APPLICATION FOR REMOVAL OF NAME OF COMPANY


Application for removal of the name of the companies from the register of companies maintained by Company registrars has legal roots in Subsection (2) of Section 248 of the Companies Act, 2013 as discussed earlier here and now outdated. Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 deals with its procedural aspects which we discussed earlier here. Recently, the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2019 amended Rule 4 significantly. We will discuss updated Rule 4 in this post.

[Law discussed in this post is as on 10th May 2019]

ENABLING PROVISION

According to subsection (2) of Section 248 of the Companies Act, 2013, a company may file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in sub-section (1).

As discussed earlier here, Section 248 (1), companies liable or eligible for removal are –

(a) a company has failed to commence its business within one year of its incorporation; or

(b) deleted;

(c) a company 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.

[(d) the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under sub­section (1) of section 10A; or

(e) the company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.][1]

STATUTORY PRECONDITIONS

According to Section 248(2) of the Companies Act, 2013, the company may make such application only after extinguishing all its liabilities. The company make such an application after passing a special resolution or receiving the consent of seventy-five per cent members in terms of paid-up share capital.

According to subsection (3), any company registered under section 8 cannot make such an application.

APPLICATION FOR REMOVAL

According to sub-rule (1) of Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, an application for removal of the name of the company shall be made in Form STK-2 along with the fee of ten thousand rupees.[2]

OVERDUE ANNUAL FILING

Newly inserted first proviso to Rule 4(1), no application in Form No STK-2 shall be filed by a company unless it has filed overdue returns up to the end of the financial year in which the company ceased to carry its business operations –

  1. in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and
  2. Form No. MGT-7 (Annual Return).

In case a company intends to file Form No. STK-2 after the action under sub-section (1) of section 248 has been initiated by the Registrar, it shall file all pending overdue returns in Form No AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return) before filing Form No STK-2. [Second Proviso to Rule 4(1)]

These two are interesting provisions. In case of a purely voluntary application for removal of the name of the company, financial statements and annual returns till the year of actual operations of the company is required to be filed. In case of an application after the information of initiation of a removal process by the Registrar, financial statements and annual returns pending till date is required to be filed.

RESTRICTION ON APPLICATION

Once notice in Form No STK-7 has been issued by the Registrar pursuant to the action initiated under sub-section (1) of section 248, a company shall not be allowed to file an application in Form No STK-2. [Third Proviso to Rule 4(1)]

REGULATORY APPROVAL

According to the proviso to Section 248(2) of the Companies Act, 2013 in the case of a company regulated under a special Act, approval of the regulatory body constituted or established under that Act shall also be obtained and enclosed with the application.

Accordingly, Rule 4(2) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, prescribes that every application under sub-rule (1) shall accompany a no objection certificate from appropriate Regulatory Authority concerned in respect of following companies, namely:-

(i) 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;

(ii) 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);

(iii) insurance companies as referred to in the Insurance Act, 1938 (4 of 1938) or rules and regulations thereunder;

(iv) 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;

(v) 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;

(vi) asset management companies as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;

(vii) any other company which is regulated under any other law for the time being in force.

ACCOMPANIED DOCUMENTS

According to sub-rule (3) of Rule 4, the application in Form STK 2 shall be accompanied by –

(i) indemnity bond duly notarized by every director in Form STK 3;

(ii) a statement of accounts in Form STK – 8 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 in Form STK 4 by every director of the company;

(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) a statement regarding pending litigations, if any, involving the company.

MANNER OF FILING OF APPLICATION

According to sub-rule (1) of rule 5, the application in Form STK 2 shall be (digitally) signed by a director duly authorised by the Board in their behalf.

According to sub-rule (2) of rule 5, 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.

In the second case, STK -2 shall not ask the digital signature of a director.

CERTIFICATION

According to rule 6, 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.

PUBLIC NOTICE

According to Section 248(2) of the Companies Act, 2013, the Registrar shall, on receipt of such application, cause public notice to be issued in the prescribed manner.

According to sub-rule (1) of rule 7, the notice under subsection (2) shall be in form STK -2. The notice 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 the 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.

According to the second proviso to rule 7(1), with effect from 12thApril 2017, the publication of notice under clause (iii) of this sub-rule, in respect of cases falling under subsection (1) of section 248 shall be in Form STK 5A.

According to the first proviso to rule 7(1), in case of any application made 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.

INTIMATION TO REGULATORY AUTHORITIES

According to sub-rule (2) of rule 7, 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. The registrar of companies shall seek objections, if any, to be furnished within a period of thirty days from the date of issue of the letter of intimation. If no objections are received within thirty 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.

EFFECT OF COMPANY NOTIFIED AS DISSOLVED

According to Section 250, Where a company stands dissolved under section 248, it shall on and from the date mentioned in the notice under sub-section (5) of that section cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.

According to rule 9, the Registrar shall cause a notice under subsection (5) of section 248 of striking off the name of the company from the register of companies and its dissolution to be published 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.

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[1] Please note, clause (d) and (e) are inserted by the Companies Amendment Ordinance 2019 with effect from 2nd November 2018 and is not yet a permanent law at the time of publication of this post.

[2] Increased from five thousand rupees with effect from 10th May 2019.

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3 responses to “APPLICATION FOR REMOVAL OF NAME OF COMPANY

  1. Pingback: Application for removal of Name of Company | AishMGhrana

  2. This is one of the best articles to understand the process for removing the Name of company. The complete knowledge is a must understand the whole process.

    This article “APPLICATION FOR REMOVAL OF NAME OF COMPANY” is really helpful to understand the way.

    Liked by 1 person

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