Strike off of Company Without Filing of Annual Returns

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(1) Power of Registrar to Remove Name of Company from Register of Companies: 

As per section 248 of Companies Act 2013, the registrar of Companies may remove name of company from Register of Companies if:-

  1. a company has failed to commence its business within one year of its incorporation.
  2. 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 .
  3. the subscribers to the memorandum have not paid the subscription money 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.
  4. the company is not carrying on any business or operations, as revealed after the physical verification carried out by ROC under sub-section (9) of section 12.
(2) Application by Company:

A company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent. members in terms of paid-up share capital, 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).

(3) Nothing in sub-section (2) shall apply to a company registered under section 8.

As per section 249 of Companies Act, 2013 An application under sub-section (2) of section 248 on behalf of a company shall not be made if, at any time in the PREVIOUS THREE MONTHS, the company—

  1. has changed its name or shifted its registered office from one State to another;
  2. has made a disposal for value of property or rights held by it, immediately before cesser of trade.
  3. has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section.
  4. has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
  5. is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy Code, 2016.

Before the Amendment made by ministry, as per Rule 4 (Removal of Names of Companies from the Register of Companies) Rules, 2016, It was mandatory for company to file all its pending Annual Returns i.e. Form AOC-4 or AOC-4 XBRL, MGT-7 before making an application in form STK-2 for removal of name of company to ROC.

BUT As per Amendment made by ministry on 10.05.2019 In the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 (hereinafter referred to as the principal rules), in rule 4,─

No application in Form No. STK-2 shall be filed by a company unless it has filed 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), up to the end of the financial year in which the company CEASED TO CARRY ITS BUSINESS OPERATIONS.

It means Company is required to file its annual return for the year, till the company have conducted the business, once the company has stopped its business, IT IS NOT REQUIRED TO FILE ITS ANNUAL PENDING RETURNS before going for strike off of company, and company can proceed for directly strike off WITHOUT FILING OF ANNUAL RETURNS OF THE YEAR IN WHICH COMPANY DOES NOT HAVE  ANY BUSINESS.

Disclaimer: The entire article have been prepared on the basis of relevant provisions and rules and as per the information existing at the time of the preparation