Winding Up of Company
Section 248-252 of the Companies Act, 2013 read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 deal with removal of names of companies for winding up of company from the Register of Companies. These provisions for winding up of company have been applicable / effective from 26th December, 2016. Earlier, striking off of name of companies was governed by Section 560 of the Companies Act, 1956 and the procedure was more or the less similar except that earlier board resolution was sufficient but now special resolution is desired. This facility of striking off of name of company for winding up of company is a very cost effective, easy and hassle free way of closing down of company by corporates which are not carrying on any business, due to any reason whatsoever or defunct.
Power of Registrar for winding up
As per Section 248(1): Where the Registrar has reasonable cause to believe that
(a) a company has failed to commence its business within one year of its incorporation or
(b) a company is not carrying on any business or operation for a period of two (2) immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455;
he shall send a notice to the company and all the directors of the company, in form STK¬1, of his intention to remove the name of the company from the register of companies for winding up of company and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty (30) days from the date of the notice.
Suo-motto Application by the Company for striking off
As per Section 248(2): A company may on its own, after extinguishing all its liabilities, after passing a special resolution or with the consent of 75% of the members in terms of paid up share capital, file an application in form STK-2 to the Registrar for removing the name of the Company (winding up of company).
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Process for striking-off name for Winding up of Company
Registrar may send a notice in form STK-1 to any company and all the directors of the company, which has failed to commence business within 1 year of its incorporation or which is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455. The Notice shall specify the intention of the Registrar to remove the name of the Company requesting them to send their representations alongwith copies of relevant documents within a period of 30 days from the date of the Notice.
A Company may on its own motion file an application with the Registrar of Companies in form STK-2, after extinguishing all its liabilities and passing of special resolution or obtaining consent of 75% of the members in terms of paid up share capital, specifying the grounds.
Requirements pertaining to filing of form STK-2:
(a) The application in Form STK 2 shall be accompanied by
i. indemnity bond on a stamp paper duly notarised by every director in Form STK 3 (It can given collectively or individually);
ii. a statement of accounts containing assets and liabilities of the company made up to a day, not more than thirty days before the date of application and certified by a Chartered Accountant;
iii. an affidavit on a stamp paper, duly notarised, in Form STK 4 by every director of the company to be given individually;
iv. a copy of the special resolution duly certified by each of the directors of the company or consent of seventy five per cent of the members of the company in terms of paid up share capital as on the date of application;
v. Copy of Pan Card / Passport of all the directors, duly attested by a Gazetted officer or a wholetime practicing professional viz Chartered Accountant/Company Secretary/Cost Accountant.
vi.Copy of documentary evidence supporting the residence address of all the directors, duly attested by a Gazetted officer or a wholetime practicing professional viz Chartered Accountant/Company Secretary/Cost Accountant.
vii. a statement regarding pending litigations, if any, involving the company.
viii. if the person is a foreign national or non-resident Indian, the indemnity bond, Affidavit and declaration shall be notarised or appostilised or consularised. ix.a no objection certificate from appropriate Regulatory Authority concerned in respect of following companies, namely :
(a) companies which have conducted or conducting non-banking financial and investment activities as referred to in the Reserve Bank of
India Act, 1934 (2 of 1934) or rules and regulations thereunder;
(b) housing finance companies as referred to in the Housing Finance Companies (National Housing Bank) Directions, 2010 issued under the
National Housing Bank Act, 1987 (53 of 1987);
(c) insurance companies as referred to in the Insurance Act, 1938 (4 of 1938) or rules and regulations thereunder;
(d) companies in the business of capital market intermediaries as referred to in the Securities and Exchange Board of India Act, 1992
(15 of 1992) or rules and regulations thereunder;
(e) companies engaged in collective investment schemes as referred to in the Securities and Exchange Board of India Act, 1992 (15 of
1992) or rules and regulations thereunder;
(f) asset management companies as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and
(g) any other company which is regulated under any other law for the time being in force.
(b)The application in Form STK 2 shall be signed by a director duly authorised by the Board in their behalf. Where the director
concerned does not have a registered digital signature certificate, a physical copy of the form duly filled in shall be signed
manually by the director duly authorised in that behalf and shall be attached with the Form STK 2 while uploading the form.
(c)The Form STK 2 shall be certified by a Chartered Accountant in whole time practice or Company Secretary in whole time Practice or
Cost Accountant in whole time practice, as the case may be.
(d) Statutory ROC fees of Rs.5,000/- to be paid alongwith form STK-2.
On receipt of application, the Registrar shall issue a public notice either in form STK-5 or STK-6, as the case may be and it shall be
(i) placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;
(ii) published in the Official Gazette;
(iii) published in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated.
Provided that in case if the application is filed by the Company on its own under sub¬section (2) of section 248 of the Act, the company shall also place the application on its website, if any, till the disposal of the application.
The Registrar of Companies shall, simultaneously intimate the concerned regulatory authorities regulating the company, viz, the Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over the company, about the proposed action of removal or striking off the names of such companies and seek objections, if any, to be furnished within a period of thirty days from the date of issue of the letter of intimation and if no objections are received within thirty (30) days from the respective authority, it shall be presumed that they have no objections to the proposed action of striking off or removal of name.
At the expiry of the time mentioned in the Notice, the Registrar may, unless cause to the contrary is shown by the Company, strike off the name of the Company from the Register of Companies and shall publish thereof in the official Gazette in form STK-7 and the same shall also be placed on the official website of the Ministry of Corporate Affairs.
In case, if any form FTE has already been filed prior to the commencement of these provisions and it is still pending and not disposed off by the authorities for want of any document or information, shall be disposed off on the submission of documents / information, in accordance with the rules made under the Companies Act, 1956 (1 of 1956).
Reasons for Winding Up of Company
Fast Winding up
A company can also be closed under the fast track exit scheme quickly in about 90 days, whereas traditional methods take longer and are more cumbersome. Hence, winding up of company under fast track exit scheme is faster and easier.
A company that doesn’t file its compliance on time incurs fines and penalty including debarment of the Directors from starting another Company. Hence, it is better to officially for winding up of company that is inactive and avoid potential fines or liabilities in the future.
When compared to maintaining compliance for a dormant company, it might actually be cheaper to wind up a company and incorporate again when the time is right.
Easier Winding up
The fast track exit scheme was specifically introduced by the Government to make it easy for inactive companies that have NIL assets and liabilities to close down or wind up. Hence, the formalities for winding up of company under fast track exit scheme is easy to complete.
Procedure For Winding Up of Company
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