Closure of the Company

 

Introduction:

Chapter XVIII of the Companies Act, 2013 (Act) deals with removal of Names of Companies From the Register of Companies comprising of section 248 to section 252 which came into effect from 26.12.2016 read with Chapter XVIII The Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016 which came into effect from 26.12.2016.

Types of closure:

1. By Registrar and
2. By Company
3. Closure by Registrar

Under Section 248 of the Act, the Registrar can send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice, where he has reasonable cause to believe that—

(a) a company has failed to commence its business within one year of its incorporation 1[or];

(b) 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,

1. By Company

A company may on its own apply for closure, 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 viz:

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

• 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. On receipt of such application, cause a public notice to be issued in the prescribed manner. In case of Section 8 Company, Company cannot apply for closure;
• 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 sub-section

(1) of section 10A; or

• the company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section

An application on behalf of a company shall not be made if, at any time in the previous three months, the company—

• has changed its name or shifted its registered office from one State to another;
• has made a disposal for value of property or rights held by it, immediately before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business;
• has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement;
• has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
• is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy Code,

A notice shall be published in the prescribed manner and also in the Official Gazette for the information of the general public.

At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand dissolved.

The Registrar, before passing an order shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company.

Note: the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies. The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company shall continue and may be enforced as if the company had not been dissolved.

In the present case Company intends to close the company, hence following is the procedure:

 Application for removal of name of company.—

An application for removal of name of the company shall be made in Form STK-2 along with the fee of five thousand rupees.

In case of entity is engaged in certain activities like NBFC, Housing finance, insurance, asset management etc., application need to  be  accompanied  by  a  no  objection  certificate  from appropriate Regulatory Authority concerned.

Documents to file along with the application in Form STK 2 –

1. Copy of Board Resolution for Striking off the
2. Notice calling Extra- Ordinary General Meeting of the Company for Strike
3. 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;
4. Indemnity bond duly notarized by every director in Form STK 3;
5. An affidavit in Form STK 4 by every director of the company;
6. Self attested ID Proof (PAN Card, Passport, Aadhaar Card) and Address Proof (Phone Bill, Electricity Bill- not older than 2 months) of the Directors of the Company
7. A statement of accounts 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;

8. A statement regarding pending litigations, if any, involving the
9. No Objection Certificate from Creditors (Loan amount outstanding if )
10. Covering letter for engaging Chartered Accountant for the filing Closure to
11. Audited Annual Reports (Auditor’s Report, Financials, Director’s Report and all other required )
12. Paid Challans for latest Annual Filing of the company filed with ROC (F.Y 2016-17.)

Note: For the purposes of these rules, if the person is a foreign national or non-resident Indian, the indemnity bond, and declaration shall be notarised or appostilised or consularised.

Manner of filing of application.–

The application in Form STK 2 shall be signed by a director duly authorized by the Board in their behalf.

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.

Form to be certified.-

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, as the case may be.

Manner of publication of notice –

The notice shall be in STK 6, and be-

• placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;
• published in the Official Gazette;
• published in 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

Note: The company shall also place the application on its website, if any, till the disposal of the application.

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 and seek objections, if any, to be furnished within a period of thirty days from the date of issue of the letter of intimation and 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.

Notice of striking off and dissolution of company. –

The Registrar shall cause a notice 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.