On certain condition, a company name could be removed from the MCA database or even struck-off by the Companies Registrar. Let us take a quick glance at the procedure for striking or removal of company name from MCA database.
Removal by the registrar:
The Companies Registrar can strike-off or remove a company name if he or she has a reasonable cause to think of:
- An organization fails to start its business within a year of its incorporation
- The memorandum subscribers have not reimbursed the subscription within 180-days from the company’s incorporation and a declaration regarding that effect has not been filed
- An organization has not yet been carrying on any operation or business for a time period of about two years immediately prior to the financial years without making an application for the getting the status of a dormant company
As far as the notice is concerned, the Registrar would request the organization and its directors for sending their representations together with the copies of relevant documents. While obtaining the notice, the organization by a special consent or resolution of 75% of shareholders based on paid-up share capital could file a reason for the purpose of removing the company name from MCA database. Once the application is received, the Registrar would cause a notice to be issued.
The notice issued for removal would be officially published in the Gazette for the knowledge of general public. During the expiry of time given in the notice, the Company Registrar will remove the organization name from MCA database followed by publishing a notice in the Official Gazette. Once the notice gets published in the Gazette officially, the company will stand dissolved. Even though the company will be dissolved as above mentioned, the tribunal would still have power for winding up an organization whose name was removed from the companies register.
Restriction on Removal application:
An application for striking-off the company’s name would not be made in the preceding three months if the company has:
- Altered its name or even moved its registered office address from one state to another in India
- Made a disposal of the value of property or rights being held by it for gain disposal at the time of actual course of trading or even carrying on the business
- Make an application to tribunal for getting approval of an arrangement or compromise without the matter to be concluded
- Organization has been wound up under the Chapter XX of Companies Act, 2013 in case voluntarily or even by the Tribunal
If the organization files an application for the removal of its name in violation, then it would be punishable by the fine amount of around Rs. 1 lakh rupees.
Removal of company’s name from MCA database on the suo-moto basis:
Removal of company’s name from the register of companies on suo-moto basis is possible where the Registrar has reason to believe that—
(a) the company has failed in commencing its business within the first year of its incorporation; or
(b) the company isn’t carrying on any operation or business for a period of 2 immediately preceding FY (financial years) and has applied within that period for acquiring the dormant company status under section 455,
The registrar 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.”
The Registrar may remove the company’s name from the companies register in terms of the Act of Section 248:
Provided that the following categories of the organization should not be striking-off from the company’s register under the rule 4, namely:
- Listed companies
- Companies, which have been delisted because of non-compliance of listing agreement or listing regulations or other statutory laws
- Companies, where investigation or inspection has been ordered and carried out or actions, which were completed yet prosecutions arising out of such investigation or inspection pending in the court
- Vanishing companies
- Companies whose compounding application is pending before the competent authority to compound the offenses being committed by the organization or its officers in default
- Companies against that any prosecution of an offense is found to be pending in any court
- Companies where notifications under Companies Act 1956, section 234 or section 207 or section 206 of the act is issued by the inspector or registrar. A Pending report under section 208 is submitted or even following the instructions regarding any prosecution emerging out of such scrutiny or inquiry if any.
- Companies that have accepted deposits from public that are outstanding
- Companies registered under Section 25 of the Old Companies Act, or Section 8 of the Companies Act 2013.
- Companies having charges that are pending for the satisfaction
Application for the removal of Company’s name: An application for the removal of company’s name under sub-section
Section 248 should be made in the Form STK-2 together with the fee of INR 5000. Every application under the sub-rule should accompany a no-objection certificate from the appropriate Regulatory Authority related to the following companies, namely:
- Organizations that have to conduct or conducted investment and non-banking financial activities as given in the Act of Reserve Bank of India, 1935 or Rules & regulations thereunder
- Insurance companies as given in the insurance act, 1938 or rules & regulations thereunder
- Housing finance organizations as given in the Housing Finance companies directions 2010 stated in the act of national housing bank, 1987
- Companies in the operation of capital market intermediaries as given in the Securities & exchange board of India Act, 1992
- Asset management companies as given in the Securities & Exchange Board of India Act, 1992
- Any other company that seems to be regulated under any laws for the time in operation
The manner of Filing application:
- The application in the Form STK 2 should be signed by the director who is duly authorized by board on their behalf
- If the concerned director won’t have a digital signature certificate, then the physical copy of that form, which is duly filled, shall be manually signed by the director. It may be attached to the Form STK 2 whilst uploading the form.
The Form STK 2 will be verified by the chartered account or company secretary or even cost accountant in the whole-time practice.