Introduction
At the time of incorporation, every company dreams of perpetual success. However, various circumstances may lead to the closure of a business. In this comprehensive guide, we delve into the intricate process of striking off a company. From understanding what it entails to the necessary procedures and legalities involved, let's navigate through the nuances of company dissolution.
What is a Strike Off Company?
A striking-off company refers to the removal of a company's name from the register, leading to its cessation. There are two types of strike-off processes: voluntary and compulsory.
Voluntary Strike Off
In this scenario, the directors dissolve the company voluntarily. Reasons for voluntary dissolution may include director retirement or a shift in focus to other projects.
Compulsory Strike Off
This process involves a third party, such as the registry house of companies or a concerned individual, petitioning for the compulsory striking off of a company. Reasons for compulsory strike off include non-compliance with regulations and failure to file annual accounts.
Eligibility for Strike Off
Any type of company, including private, public, and one-person companies, can opt for strike off. However, dormant companies and section 8 companies have certain restrictions.
Situations Restricting Strike Off
Certain actions within the preceding three months can disqualify a company from applying for strike off, as per the Company Act, 2013.
Preconditions for Strike Off
Before applying for strike off, specific conditions must be met:
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Voluntary Strike Off: Clearance of all liabilities and obtaining approval from all members through a special resolution.
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Compulsory Strike Off: Compliance with the directives of the tribunal or registrar, as mandated by law.
Forms and Fees for Strike Off
To initiate the strike-off process, companies must file forms such as E-form MGT-14 and E-form STK-2, along with the requisite fee.
Documents Required for Strike Off
Key documents essential for filing include an indemnity bond, a statement of assets and liabilities certified by a chartered accountant, and relevant affidavits.
Application Process for Company Strike Off
Companies must provide a valid reason for strike off when applying to the registrar of companies. The procedure, outlined in sections 248 to 252 of the Company Act, 2013, mandates public notification and registrar verification.
Consequences of Official Dissolution
Upon dissolution, a company ceases to operate, and its certificate of incorporation is revoked. However, directors remain liable for settling the company's liabilities.
Procedure for Voluntary Termination
The process of voluntary striking off entails several steps, including board meetings, resolution approval, and submission of requisite forms to the ROC.
Revival of Strike Off Company
Section 87A of the National Company Law Tribunal (Amendment) Rules outlines the process for reviving a struck-off company, involving NCLT order submission and compliance with regulatory requirements.
Assistance from Odint Consulting
Odint Consulting offers comprehensive support for company strike off, from form completion to application processing, ensuring compliance with legal norms.
Conclusion
When a company undergoes striking off, it ceases operations, necessitating careful adherence to legal protocols. Seeking professional assistance, such as that provided by Odint Consulting, can streamline the process and mitigate potential complications.
FAQs (Frequently Asked Questions)
What happens when a company status is struck off?
When a company is struck off, it ceases business operations, and its name is removed from the registrar of companies.
Can a company be struck off if it owes money?
Yes, a company can be struck off even if it owes money, as long as it fulfills the necessary legal requirements.
How long can a strike-off be suspended?
The duration of a strike-off suspension varies depending on the circumstances and legal proceedings involved.
Can you strike a company off online?
The process of striking off a company typically involves submitting forms electronically, but certain legal formalities must be completed offline as well.
Which companies are eligible for strike off?
Private, public, one-person, and certain other types of companies are eligible for strike off, subject to compliance with legal regulations.By adhering to the outlined procedures and seeking professional guidance where necessary, companies can navigate the process of striking off with clarity and confidence.
What are the consequences of failing to comply with the strike-off procedure?
Failure to comply with the strike-off procedure may result in legal repercussions, including fines, penalties, and potential legal action against the company's directors.
Is it possible to reverse a voluntary strike off once initiated?
Yes, under certain circumstances, it may be possible to reverse a voluntary strike off. However, the process for reversal is complex and typically involves legal proceedings and regulatory approvals.
Can a company apply for strike off if it has outstanding debts?
While it is possible for a company to apply for strike off with outstanding debts, it must first settle these debts or make suitable arrangements with creditors before initiating the strike-off process.
What happens to the assets of a struck-off company?
After a company is struck off, its assets are typically liquidated to pay off outstanding debts. Any remaining assets may be distributed among shareholders or transferred to relevant authorities, depending on the circumstances.
Is professional assistance necessary for the strike-off process?
While it is possible to navigate the strike-off process independently, seeking professional assistance from legal and financial experts can help ensure compliance with regulatory requirements and streamline the process, minimizing the risk of errors or complications.
These additional FAQs provide further clarity on common queries related to the strike-off process, helping companies make informed decisions and navigate the process with confidence.