Strike Off of Company Fast Track Exit (FTE) Mode

Modes of Strike Off of a Company under Companies Act 2013:

Pursuant to the provisions of Companies Act, 2013 there are two modes of strike off as mentioned below:

• Strike off by ROC under Section 248(1) of the Companies Act 2013
• Strike off by Company by its own under Section 248(2) of the Companies Act 2013. 

Grounds of strike Off of a Company under Companies Act 2013:

• A company has failed to commence its business within one year of incorporation;
• The company is not carrying out any business or Activity for preceding 2 financial years and has not sought the status of Dormant Company under Section 455 of the Act.

Strike off by ROC under Section 248(1) of the Companies Act 2013

The registrar if having a reasonable cause as mentioned above may send a notice in Form STK-1 of Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 to the

• Company and
• all the Directors of the company,

Informing his intention to remove the company’s name from the record and request company to send its representations along with supporting documents within thirty days from the date of the notice. This process can also be called as Compulsory removal of name from the registrar of companies.

Strike off by Company by its own under Section 248(2) of the Companies Act 2013

The company can file an application in E-form STK-2 with Registrar of Companies suo-motto after extinguishing all its liabilities, by special resolution or with the consent of seventy-five per cent of the members in terms of paid-up share capital, to the Registrar for removing the name of the Company on all or any of the above-mentioned grounds.

The process followed by Company for Strike off by Company by its own under Section 248(2) of the Companies Act 2013

Holding of Board Meeting

The Company will hold Board Meeting for passing a Board resolution for the purpose of Striking off the name of the Company and to authorize any director of the Company to apply to Registrar of Companies.

Extinguishment of all the Liabilities

After passing of Board resolution if there are any liabilities then the Company will extinguish all the liabilities before the next step.

Holding of General Meeting

The Company will hold the general meeting of shareholders by passing a resolution for striking off the name of the Company with the approval of 75% of members as per paid up share capital of the Company and after passing of Special resolution Company will file E-form MGT-14 within 30 days.

Approval of Concern Authorities

In case if any other authority regulates the company, then the approval of such authority shall also be required.

Application to ROC by Company

Application in Form STK- 2 to be filed by the Company (Government filing fees of INR 10,000) along with following documents:

• Indemnity Bond duly notarized by every director in Form STK 3;
• A statement of accounts containing assets and liabilities of the company made up for a day, not more than 30 days before the date of application and certified by a Chartered Accountant;
• An affidavit in Form STK 4 by every director of the company;
• CTC of Special Resolution duly signed by each Director
• In the case of a Company regulated by any other authority, approval of such authority shall also be required;
• A statement with respect to any pending litigations, involving the Company.

Note:-

• It is not necessary to do annual filing before making an application for strike off. 
• The Company will place the copy of application on its website till the disposal of the application. .[Proviso to R.7(1)].

Process followed by ROC

• After receiving an application, ROC shall publish a public notice STK-6. Any objection on proposed strike off shall be sent within 30 days.
• The notice shall be placed on the website of Ministry of Corporate Affairs, published in the Official Gazette and published in a leading English newspaper and at least in one vernacular newspaper where the registered office of the company is situated.
• ROC shall simultaneously intimate the concerned regulatory authorities regulating the company, i.e. 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.
• After complying all the process, ROC shall strike off the name and dissolve the company by sending notice in the official gazette in form STK-7.
• On the publication in the Official Gazette of this notice, the Company shall stand dissolved in effect from the date mentioned therein. The same shall also be placed on the official website of the MCA.

Other Provisions

• If a company confirms as dissolved, it shall cease to operate as a Company from the date of dissolution and the Certificate of Incorporation issued by the ROC to it shall be deemed to have been cancelled except for the purpose of realizing the amount due to the company and for the payment or discharge of the legal liabilities or other obligations of the Company.
• The Corporate liability, if any, of every directors and officer who was exercising any power of management directly or indirectly, and of every member of the Company dissolved, shall continue and may be enforced as if the Company had not been dissolved.

Restrictions on making application for strike off [S. 249(1)]

The companies making an application voluntarily with respect to provision as mentioned in section 248(2) of the companies act,2013 be restricted 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, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement;
• 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, whether voluntarily or by the Tribunal or under the IBC,2016.

Categories of Companies which cannot be Strike Off: [Proviso of R.3(1)]

• Listed companies;
• Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;
• vanishing companies(*);
• Companies where inspection or investigation is ordered and being carried out or actions on such order are yet to be taken up or were completed but prosecutions arising out of such inspection or investigation are pending in the Court;
• Companies, where notices under section 234 of the Companies Act, 1956 (1 of 1956) or section 206 or section 207 of the Act have been issued by the Registrar or Inspector and reply thereto, is pending or report under section 208 has not yet been submitted or follow up of instructions on the report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the Court;
• 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 25 of the Companies Act, 1956 or section 8 of the Act.

*A “vanishing company” means a company, registered under the Act or previous company law or any other law for the time being in force and listed with Stock Exchange which has failed to file its returns with the Registrar of Companies and Stock Exchange for a consecutive period of two years and is not maintaining its registered office at the address notified with the Registrar of Companies or Stock Exchange and none of its directors are traceable.

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