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Company Strike Off


Company Strike Off refers to the formal process of removing a company's name from the Registrar of Companies (ROC) when it is no longer operational. This process, governed by Section 248 of the Companies Act, 2013, allows inactive companies to officially close their business without going through lengthy liquidation.

Importance of Company Strike Off Clearance


  • Prevents Compliance Burden: Strike-off frees inactive companies from mandatory annual filings, audits, and other ROC compliances.
  • Avoids Penalties: Inactive companies can accumulate penalties for non-compliance; strike-off helps avoid these future liabilities.
  • Legal Closure: Ensures an official closure, providing a clear legal status to the company's dissolution.

Types of Companies Eligible for Strike Off


  • Private Limited Companies (Pvt Ltd)
  • One-Person Companies (OPC)
  • Limited Liability Partnerships (LLP)
  • Section 8 Companies (if no charitable activities are ongoing)
  • Public Limited Companies

Eligibility Criteria for Company Strike Off


To be eligible for a strike-off, the company should meet the following criteria:

  • Inactivity: The company must have been inactive for two or more years or must not have commenced business since incorporation.
  • No Liabilities: The company should have no outstanding liabilities, dues, or pending legal cases.
  • Unutilized Bank Account: The company’s bank account should have been closed, with a zero balance and no transactions within the past two years.

Company Strike Off Process Under Companies Act, 2013


  • Board Resolution: The company's Board of Directors passes a resolution approving the decision to apply for strike off.
  • Clearance of Liabilities: The company must ensure all liabilities are cleared, and it must close all bank accounts.
  • Application Filing: File Form STK-2 with the ROC, along with supporting documents, including the Board resolution, indemnity bond, statement of accounts, and affidavit.
  • Publishing Notice: The ROC publishes a notice in the Official Gazette and the ROC website, allowing objections from any interested parties within 30 days.
  • Approval and Strike Off: If no objections are raised, the ROC issues a Strike-Off Certificate after 30 days, confirming the company’s removal from the register.

Legal Requirements and Acts Governing Strike Off


  • Section 248-252 of the Companies Act, 2013: Outlines the process for company strike-off.
  • Rule 4(1) of the Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016: Provides guidelines on filing and documents required for strike-off applications.

Documents Required for Company Strike Off


  • Board Resolution Copy: A copy of the resolution passed by the Board of Directors for applying for strike-off.
  • Indemnity Bond: Signed by all directors, ensuring no liabilities or claims exist.
  • Affidavit by Directors: Affidavit confirming that the company has no outstanding liabilities and has ceased business operations.
  • Statement of Accounts: A statement not older than 30 days from the filing date showing the company’s financial position.
  • Company's PAN Card and Certificate of Incorporation: Documents proving the company’s legal identity.
  • Special Resolution or Consent from Creditors: If applicable, a resolution or consent from creditors, confirming no pending claims.

Timeline for Strike Off Process


  • Application to Approval: Approximately 3-6 months, depending on ROC processing time.
  • Objection Period: 30 days from the notice publication.
  • Final Strike Off Certificate: Issued after 30 days if no objections are raised.

Cost of Strike Off


The application fee for Form STK-2 is ₹10,000. Additional costs may be incurred for professional assistance in document preparation and filing.

Consequences of Strike Off


  • End of Legal Entity: The company ceases to exist as a legal entity and is no longer able to operate.
  • No Rights to Assets: Any company assets remaining after strike-off may become the property of the Central Government.
  • Protection from Liabilities: Directors are protected from further compliance obligations post-approval, provided there was no fraud or misconduct.

Revocation of Strike Off


Under Section 252 of the Companies Act, 2013, any aggrieved party, including creditors or directors, may apply to the National Company Law Tribunal (NCLT) to restore the company within 20 years of the strike-off if it can prove sufficient cause.

Example of Company Strike Off Cost Calculation


Suppose a company has professional assistance fees of ₹15,000 and a government fee of ₹10,000. The total cost would be:

  • Government Fee: ₹10,000
  • Professional Assistance: ₹15,000
  • Total Cost: ₹25,000
FAQ

Frequently Asked Questions

These FAQs cover essential details like eligibility, required documents, process steps, and benefits. It helps clarify common queries about setup, compliance, costs, and timelines.

No, only inactive or non-operational companies can apply.
All liabilities must be cleared before applying; otherwise, the strike-off will not be processed.
Yes, through NCLT, the company may be restored within 20 years if there is a valid reason or claim.
Generally, 3-6 months, including a 30-day objection period.
If objections are raised, the ROC may halt the process until resolved.
Delayed strike-off may incur penalties, especially if annual compliance filings are missed.
The government fee for Form STK-2 is ₹10,000.
LLPs follow a similar strike-off procedure with ROC filing, but they use Form 24 instead of STK-2.
Directors must submit an indemnity bond, affidavit, and Board resolution, among other documents.
All assets must be disposed of before applying, or they may go to the Central Government.


Company strike-off is a straightforward process for companies that wish to legally close their operations and be relieved of compliance obligations. At YathraFin, we assist clients with end-to-end services for company strike-off, ensuring compliance with the Companies Act, 2013, and the ROC requirements to complete the process seamlessly.

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