strike off (easy exit) way to shut down a company (kn p partners)
TRANSCRIPT
Presentation on:
STRIKE OFF (EASY EXIT)
WAY TO SHUT DOWN A COMPANY
Dated: 18th February, 2017
Prepared by:
Kn P Partners
Visit us at knppartners.com
We have observed that many start-ups and small companies face various challenges such
as shortage of funds, poor marketing, lack of direction, planning and over staffing etc.
Due to these challenges, these companies find it difficult to operate and run business.
Thus, these struggling companies have to shut down their operations. However, shutting
down a company is not a easy task. It involves a long process, cost and time.
To help and educate these companies, we have tried to explain in this presentation the
statutory provisions relating to closure of a company though strike off.
Should you have queries regarding the information contained in this presentation, please
feel free to contact us. Our contact details are given at the end of this presentation.
We hope you shall find this presentation informative and useful. We shall be very happy
to hear your valuables views/comments on this presentation.
This presentation is for knowledge purpose only and not for any other purpose. We are not liable for any loss/obligation which may arise due to this PPT
EXECUTIVE SUMMARY
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4
Voluntary
Winding up
Compulsory
Winding up
By Registrar of
Companies At the request of a
company
WAYS TO SHUT DOWN A COMPANY
Following are the ways to close a company
WAYS TO SHUT DOWN A COMPANY
STRIKE - OFF (Name of the company struck off from
the register of companies)
WINDING – UP (Assets of the company are first disposed
than company is closed)
Done in two ways Done in two ways
Strike off and Winding up - both can be done in two ways. The same are mentioned above. Separate procedures are
laid out in the Companies Act. 2013 and rules made thereunder for each process.
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STRIKE OFF
Strike off is a process of REMOVING the name of the incorporated or registered
company from the register of companies. The existence of a company comes to an end
once the name of the company is removed from the register of companies.
The Companies Act, 2013 and rules made thereunder contain provisions such as
eligibility for strike off, procedure to strike-off and consequences etc. regarding strike-
off.
Chapter
18 Section
248 to 252
The
Companies
Act, 2013
ELIGIBILITY FOR STRIKE-OFF
Company is not carrying on any
operations for continuous
2 years
Company fails to commence its
business within 1 year from
the date of registration
OR
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By Registrar of Companies
(RoC) on own motion
Section – 248 (1) of the
Companies Act, 2013 deals
with it
At the REQUEST of the
company
Section – 248(2) of the
Companies Act, 2013 deals
with it
TWO WAYS OF STRIKE OFF (Name of the company struck off from the register of companies)
PROCESS OF STRIKE OFF (Name of the company struck off from the register of companies)
STRIKE OFF
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STRIKE OFF
PROCESS OF STRIKE OFF (Name of the company struck off from the register of companies)
By Registrar of Companies on OWN MOTION (Section – 248 (1))
Registrar of Companies (RoC) may Strike off a company on its own motion as per
Section 248 (1) of the Companies Act, 2013.
A company which falls under the eligibility criteria of Strike off (as mentioned above)
may be struck off by RoC if the company has not applied for the status of a
DORMANT COMPANY.
Significant Accounting Transaction means, any
transaction other than-
Payment of fees by a company to the
Registrar
Payment made by it to fulfil the requirements
of this Act or any other law
Allotment of shares to fulfil the requirements
of the Companies Act, 2013 and rules made
thereunder
Payment for maintenance of its office and
records
DORMANT
COMPANY
Which is formed for a
future project
Which is formed to hold
assets/Intellectual property
Which has no significant
accounting transactions
Application is
made to RoC for
this status
OR
OR
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STRIKE OFF
PROCESS OF STRIKE OFF (Name of the company struck off from the register of companies)
By Registrar of Companies on own motion (Section – 248 (1))
RoC sends a notice to the Company and the Directors (in prescribed form) of its intention to
remove the name of the Company from the register of companies
Directors shall send representation to RoC within 30 DAYS from the date of receipt of the
notice through Registered/Speed Post
After the expiry of the time mentioned in the notice, RoC may strike off the company unless
cause to the contrary is shown by the company
Notice will be issued (in prescribed form ) by RoC and the same shall be published in official
Gazette and placed on the website of Ministry of Corporate Affairs (MCA: www.mca.gov.in)
to seek objection from public within 30 days from the date of Notice
If no objection is received from public, notice of striking off the name of the company and its
dissolution (in prescribed form) will be published in Official Gazette and Official Website of
MCA
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STRIKE OFF
PROCESS OF STRIKE OFF (Name of the company struck off from the register of companies)
At the REQUEST of a Company (Section – 248(2))
Company may apply to RoC for Strike off the Company in prescribed form along with
requisite Statutory fee
Application form shall be accompanied with:
• Indemnity Bond in prescribed form
• Affidavit in prescribed form
• Copy of Special Resolution
• Statement of Accounts (not more than 30 days older from the date of application and
certified by CA)
• Statement regarding pending litigation(s)
(Aforementioned terms are defined separately in following slides)
In case of following companies, No Objection Certificate (NOC) from regulatory authorities is also required:
• Non-Banking Financial Companies
• Housing Finance Companies
• Insurance Companies
• Asset Management Companies
• Companies engaged in Collective Management Scheme
• Companies in the business of Capital Market Intermediaries
(Aforementioned terms are defined separately in following slides)
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STRIKE OFF
PROCESS OF STRIKE OFF (Name of the company struck off from the register of companies)
At the REQUEST of a Company (Section – 248(2))
Letter of intimation will be issued by RoC to regulatory authorities namely:
Income Tax Authorities
Central Excise Authorities
Service Tax Authorities
Notice will be issued (in prescribed form ) and the same shall be published in
official Gazette and placed on the website of MCA to seek objection from public
within 30 days from the date of the notice
If no objection is received from public, notice of striking off the name of the
company and its dissolution (in prescribed form) will be published in Official
Gazette and Official Website of MCA
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Section 249 of
the Companies
Act, 2013
describes the
cases in which
company cannot
apply for Strike -
off
has
changed
its name
STRIKE OFF
CASES IN WHICH COMPANY CANNOT APPLY FOR STRIKE OFF
has
engaged in
any other
activity
has shifted
registered
office from
one state to
another
has made
disposal for
value of
property
has filed an
application to
Tribunal for
sanctioning of
Compromise
or
Arrangement
Company cannot
apply for Strike
off if any time in
previous 3
months from the
date of making
application the
company
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FOLLOWING CATEGORIES OF THE COMPANIES SHALL NOT BE REMOVED
FROM REGISTER OF COMPANIES
STRIKE OFF
CASES IN WHICH COMPANY CANNOT APPLY FOR STRIKE OFF
Listed Companies
Companies which have
been delisted due to non-
compliance of listing
regulations
Vanishing companies
Companies where
inspection or
investigation is ordered
and such order are yet to
be taken up
Companies against
which any prosecution
for an offence is
pending in any court
Companies whose
application for
compounding is
pending before the
competent authority
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
Companies registered
under section 8 of the
Companies Act, 2013
and rules made
thereunder
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STRIKE OFF
CONSEQUENCE OF STRIKE OFF
As per Section 250 of the Companies Act, 2013, the Company shall cease to operate and
exist after the strike off and the Certificate of Incorporation shall deemed to be
cancelled from the date of the notice.
COMPANY CEASE TO EXIST AFTER STRIKE OFF
FRAUDULENT APPLICATION FOR REMOVAL OF NAME
As per Section 251 of the Companies
Act, 2013, if fraudulent application
is made for removal of name
To evade Company’s liability
To deceive creditors
Company will be liable to person
who has incurred losses
Punishable for fraud u/s 447
(explained in following slide)
Registrar of Companies will
recommend Prosecution
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Section 252
of the
Companies
Act, 2013
deals with it
Person aggrieved by the order of ROC may
file an application to Tribunal
Within 3 years from date of ROC order
If removal of name is not justified, Tribunal will
order restoration of name of company
STRIKE OFF
WAY TO RESTORE COMPANY STRUCK OFF BY ROC ON ITS OWN MOTION
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248
249 252
251
250
Power of
Registrar of
Companies to
Remove Name
of Company
From Register
of Companies
Restrictions
on Making
Application
Under
Section 248
in Certain
Situations
Effect of
Company
Notified as
Dissolved
Fraudulent
Application
for
Removal of
Name
Appeal to
Tribunal
STRIKE OFF
PROVISIONS OF COMPANIES ACT, 2013 RELATED TO STRIKE OFF - SNAPSHOT
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Vanishing companies are companies which raise funds from public through Initial Public Offers (IPOs) and
afterwards fail to satisfy the listing/ filing requirements of the Registrar of Companies (ROC) and the Stock
Exchanges for a continuous period of two (2) years or more and are not found at their registered office address at the
time of inspection which is done by authorities / Stock Exchange.
ESSENTIALS OF VANISHING COMPANIES
• Failed to file company’s return with the Registrar of Companies (ROC) or with the Stock Exchange for a
continuous period of two (2) years or more.
• It is not being maintained at its registered office whose address has been notified with the Registrar of Companies/
Stock Exchange.
• None of its Directors are detectable.
VANISHING COMPANIES
DEFINITIONS
A company which is engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities.
Registration from RBI is required to open an NBFC.
Non-Banking Financial Company (NBFC)
Companies carrying business of financing, acquisition or construction of houses, including acquisition or
development of land in connection therewith.
Housing Finance Company (HFC)
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DEFINITIONS
A company that offers insurance policies to the public, either by selling directly to an individual or through
another source. An insurance company can specialize in one type of insurance, such as life insurance, health
insurance, or offer multiple types of insurance.
Insurance Company
Asset Management Company
Company that invest its clients pooled funds in securities. It provides investors with more diversification and
investing options.
Collective Management Scheme
It’s an investment scheme wherein several individuals come together to pool their money for investing in a particular
asset(s) and for sharing the returns arising from that investment as per the agreement between them
Capital Market Intermediaries
Stock Broker-who buys and sells securities on a stock exchange on behalf of clients.
Merchant Banker- Acts as an intermediary between the lender /investor and the borrower/investee.
Underwriter- Underwrites or buys the shares to complete the agreed % of shares with the company.
Listed Company
Company whose shares are listed and traded on recognised stock exchange.
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INDEMNITY BOND Bond executed to reimburse the holder for any loss occurred
AFFIDAVIT A written statement confirmed by oath for use as evidence in court
SPECIAL RESOLUTION
DEFINATIONS
Resolution passed by a majority of not less than two-third of total no. of votes caste
by all the shareholders
STATEMENT OF PENDING
LITIGATION Any suit filed by or against the company but remain unresolved
SECTION 447
Any person found guilty of fraud, shall be punishable with imprisonment for
a term which shall not be less than six months but which may extend to ten
years and shall also be liable to fine which shall not be less than the
amount involved in the fraud but which may extend to 3 times the amount
involved in the fraud
STATEMENT OF ACCOUNTS Accounts containing assets and liabilities of a company
ABOUT US
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KnP Partners is a corporate consultant firm having operations in several jurisdictions like New Delhi,
Uttar Pradesh, Jharkhand, West Bengal and Madhya Pradesh.
Our objective is to ensure that the business objectives of the clients are met in the most creative and
expeditious manner.
We believe in providing our best services and the most cost effective business solutions to the clients since
we see our growth in our clients’ growth.
THANK YOU
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