Category Archives: Chapter XVIII – CA2013

REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES

WHERE MEMBER COMPANY REMOVED FROM THE REGISTER OF REGISTRAR


One of the fundamental principles of corporate law is that a company independent existence than the existence of its shareholders. Therefore, all members of a company may die, the company will not.

When I read this principle, admittedly, I had limited vision. I presumed members either as natural persons with life and death or bodies corporate as members, their merger, amalgamation, winding up and liquidation. The removal of the name of the member company from the registrar was not an example suggested then.

There would be no direct impact on the existence of the company if the Registrar of Companies removed the name of a member company under Section 248 of the Companies Act, 2013 from the register of companies. However, for companies with small numbers of members, this is not an ideal situation.

The removal of the name of one or more member companies:

  • quorum in general meetings;
  • holding of company meetings on shorter notice;
  • holder of beneficial interest in a share if in favour of such a member company; and
  • Significant beneficial ownership (SBO) may have interest impacts.

This list is not an exhaustive one.

No, paying dividends to these companies does not bother. On the contrary, it may help to a limited extent. The right issue of shares may also have an exciting twist.

Quorum in general meeting is not a big deal if managed by other members properly. They may calculate the required number of transfers to satisfy the legal number.

Even without such an odd situation, a company may face a hurdle to convene a general meeting on shorter notice. The company may not call an extraordinary public meeting on a shorter period notice, where a member company holds more than 5% shares. Similarly, where the company has less than 20 members, there will not be an annual general meeting on a shorter notice period. In the first case, only a fresh issue of shares may help. In the second case, some well-calculated share transfers by an existing member may help.

In all earlier situations, these shares shall always remain in the hand of companies whose name is not in the register of companies.

I see no direct impact on the holder of the beneficial interests except to comply with an earlier direction given by the actual owner or beneficial owner.

The law related to significant beneficial ownership comes into the picture if the member company has a shareholding of more than the threshold limit of the applicability of these rules. Unlike previous situations here, these shares may land in the hand of the Investor Education and Protection Fund Authority. The company will have to transfer these shares held by such a member company will also be transferred to the Investor Education and Protection Fund Authority in case of declaration of dividend, but with a wait of seven years.

As the name of the member company remains there in the register of members despite its removal from the register of companies in the office of the Registrar of Companies, it requires some regulatory step to be taken. I suggest a law to transfer shares belonging to these member companies in favour of the Investor Education and Protection Fund Authority.

Tax stains are good for Strike Off Companies


Daag Achchhe haiN (Stains are good)” This must be a tagline of a politician or may of a Strike-off company.  Congratulations to all strike-off companies with income tax proceedings. A circular issued by Central Board of Direct Taxes may bring back life to these strike-off companies. It is reported that on or before 4th January 2018, NCLT, vide its interim orders, directs 46 strike –off companies to be deemed to be restored to its original number and entitles petitioner, Income Tax Department to raise demand by serving notice in accordance with law.

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Understanding Form DIR – 10


Many years ago one Hindu priest told me, those worshipping Laxmi ji (goddess of wealth) before without satisfying Ganesh Ji (god of goodness) may not get good wealth. We need to follow established a procedure to get the desired result. Without understanding utility of Form DIR – 10, its use may not give the desired result. Here, we will have a discussion.

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Remedies for disqualified directors of strike – off companies


Compliance way or Confine way! The Government made it clear. Directors who were on a long-term picnic after removal of names of their “shell companies” are now offered sleepless nights. I appreciate.

Ministry of Corporate Affairs issued two important lists in this regard –

  1. List Of Directors Associated With Struck Off Companies U/S 248
  2. List Of Disqualified Directors U/S 164 (2)(A)

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Appeal or Application for Restoration of Names of Company


The National Company Law Tribunal (Amendment) Rules, 2017 notified on 6th July 2017 which came into force in same date inserted Rule 87A the National Company Law Tribunal Rules, 2016. In this post, we will discuss newly inserted rules with brief background.

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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. Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 deals with its procedural aspects. We will discuss Rule 4 in this post.

[Law stated in this post was valid from 26 December 2016 to 9 May 2019. For Law effective from 10 May 2019, visit here.

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Show Cause Notices for Suo-motu strike off of company


In earlier post here, we discussed law relating to suo-motu removal of name of company from the register of companies of the Registrar of companies. Recently, Registrar of Companies posted strike off notices in bulk of companies seems eligible for suo-motu strike off. When Government is claiming it a strike on shell companies, such notices received mixed reaction. Public notices are also published by almost all Registrar of Companies. One can access these public notices here.

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Suo-motu Removal of name of company


Suo-motu removal of name of the companies from the register of companies maintained by Company registrars is legal roots in Sub – section (1) of Section 248 of the Companies Act, 2013 as discussed earlier here in its original form and its amendment by the Companies (Amendment) Act, 2015 as discusses thereafter. Rule 3 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 deals with its procedural aspects. We will discuss Rule 3 in this post.

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Companies Act 2013 Amended by Insolvency and Bankruptcy Code 2016


A notification issued by Ministry of Corporate Affairs notified section 255 of the Insolvency and Bankruptcy Code, 2016. By virtue of notification of Section 255 of Insolvency and Bankruptcy Code, 2016; the Companies Act, 2013, stands amended in accordance with Schedule XI of the IBC2016 with effect from 15th November 2016. We shall have a short discussion here.

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REMOVAL OF NAME OF COMPANIES


Life always started to die. The company can be created and wind up. Sometimes, Idea of a company conceives, but fail to take life.

[Law state in this post came into effect from 26 Dec 2016 after a few amendments.]

POWER OF REGISTRAR TO REMOVE NAME (SECTION 248):

Intimation for Removal of Name by the Registrar:

The Registrar may send a notice to the company and all its director of his intention to remove the name of the company from the register of companies when the Registrar has reasonable cause to believe –

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