation, have not done any business and also the promoters do not intend to carry on any business activity in those companies in future. Those companies may be struck-off by following the procedure listed above as envisaged under Section 248 of the Companies Act, 2013.

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