Corporate Law

# Striking Off of the Company

The Directors of many defunct or non-compliant companies recently got shocked on receipt of a striking-off notice by the Registrar of Companies (ROC) of their respective jurisdiction. The Registrar of Companies of almost all states initiated proceedings against the defunct and non-compliant companies for removal of the name of the company from the Register of Companies.

### Power to Strike Off

The Registrar of Companies is empowered under Section 248 of the Companies Act if the Company has:

- Failed to commence business within a period of one year from incorporation, or
- The subscribers of the Memorandum of Association do not pay the subscription money within 180 days from the date of incorporation, or
- The Company is not carrying on any business for a period of two immediately preceding financial years.

Whatever the reasons stated in the Act and the rules, the basic issue in respect of the same is non-filing of Annual Accounts and Annual Return of the Company with the Registrar of companies in the prescribed manner.

### The Striking-Off Process

For removing the name of the Company from the Register of Companies, the Registrar shall send a notice to the Company and each of the directors, specifying his intention to remove the name and also give a public announcement in this regard in the prescribed manner. After following the said process and consideration of representations received if any, the Registrar may remove the name of the Company from the Register of Companies.

### Options for Defunct Companies

If the Companies are actually carrying on business and are in default for non-filing of annual accounts and annual return of the company for the previous years, they are required to complete their annual filing immediately on receipt of notice.

Other companies which are defunct and not intending to carry on business have the option to make an application to the Registrar for striking off the name of the Company from the Register of Companies, if more than 75% of shareholders agree to such a resolution.

### Restoration of Name

Any person aggrieved by the order of the Registrar striking off the Company from the Register of Companies under Section 248 may prefer an appeal to the National Company Law Tribunal (NCLT) for restoration of the name in the Register.