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Strike off Company

Striking off is a technique that can be used instead of winding up a business. The Companies Act allows for two types of strike-offs: strike-off by the ROC (Registrar of Companies) under Section 248(1) and strike-off by a company on its own accord under Section 248(2) of the Companies Act, 2013.

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How to Start a Private Limited Company Registration

What is Strike off Company

Striking off is a technique that can be used instead of winding up a business. The Companies Act allows for two types of strike-offs: strike-off by the ROC (Registrar of Companies) under Section 248(1) and strike-off by a company on its own accord under Section 248(2) of the Companies Act, 2013.
Checklist for Starting a Strike Off

Companies can pursue a strike off by following the processes outlined below:
Meetings of the Board of Directors
For key corporate enactments, the adoption of Board Resolutions has been compulsory. A corporation could approve a resolution for the purpose of this provision during a Board Meeting, after which any of its directors would be designated to file a strike-off application with the Registrar of Companies (ROC).
Liabilities are being closed off
A company that wants to strike must have all of its liabilities closed off.

Meeting of the General Assembly

The firm should conduct a general meeting of shareholders and enact a resolution to remove the Company's name from the register. According to the Company's paid-up share capital, this resolution must be supported by 75% of its members. Following this stage, the Company would be required to file E-form MGT-14 within thirty days.
Note that if the corporation is regulated by another authority, that authority's consent is required for this reason.

Application and Document Submission

Companies that want to be struck off must file an application with the Registrar of Companies (ROC), which must include the following documents:
    • All directors have signed an indemnity bond that has been notarized (in Form STK 3).
    • A statement of liabilities lists all of the company's assets and obligations (certified by a Chartered Accountant).
    • An affidavit in STK 4 format (by all directors of the company).
    • Special Resolution CTC (duly signed by every director of the company).
    • A statement of any outstanding legal proceedings involving the company.

What documents are necessary for striking off company?

    • A verified copy of the board resolution authorizing the filing of this application.
    • Digital Signatures that Have Been Registered For signing the form, a director's certificate is required.
    • The Company's Memorandum of Association.
    • The Company's Articles of Association.
    • PAN card, Aadhar card, or voter ID card as proof of identity.
    • Proof of residency (passport, driver's license, or voter ID card).
    • A chartered accountant must certify the statement of account.
    • Notarized affidavit in Form STK-4 and indemnity bond in Form STK-3.
    • An authentic copy of the special resolution has been certified.

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What is the procedure for striking a firm if it is voluntarily struck off?

The method is fairly simple and is carried out in the following order: -
1. Call a board meeting in compliance with the Companies Act 2013 and the Secretarial Standards.
2. Call a meeting of the Board of Directors to pass the following resolutions:
    • To make a note of the balance sheet.
    • To authorize directors to sign the Form STK-3 and Form STK-4 Indemnity Bond and Affidavits.
    • To authorize a director to digitally sign the e-Form STK-2 application.
    • To set the date, time, and location of the general meeting.
    • To approve the general meeting notice.
3. Prepare draught minutes of the board meeting and distribute them to all directors for comment within fifteen days after the meeting's end, via hand/speed post/registered post/courier/e-mail or any other recognized electronic methods.
4. Convene a general meeting to pass a special resolution authorizing the Registrar of Companies to file a name-striking application.
5. Within thirty days following the special resolution's passage, file e-Form MGT-14 with a copy of the special resolution at the Registrar of Companies' office.
Prepare an Indemnity Bond (Form STK-3) and Affidavits (Form STK-4)
6.Prepare a statement of accounts and have a chartered accountant certify it.
7. Within thirty days of the date of the statement of accounts, submit e-Form STK-2 to the ROC.
8. After receiving an application, the Registrar shall publish a notice in Form STK-6 of the same inviting objections, if any.
What Happens If You Strike Off But You Still Have Debts?

HMRC is clear that a firm can't be struck off if it owes money. Creditors are likely to protest to a strike off, preventing the operation from being completed until the issue is resolved.
Directors may not be aware of which creditors have raised objections, and Companies House will not reveal this information. If HMRC has not been contacted and has not agreed to this, they are the most likely to object.
Companies House emphasizes that striking off should not be considered a low-cost alternative to insolvent liquidation. The company strike off procedure implies that the directors or accountants followed the correct procedure, which is to deliver the DS01 form to all business creditors prior to dissolution, informing them of the intention to strike off. If this step of the operation is skipped, it could result in major complications in the future.
If a corporation is struck off and the company owes HMRC money, HMRC has no time limits on pursuing money owed to them. Furthermore, fines might be retroactive to the beginning of the tax arrears. If the debt is significant and involves a VAT or PAYE/NIC liability, an insolvency practitioner may conduct a fraud inquiry.
Effects of a Company That Has Been Dissolved
When a company is dissolved under Section 248 of the Act and a notice is published in the Official Gazette, the company ceases to exist on the date specified in the notice.
The ROC's Certificate of Incorporation will be considered null and void as of the date of dissolution. The Certificate of Incorporation, on the other hand, will be valid for the payment or discharge of corporate liabilities, as well as the realization of amounts owed to the company and the discharge of company obligations.

Non-Qualifying Businesses

The following businesses are exempt from the strike-off provision:
    • Companies that are publicly traded.
    • Non-compliance with listing regulations, listing agreements, or any other statutory laws can result in a company's delisting.
    • Companies that have vanished.
    • Companies that have been listed for inspection or investigation - if the directive is being followed/pending/completed, but the prosecutions related to the inspection or investigation are still ongoing in the courts.
    • Companies that have failed to reply to notices of certain provisions.
    • Companies that have not provided the Act's section 208 follow-up instructions on any report.
    • If the prosecutions under the preceding two clauses are still proceeding in a court of law.
    • Companies that are the subject of a criminal investigation in a court of law.
    • Companies whose application for compounding the offences committed by it or any of its officers in default is pending before the relevant authority.
    • Companies that take any outstanding public deposits.
    • Companies that owe money but haven't paid their bills yet.
    • Companies incorporated under Section 25 or Section 8 of the Companies Act, 1956.

Note on Compulsory Strike off:

It's possible that your firm will be struck off by Companies House for failing to file accounts and ignoring warnings. Companies House is required by the Companies Act 2006 to send two late payment notices to the company address. If these are not followed, they may issue a strike-off notice. This will be published in The Gazette and will be available to the public. Due to non-filing of accounts and failure to respond to warnings, your business can be struck off and will cease to exist, even if it is still operating. If you do not intend to close your business, you must react to a strike off notice. The following are some of the possible outcomes of the strike off notice:
    • Dissolution of your business, even if it is still operating
    • The crown has taken over the company's assets.
    • You may find it difficult to obtain funding from lenders in the future.
    • Disqualification of the director
Frequently asked questions:

    1. What does it signify when a firm is struck off?
The term "strike off" refers to the removal of the Company's name from the Registrar of Companies' Register of Companies.
It's more like a company closure, as the company will cease to exist after being Struck Off and will be unable to execute any operations thereafter.
    2. How long does it take for a firm to be struck off?
A company's official dissolution normally takes at least three months; however the time might vary greatly depending on how complicated the process is. In most cases, however, a firm will cease to exist within three months after receiving a winding-up notice.
    3. Is it possible for a firm that has been struck off to continue to trade?
A firm's name is removed from the company registry when it is struck off, and it is no longer authorized to trade, sell assets, make the payments, or engage in any other business activities. The company's name would be made available for future businesses to utilize.
    4. How can I obtain a form DS01 to dissolve the corporation?
You can fill out the form online at the company's website or download it from their website. Here's where to begin.
Thankfully, filling out the form is a breeze. You'll need to include the following:
    • The company's telephone number.
    • The name of the business; and
    • The signature(s) of the company's officers approving the strike-off.
A majority of the directors should sign the form. Both directors should sign if there are two.
    5. What can be done to keep the company from being deregistered?
Companies House will check with HMRC before striking a company off. If HMRC believes there is or may be tax payable from the firm, they will object to the dissolution and Companies House would reject the application.
So, before submitting a DS01, double-check with HMRC that no tax is due or may be required.
    6. Is it possible to reinstate a firm that has been stricken from the company register?
Yes, most of the time. However, it is not always an easy (or inexpensive) process, and a court order may be required.
    7. What is the statute of limitations for corporations that have been struck off?
In some cases, the statute of limitations is three years. When it comes to workers and the workforce, however, the time limit is 20 years.
    8. Can the ROC issue a strike-off order for failure to file e-forms?
Yes, the ROC can issue an order for non-filing of e-forms like as MGT-7 and AOC-4. Such an order can only be issued if the filing requirements have not been met within the prior two years.

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