Section 248 of Companies Act, 2013 – Power of Registrar to remove name of company from register of Companies

Section 248. Power of Registrar to Remove Name of

Company from Register of Companies

[Effective from 26th December 2016]

(1) Where the Registrar has reasonable cause to believe that—

(a) a company has failed to commence its business within one year of its incorporation; [or][1]

[2] (b) [***]; or

(c) a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of dormant company [under section 455; or] [4], he shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice.

[5] [(d) the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under sub­section (1) of section 10A; or

(e) the company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.]

(2) Without prejudice to the provisions of sub-section (1), a company may, after extinguishing all its liabilities, by a special resolution or consent of seventyfive per cent members in terms of paid-up share capital, file an application in the prescribed manner to the Registrar for removing the name of the company from register of companies on all or any of the grounds specified in sub-section (1) and the Registrar shall, on receipt of such application, cause a public notice to be issued in the prescribed manner:

Provided that in the case of a company regulated under a special Act, approval of the regulatory body constituted or established under that Act shall also be obtained and enclosed with the application.

(3) Nothing in sub-section (2) shall apply to a company registered under section 8.

(4) A notice issued under sub-section (1) or sub-section (2) shall be published in the prescribed manner and also in the Official Gazette for the information o the general public.

(5) At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand dissolved.

(6) The Registrar, before passing an order under sub-section (5), shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company:

Provided that notwithstanding the undertakings referred to in this sub-section, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies.

(7) The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved.

(8) Nothing in this section shall affect the power of the Tribunal to wind up a company the name of which has been struck off from the register of companies.

Applicable Rules

Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016

[Effective from 26^th December 2016]

Rule 2.Definitions- (1) In these rules, unless the context otherwise requires,-

(a)“Act” means the Companies Act, 2013 (18 of 2013)

(b) “Form” or “e-Form” means a non-electronic form or an electronic form annexed to these rules.

(2) Words and expressions used in these rules but not defined and defined in the Act or in the Companies (Specification of Definitions Details) Rules, 2014, shall have the same meanings respectively assigned to them in the Act or in the said rules.

Rule 3. Removal of name of company from the Register on suo-motu basis- (1) The Registrar of Companies may remove the name of a company from the register of companies in terms of sub-section (1) of section 248 of the Act:

Provided that following categories of companies shall not be removed from the register of companies under this rule and rule 4, namely:-

(i)Listed Companies

(ii) Companies that have been delisted due to non- compliance of listing regulations or listing agreement or any other statutory laws;

(iii) Vanishing companies;

(iv) 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;

(v) 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 report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any is pending with the Court;

(vi) Companies against which any prosecution for an offence is pending in any court;

(vii) 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;

(viii) Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;

(ix) Companies having charges which are pending for satisfaction; and

(x) Companies registered under section 25 of the Companies Act, 1956 or section 8 of the Act.

Explanation– For the purposes of clause (iii), the expression “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 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 Exchanges and none of its directors are traceable.

(2) For the purpose of sub-rule (1), the Registrar shall give a notice in writing in Form STK 1 which shall be sent to all the directors of the company at the addresses available on record, by registered post the acknowledgment due or by speed post.

(3) The notice shall contain the reasons on which the name of the company is to be removed from the register of companies and shall seek representations, if any against the proposed action from the company and its Directors along with the copies of relevant documents, if any within a period of thirty days from the date of notice.

Rule 4. Application for removal of name of company.- (1) An application for removal of name of the company under sub-section (2) of section 248 shall be made in Form STK-2 along with the fee of [6] [Ten thousand rupees;

Provided that no application in Form No. STK-2 shall be filed by a company unless it has filed overdue returns in Form No. AOC-4 (Financial statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return), up to the end of the financial year in which the company ceased to carry its business operations.

Provided further that in case a company intends to file Form No. STK-2 after the action under sub-section (1) of section 248 has been initiated by the Registrar, it shall file all pending overdue returns in Form No. AOC-4 (Financial statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return) before filing Form No. STK-2.

Provided also that once notice in Form No. STK-7 has been issued by the Registrar pursuant to the action initiated under sub-section (1) of section 248 company shall not be allowed to file an application in Form No.STK-2.]

(2) Every application under sub-rule (1) shall accompany a no objection certificate from appropriate Regulatory Authority concerned in respect of following companies namely:-

(i) companies which have conducted or conducting non-banking financial and investment activities are 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) Directors, 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 as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

(v) companies engaged in collective investment schemes as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

(vi) asset management companies as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

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

(3) The application in Form STK-2 shall be accompanies by-

(i) indemnity bond duly notarized by every director in Form STK-3;

(ii) a statement of accounts [7][in Form no. STK-8] 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;

(iii) An affidavit in Form STK-4 by every director of the company;

(iv) a copy of the special resolution duly certified by each of the directors of the company or consent of seventy five percent of the members of the company in terms of paid up share capital as on the date of application;

(v) a statement regarding pending litigations, if any, involving the company.

Rule 5. Manner of filing of application.- (1) The application in Form STK-2 shall be signed by a director duly authorized by the Board in  their behalf.

(2) 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 authorized in that behalf and shall be attached with the Form STK-2 while uploading the form.

Rule 6. Form to be certified.- 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.

Rule 7. Manner of publication of notice- (1) The notice under sub-section (1) or sub-section (2) of section 248 shall be in Form STK- 5 or STK -6, as the case may be, and be-

(i) placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;

(ii) published in the Official Gazette;

(iii) published in English language in a leading English newspaper, both having wide circulation in the State in which the registered office of the company is situated.

Provided that in case of any application made under sub-section (2) of section 248 of the Act, the Company shall also place the application on its website, if any, till the disposal of the application.

[3] [Provided further that the publication of notice under clause (iii) of this sub rule, in respect of cases falling under sub-section (1) of section 248 shall be in Form No. STK- 5A.]

(2) The Registrar of Companies shall, 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.

Rule 8. Manner of notarization, appostilisation or consularisation of indemnity bond and declaration in case of foreign nationals or non resident Indians:- For the purposed of these rules, if the person is a foreign national or non- resident Indian, the  indemnity bond, and declaration shall be notarized or appostilised or consularised.

Rule 9. Notice of striking off and dissolution of company.- The Registrar shall cause a notice under sub-section (5) of section 248 of striking off the name of the company from the register of companies and its dissolution to be published in the Official Gazette in Form STK 7 and the same shall also be placed on the official website of the Ministry of Corporate Affairs.

 Rule 10. Applications or forms pending before Central Government.- Any application or pending proceeding for striking off or Form-FTE filed with the Registrar of Companies prior to the commencement of these rules but not disposed of by such authority for want to any information or document shall, on its submission, to the satisfaction of the authority, be disposed of in accordance with the rules made under the Companies Act, 1956 (1 of 1956).

Applicable Circular

Removal of names of companies from the Register of Companies- clarification regarding availability of Form STK on MCA-21 portal-reg.

General Circular No. 16/2016 dated 26.12.2016

The Ministry has commenced provisions of section 248 to 252 of the Companies Act, 2013 w.r.t. removal of names of companies from the Register of Companies today and notified relevant rules simultaneously. However, e- Form STK-2 prescribed under the said rules, for making application to the Registrar of Companies for removal of name of the company from the register of companies, is under development and would be deployed and would be deployed in some time.

[1] Inserted by the Companies (Amendment) Act, 2015 vide Notification No. S.O. 1440(E) dated 29th May 2015.

[2] Omitted by the Companies (Amendment) Act, 2015 vide Notification No. S.O. 1440(E) dated 29th May 2015.

Prior to omission it read as under:

“(b) the subscribers to the memorandum have not paid the subscription which they had undertaken to pay within a period of one hundred and eighty days from the date of incorporation of a company and a declaration under sub-section (1) of section 11 to this effect has not been filed within one hundred and eighty days of its incorporation”.

[3] Inserted vide Notification No. F. No. 1/28/2013-CLV dated 12th April, 2017.

[4] Substituted for the words “section 455” by The Companies (Amendment) Ordinance, 2019 dated 12th January, 2019 effective from 2nd November, 2018.

[5] Inserted by The Companies (Amendment) Ordinance, 2019 dated 12th January, 2019 effective from 2nd November, 2018.

[6] Substituted for the words “five thousand rupees” by Companies(Removal of Names of Companies  from Register of Companies) Amendment Rules, 2019 vide notification no. 350(E) dated 8th May, 2019 effective from 10th May, 2019.

[7] Inserted words “in Form No. STK-8” by by Companies(Removal of Names of Companies  from Register of Companies) Amendment Rules, 2019 vide notification no. 350(E) dated 8th May, 2019 effective from 10th May, 2019.