Striking off a company’s name is an alternative method to formally close its operations. The Registrar of Companies (ROC) may initiate this process by issuing a notice to remove a company from the Register of Companies under specific circumstances. Companies themselves may also file a request to the ROC for voluntary strike-off.
Sections 248 to 252 of the Companies Act, 2013, outline the procedures for removing a company’s name, either through ROC action or by voluntary application. This process is typically used to shut down inactive companies efficiently. It is one of the most straightforward methods to dissolve a business.
Voluntary Strike Off by a Company
A company can request to be struck off by passing a special resolution or obtaining approval from 75% of its shareholders (based on paid-up capital). This application can be made to the ROC after settling all liabilities and under any of the following conditions:
- The company has not started business within one year from the date of incorporation.
- The company has remained inactive for the past two financial years and has not applied for dormant status under Section 455 of the Act.
Upon receiving such an application, the ROC will publish a public notice as per the procedure laid out in the Act.
Restrictions on Voluntary Strike Off Applications
A company is not permitted to apply for strike-off if, within the last three months, it has:
- Sold or transferred property or rights for value, immediately before stopping business, in the ordinary course of trade.
- Changed its registered office from one state to another or altered its name.
- Submitted an application to the National Company Law Tribunal (NCLT) for a compromise or arrangement, which is still pending.
- Undertaken any activities other than those necessary to file for strike-off, comply with statutory obligations, or complete winding-up tasks.
- Been subject to winding-up under Chapter XX of the Act, whether voluntarily or by order of the Tribunal.
If a company submits a strike-off request despite violating any of the above conditions, it may face a penalty of up to ₹1 lakh.
Striking Off a Company Name by the Registrar of Companies (ROC)
If the Registrar of Companies (ROC) has sufficient grounds to believe that:
- A company has failed to commence its business within one year from the date of incorporation, or
- The company has remained inactive and not carried out any business for the last two financial years, and has not applied for dormant status under Section 455 of the Companies Act,
the ROC may issue a notice to the company and its directors, stating the intention to remove the company’s name from the Register of Companies. The notice will also request the company to furnish its representation along with relevant documents within 30 days from the date of issue.
Procedure for Removal of Company Name
Whether the company initiates the process of striking off or the ROC does so, a notice must be published in the Official Gazette to inform the public. If the company does not present a valid objection within the time frame specified in the notice, the ROC will proceed to strike off the name from the Register of Companies.
Following this, the ROC will issue a dissolution notice, also published in the Official Gazette. Upon publication, the company will be considered dissolved.
Before issuing an official order to strike off and dissolve the company, the ROC ensures that adequate arrangements are made for settling the company’s liabilities, recovering outstanding dues, and meeting any company obligations within a reasonable timeframe.
In addition, the ROC will obtain necessary undertakings from the managing director, director, or other responsible persons in charge of company operations.
Even after the company’s name has been removed from the Register, its assets remain available to meet any existing obligations or liabilities.
Also, the liability of directors, managers, officers with managerial responsibilities, and members continues as though the company had not been dissolved. These liabilities remain enforceable under law.
Impact of Dissolution Notification
Once a company is dissolved under Section 248 and the notification is published in the Official Gazette, the company ceases to function from the date specified in that notification.
The Certificate of Incorporation is considered cancelled from that date. However, for the purpose of clearing liabilities, collecting dues, and fulfilling obligations, the certificate continues to be valid to that extent.
Appealing to the Tribunal Against Company Dissolution
Any person who is dissatisfied with the order of the Registrar of Companies (ROC) stating that a company has been dissolved under Section 248 of the Companies Act may file an appeal before the Tribunal. This appeal must be filed within a three-year period from the date of the ROC’s dissolution order.
If the Tribunal finds that the removal of the company’s name was unjustified—due to the absence of valid grounds as specified by the ROC—it has the authority to order the restoration of the company’s name to the Register of Companies. Before issuing such an order, the Tribunal must provide a fair opportunity for all parties involved, including the ROC, the affected company, and any other concerned individuals, to present their views.
Once the Tribunal passes the order for restoration, the company is required to file a copy of that order with the ROC within thirty days. Upon receiving the order, the ROC will reinstate the company’s name in the Register of Companies and issue a new Certificate of Incorporation.
Moreover, if the ROC identifies that the company name was struck off due to misinformation provided by the company or its directors—or was removed by mistake—it may also approach the Tribunal for restoration. In such cases, the ROC must file the application for restoration within three years from the date of the original dissolution order.
Frequently Asked Questions (FAQs)
Q1. Who can appeal against the striking off of a company?
Any aggrieved individual or party, such as shareholders, creditors, or directors, can file an appeal with the Tribunal against the dissolution of a company under Section 248.
Q2. What is the time limit for filing an appeal?
The appeal must be filed within three years from the date of the order passed by the ROC striking off the company.
Q3. What happens after the Tribunal passes the restoration order?
The company must file the Tribunal’s order with the ROC within 30 days. Once submitted, the ROC will restore the company’s name in the Register of Companies and issue a new Certificate of Incorporation.
Q4. Can the ROC itself seek restoration of a company name?
Yes, the ROC can file an application before the Tribunal for restoration if it believes that the company was struck off based on incorrect information or due to an oversight.
Q5. Will the company resume its legal existence after restoration?
Yes, once restored, the company is considered to have continued in existence as if its name had never been struck off the Register.
