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Strike-Off of a Company: Complete Guide

The strike-off process is a simplified and cost-effective method to close a company that is not operational or has no plans to continue business. Once a company is struck off, it is removed from the Register of Companies maintained by the Registrar of Companies (ROC), making it legally dissolved.
Here’s a detailed guide to the strike-off process for companies:

When can a Company be Struck Off?

A company can apply for strike-off if:

  • • It has not commenced business within a year of its incorporation.
  • • It has not carried on any business or operations for two consecutive financial years.
  • • It has no outstanding liabilities or legal obligations.

Conditions for Strike-Off of a Company:

Before applying for strike-off, the company must meet the following conditions:

  • • The company must not have any ongoing business operations.
  • • All shareholders, directors, and creditors must agree to the closure.
  • • The company must have settled all debts, liabilities, and statutory obligations.
  • • It must not be under any inspection, investigation, or prosecution.

Process for Strike-Off of LLP:

The process to strike off a company is as follows:

Step Details
Step 1:The process to strike off a company is as follows: The board of directors must pass a resolution for strike-off, approving the closure of the company.
Step 2: File Application (Form STK-2) The company must file Form STK-2 with the ROC, along with necessary documents, for the strike-off.
Step 3: Submit Necessary Documents Documents such as an affidavit, indemnity bond, statement of accounts, and shareholders' consent must be submitted.
Step 4: Public Notice The ROC will issue a public notice inviting objections from any stakeholders within 30 days of the application.
Step 5: Strike-Off Confirmation After verifying the application and no objections are raised, the ROC will strike off the company from the register.

Documents Required for Strike-Off of a Company:

The following documents are required for the strike-off process:

  • 1. Board Resolution: A copy of the board resolution approving the closure.
  • 2. Affidavit: A statement from the directors declaring that the company has no liabilities.
  • 3. Indemnity Bond: Signed by the directors, ensuring that they will be liable for any future claims.
  • 4. Consent of Shareholders: Approval from all shareholders agreeing to strike off the company.
  • 5. Statement of Accounts: A statement showing the company’s financial position, prepared up to the date of application.
  • 6. No Objection Certificates (NOCs): NOCs from creditors, if applicable.

Timeline for Strike-Off of a Company:

The strike-off process usually takes around 6 to 12 months depending on the completeness of the documentation and verification by the ROC.

Voluntary Strike-Off vs. Compulsory Strike-Off:

  • Voluntary Strike-Off: This is initiated by the company itself, typically because it is no longer in business and has no liabilities.
  • Compulsory Strike-Off: This is initiated by the Registrar of Companies (ROC) when the company has not filed its financial statements or annual returns for two consecutive financial years and has not responded to ROC notices.

Key Points to Note:

  • • Once the company is struck off, it ceases to exist and cannot engage in any further business activities.
  • • Any pending liabilities must be settled before applying for a strike-off.
  • • If the company is later found to have outstanding liabilities or legal issues, the directors may be held personally liable.

Penalties for Non-Compliance:

If a company continues to operate without meeting compliance requirements and without applying for strike-off, the Registrar of Companies can take the following actions:

  • Impose Penalties: Penalties for non-compliance can range from ₹10,000 to ₹1,00,000 or more.
  • Compulsory Strike-Off: The ROC may initiate a compulsory strike-off if a company fails to file annual returns for two consecutive years.
  • Director Disqualification: Directors may be disqualified from serving on the board of any other company for five years.

Conclusion:

The strike-off process is an efficient way to close down a company that is no longer operational or does not intend to continue business. It ensures that the company is legally dissolved and removed from the ROC's records, protecting the directors from future liabilities. It is essential to follow the proper procedures and submit all required documentation to avoid complications.

For assistance with the strike-off process or any company-related compliance, contact Prahar Filing & Advisory for expert guidance.

Contact

DumDum, Kolkata,

PIN:- 700028

92295 82295

praharfiling@gmail.com

Request a Callback

As a fellow small business owner, we know the fulfillment that an a comes from running your own business contact to Financy.

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