Strike off of Company / LLP and restoratation of company / LLP

Strike off of Company / LLP and restoratation of company / LLP

The provisions relating to strike off provide an opportunity to the non working companies to get their names struck off from the records of the ROC.

Ways of Striking off of Companies

STRIKE OFF BY ROC SUO MOTU

Subject to the provisions of sub section 1 of section 248 of companies Act 2013 read with Rule 3 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, in the following cases, the Registrar can suo motu remove the name of the company from the Register:

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

(b) 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 a dormant company under section 455 of the Companies Act, 2013 or

(c) the subscribers to the memorandum have not paid the subscribers to the memorandum have not paid  20 n Strike Off and Restoration of Name of the Company and LLP the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this affect has not filed within 180 days of its incorporation;

(d) the comp[any is not carrying on any business or operations as revealed after the physical verification carried out under section 12(9).

Before removal of the name of the company from the Register, the registrar is required to send a notice in Form STK 1 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. Such a notice should contain the reasons on which the name of the company is to be removed from the register of companies. Such a notice should be sent to all the directors of the company at the addresses available on record, by registered post with acknowledgement due or by speed post. On receipt of such a notice the company and all the directors of the company are required to send their representations along with copies of the relevant documents, if any, explaining the reasons as to why the name of the company should not be removed from the register of companies. Such representations should be given within a period of thirty days from the date of the notice.

1. Service of notice: The registrar is required to send a notice in Form STK 1 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. Such a notice should contain the reasons on which the name of the company is to be removed from the register of companies. Such a notice should be sent to all the directors of the company at the addresses available on record, by registered post with acknowledgement due or by speed post.
2. Reply to Notice: On receipt of such a notice the company and all the directors of the company are required to send their representations along with copies of the relevant documents, if any, explaining the reasons as to why the name of the company should not be removed from the register of companies. Such a representation should be given within a period of thirty days from the date of the notice.
3. Consideration of the representation made: The ROC will consider the representation made by the company and all the directors of the company. If the ROC is not satisfied with the representation made by the company and its directors, it may proceed to strike off the name of company.
4. Publication of Notice: The notice for removal of the name of the company should be in form STK 5 for the information of the general public and should 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 Form No. STK 5A in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated.

Such a publication is required to be given for the information of the general public in order to enable the general public to give their objections, if any, to the proposed removal / striking off of name of the companies from the register of companies and requiring them to send their objection to the ROC within thirty days from the date of publication of the notice

5. Intimation to regulatory authorities: Intimation about the proposed action of removal or striking off the names of company should be sent to the Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over such a company. Such intimation should be given to enable the authorities to give their objections, if any. Such objections are required to be given within a period of thirty days from the date of issue of the letter of intimation.
6. Striking off / Removal of the name of the company: After expiry of thirty days from the date of publication of the notice in the newspaper, official gazette and intimation to regulatory authorities and unless cause to the contrary is shown by the company, if there are no objections received within thirty days from the general public or respective authority, the ROC can proceed to strike off or remove the name of the company from the Register of companies.
7. Provision for realisation of amount due: The ROC before passing an order for Striking off / Removal of the name of the company should satisfy 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. Registrar can obtain necessary undertakings from the director or other persons in charge of the management of the company.
8. Notice of dissolution of the company: After the expiry of the time mentioned in the notice, the ROC can strike off the name of the company from the Register. The notice of striking off the name of the company from the register of companies and its dissolution should be published in the Official Gazette in Form STK 7 and the same should also be placed on the official website of the Ministry of Corporate Affairs. The company shall stand dissolved on the publication of this notice in the Official Gazette

Procedure of striking off of the name of the company by way of an application to ROC:

The board of directors of the company shall follow the following procedure for removal of name of the company from the register of ROC

(i) Call and hold Board Meeting to pass Board resolution for the purpose of striking off of the name of the company from the register of the ROC subject to the approval of the shareholders of the company and to authorize any director to file an application, fixing date, date, time and venue for the Extra Ordinary General Meeting of the shareholder.

(ii) After passing of Board resolution, if there is any liability in the company, the company will set off / pay all liabilities.

(iii) Every director of the company should sign and execute indemnity bond in Form STK 3 and Affidavit in Form STK 4 which should be duly notarized. In case director is a foreign national or non-resident Indian, the documents should be notarized or apostilled or consularised.

(iv) Company should get the statement of accounts prepared showing the assets and liabilities of the company made up to a day, not more than thirty days before the date of application. Such a statement should be certified by a Chartered Accountant;

(v) General Meeting should be held on the day, date, time and venue as fixed earlier for passing of the special resolution. Resolution for purpose of striking off of the name of the company from the register of the ROC should be passed by the shareholders as a special resolution or consent of seventy-five percent members in terms of paid-up share capital should be obtained.

(vi) Within thirty days from the date of the passing of the special resolution in the General Meeting or after obtaining consent, company should file MGT-14. 20 n Strike Off and Restoration of Name of the Company and LLP

(vii) Approval of concerned authorities is required in case of a company regulated by any other authority.

(viii) Thereafter, an application for removal of the name of the company shall be made in Form STK-2 along with fee Rs.5,000/-. Following below mentioned documents will be attached in the Form STK-2. Rule 4(1)

Attachment – STK-2: Rule 4(3)

(a) NOC from the appropriate concerned authority, if required (RBI, IRDA, Housing Finance, SEBI etc.) Rule 4(2)

(b) 1Indemnity Bond from Every Director in Form STK-3

(c) Statement of Accounts certified by CA. Statement should not be older than 30 days from the date of application.

(d) An Affidavit from every Director in Form STK-4

(e) CTC of Special Resolution duly signed by each Director

(f) Statement regarding pending litigations, if any, involving Company. (Better to give in affidavit format)

(ix) E-Form STK-2 shall be signed by authorized director.

(x) E-Form STK-2 shall be certified by Company secretary in whole time practice or Chartered Accountant in whole time practice or Cost Accountant in whole time practice.

(xi) Public notice by ROC: After filing application for strike off by the company, the ROC shall publish a public notice in Form STK-6 inviting objections to the proposed strike off, if any. The notice will also be published for information of the general public by following ways:

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

(b) published in the Official Gazette;

(c) Published in in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated.

(xii) Intimation to regulatory authorities: Intimation about the proposed action of removal or striking off the names of company should be sent to the Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over such a company.

(xiii) Striking off / Removal of the name of the company: After thirty days from the date of publication of the notice in the newspaper, official gazette and intimation to regulatory authorities and unless cause to the contrary is shown by the company, if there are no objections received within thirty days from the general public or respective authority, the ROC can proceed to strike off or remove the name of the company from the Register of companies.

(xiv) Provision for realisation of amount due: The ROC before passing an order for striking off / Removal of the name of the company should satisfy that the 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. Registrar can obtain necessary undertakings from the director or other persons in charge of the management of the company. The assets of the company should be

(If the person is foreign national or non-resident Indian, the indemnity bond, and declaration shall be notarized or apostillised or consularised.)

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.

(xv) Notice of dissolution of the company: After the expiry of the time mentioned in the notice, the ROC can strike off the name of the company from the Register. The notice of striking off the name of the company from the register of companies and its dissolution should be published in the Official Gazette in Form STK 7 and the same should also be placed on the official website of the Ministry of Corporate Affairs. The company shall stand dissolved on the publication of this notice in the Official Gazette.

List of STK forms

Restoration of the company

Registrar of Companies can suo motu after issuing the notices under section 248(1) strike of the name of the company. In such a case it may happen that the name of the company may be struck off even though the company is active company but due to the non-filing of reply, the ROC has removed the name of the company from the Register. In such a case the directors of such a company have no option but to approach NCLT by making an appeal for the restoration of the name of the company in the Register of companies maintained by the ROC. Legal provisions related to restoration of name of the struck off companies are given in Section 248 to 252 of the Act read with Rule 87A of the NCLT (Amendment) Rules, 2017 and the Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016.

Appeal to NCLT for restoration of the name of the company

The ROC may, within a period of three years from the date of passing of the order dissolving the company under section 248, file an application before the Tribunal seeking restoration of name of such company if it is satisfied  20 n Strike Off and Restoration of Name of the Company and LLP.

that that the name of the company has been struck off from the register of companies either inadvertently or on the basis of incorrect information furnished by the company or its directors.

Application to NCLT for restoration of the name of the company by Company or any member or creditor or workmen:

The Tribunal, on an application made by the company, member, creditor or workman before the expiry of 20 years from the publication in the Official Gazette of the notice of dissolution of the company, if satisfied that:

(a) the company was, at the time of its name being struck off, carrying on business or in operation; or

(b) otherwise it is just that the name of the company be restored to the register of companies,

may order the name of the company to be restored to the register of companies. Further, the Tribunal may also pass an order and give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off from the register of companies.

Procedure for making an appeal /application to NCLT:

1. An appeal or application is to be filed before Hon’ble bench of NCLT where the registered office of the company is situated, in form NCLT 9. Such an application or appeal should be accompanied by various documents proving that the company is active company and that the name of the company should be restored in the Register of companies and a Demand draft evidencing payments of application fees of Rs.1,000/- should also be annexed to the application or appeal.

Annexure B of NCLT Rules, 2016 provide the list of documents required to be filed with NCLT while filing application in different sections. The said Annexure not providing any separate list of documents for filing of application with NCLT u/s 252 .Therefore, as per Point NO. 13 of Annexure B“Wherever no document is prescribed to be attached with the application or petition, documents as mentioned below may be attached, as applicable.”

(a) Document and/or other evidence in support of the statement made in the application orappeal or petition, as are reasonably open to the petitioner(s);

(b) Affidavit verifying the petition;

(c) Evidence regarding payment of fee of INR 2,500/- (Rupees Twenty Five Hundred Only)

(d) Memorandum of appearance with copy of the Board Resolution or the vakalatnama, as the case may be;

(e) Three copies of the petition; and

(f) Any other documents in support of the case.

2. A copy of the application shall be served on the Registrar of Companies and on such other persons as the Tribunal may direct, not less than 14 days before the date fixed for hearing of the application..
3. ROC may send his report to NCLT as to his comments and views on the restoration of the name of the company.
4. NCLT after hearing all the parties, will pass an appropriate order for restoration of the name of the company in the register of company maintained by ROC.
5. The company is required to file E-form INC-28 to the ROC within 30 days from the date of order of NCLT for the order passed by the NCLT.
6. Thereafter, the Company is required to complete the pending filing of financial statements and annual returns with the ROC and other documents as may be directed by the NCLT.

STRIKING OF THE NAME OF THE LIMITED LIABILITY PARTNERSHIP (LLP) FROM THE REGISTER OF LIMITED LIABILITY PARTNERSHIPS

Similar to the provision of section 248 to 252 of the Companies Act, 2013 read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 dealing with the provision for Removal of Names of Companies from the Register of Companies, Section 75 of the Limited Liability Partnership Act, 2008 read with Rule 37 deals with the provision for the striking off the name of the Limited Liability Partnership from the register of limited liability partnerships.

The Ministry of Corporate Affairs has recently amended Limited Liability Partnership Rules, 2009 by introducing the Limited Liability Partnership (Amendment) Rules, 2017 with effect from 20th May, 2017. With this amendment, LLP Form 24 has been introduced by the MCA to allow easily close a LLP by making an application to the Registrar for striking off name of LLP.

Legal Framework dealing with the provision of Striking off:

In case of an existing LLP which is not carrying on any business or operation for a period of one year or more can make an application in Form 24 to the Registrar, with the consent of all partners of the limited liability partnership for striking off its name from the register. Similarly, where the Registrar has reasonable cause to believe that a limited liability partnership is not carrying on business or its operation, in accordance with the provisions of this Act for a period of two years or more, the name of limited liability partnership may be struck off from the register of limited liability partnerships by ROC by taking suo motu action for striking off the name of the LLP. However before striking off the name of the LLP, the registrar shall give reasonable opportunity of being heard.

STRIKE OFF BY ROC SUO MOTU

Subject to the provisions of section 75 of the Limited Liability Partnership Act, 2008 read with Rule 37 of Limited Liability Partnership Rules, 2009 as amended from time to time, the Registrar can suo motu remove the name of the LLP from the Register in case a limited liability partnership is not carrying on any business or operation for a period of two years or more and the Registrar has reasonable cause to believe the same. In such a case the Registrar can suo motu take the action for striking off the name of the LLP.

Procedure to be followed by ROC for striking of the name of the LLP on suo motu basis:

STRIKE OFF BY WAY OF FILING AN APPLICATION BY THE LLP

Subject to the provision of section 75 of the Limited Liability Partnership Act, 2008 read with Rule 37, where a limited liability partnership is not carrying on any business or operation for a period of one year, such a LLP can make an application for purpose of suo motu striking off the name of the LLP.

Procedure of striking off of the name of the LLP by way of an application to ROC:

1. Calling and holding the meeting of the partners of LLP making an application for the striking off of the name of the LLP and authorizing the partner to make the application to Registrar. The consent of all partners of the limited liability partnership should be obtained before making an application to the Registrar for striking off of the name of the LLP.
2. All the pending filing including the Annual Filing of form 8 and 11 up to the end of the financial year in which the limited liability partnership ceased to carry on its business or commercial operations should be completed before making of an application for striking off of the name of the LLP.
3. Approval of concerned authorities should be obtained in case of a LLP regulated by any Special Law.
4. All the Designated Partners of the LLP must execute an affidavit, either jointly or severally, that the Limited Liability Partnership ceased to carry on commercial activity from (Date) or has not commenced business and also declare that the LLP has no liabilities and indemnify any liability that may arise even after striking off its name from the Register. The liability of the Partners would not be extinguished even after closure of a LLP while using Form LLP 24.
5. Thereafter, an application for striking of the name of the LLP shall be made in Form 24 along with fees as prescribed and along with following documents:

(a) a statement of account disclosing nil assets and nil liabilities, certified by a Chartered Accountant in practice made up to a date not earlier than thirty days of the date of filing of Form 24.

(b) Copy of acknowledgement of latest Income tax return- Self Explanatory

(c) copy of the initial limited liability partnership agreement, if entered into and not filed, along with changes thereof

(d) an affidavit signed by the designated partners, either jointly or severally, to the effect,—

(i) that the Limited Liability Partnership has not commenced business or where it commenced business, it ceased to carry on such business from ………….(dd/mm/yyyy);

(ii) that the limited liability partnership has no liabilities and indemnifying any liability that may arise even after striking off its name from the Register;

(iii) that the Limited Liability Partnership has not opened any Bank Account and where it had opened, the said bank account has since been closed together with certificate(s) or statement from the respective bank demonstrating closure of Bank Account;

(iv) that the Limited Liability Partnership has not filed any Income-tax return where it has not carried on any business since its incorporation, if applicable.

(e) Copy of Detailed Application- Mention full details of LLP plus reasons for closure

(f) Copy of Authority to Make the Application- Duly signed by all the Partners

6. Publication of Notice: Notice shall be placed on the website of the Ministry of Corporate Affairs for the information of the general public for the period of one month.
7. Striking off of the name of the LLP: After the expiry of the time limit of one month and unless cause to the contrary is shown by the LLP, if there are no objections received, the Registrar can proceed to strike off the name of the LLP from the Register of partnership.
8. Provision for realisation of amount due: The Registrar before passing an order for striking off of the name of the LLP should satisfy that the sufficient provision has been made for the realization of all amount due to the limited liability partnership and for the payment or discharge of its liabilities and obligations by the limited liability partnership within a reasonable time. Registrar can obtain necessary undertakings from the designated partner or partner or other persons in charge of the management of the limited liability partnership.
9. Notice of dissolution of the LLP: After the expiry of the time mentioned in the notice, the Registrar can strike off the name of the company LLP from the Register. The notice of striking off the name of the LLP from the register and its dissolution should be published in the Official Gazette. The company shall stand dissolved on the publication of this notice in the Official Gazette.
10. Striking off of the name of the LLP: On processing the application, if found acceptable, the concerned Registrar will strike off the name of the LLP from the Register of the Partnership.

Liabilities of Partners to be continue after Striking Off

The liability of all designated partners of the limited liability partnership would continue and may be enforced as if the limited liability partnership had not been dissolved.

Restoration of the LLP

Registrar can suo motu after issuing the notices under section 75 strike off the name of LLP. In such a case it may happen that the name of the LLP may be struck off even though the LLP is active, but the Registrar  20 n Strike Off and Restoration of Name of the Company and LLP removed the name of the LLP from the Register. In such a case the partners of such a LLP have no option but to approach NCLT by making an application for the restoration of the name of the LLP in the Register of Partnership maintained by the Register. Legal provisions related to restoration of name of the struck off LLP are given in Rule 37 of Limited Liability Partnership Rules, 2009 as amended from time to time.

Application By LLP

By Partners of LLP

By Creditor of LLP

If an LLP, or any partner or creditor thereof, feels aggrieved by the LLP having been struck off the register, the Tribunal, on an application made by the

• LLP
• Partner or
• Creditor

before the expiry of five years from the publication in the Official Gazette of the notice aforesaid, may, if satisfied that the LLP was, at the time of the striking off, carrying on business or in operation or otherwise that it is just that the LLP be restored to the register, order the name of the LLP to be restored to the register; and the Tribunal may, by order, give such directions and make such provisions as seem just for placing the LLP and all other partners in the same position as nearly as may be as if the name of the LLP had not been struck off.

Procedure for making an application to NCLT:

1. An application is to be filed before Hon’ble bench of NCLT where the registered office of the LLP is situated, in form NCLT 9. Such an application should be accompanied by various documents proving that the LLP is active LLP and that the name of the LLP should be restored in the Register.
2. A copy of application or appeal is required to be send to Registrar concerned.
3. Registrar may send his report to NCLT as to his comments and views on the restoration of the name of the LLP
4. NCLT after hearing all the parties shall pass an appropriate for restoration of the name of the LLP in the register.