Removal of Name from Registrar of Companies as per Section 248 of the Companies Act, 2013

The company that does not want to carry out any business operation and only bearing the annual compliance, can proceed with the closure of the business. The Company can ask the Registrar of the company to remove the name of the company from its register. Section 248 of the Companies Act, 2013 provides the provision for the removal of name.The registrar after the examination of the application can remove the name of the company.  In the below article, we will discuss the procedure for Removal of Name of Company and the Power of Registrar for Removal of Name of Company from the Register of Companies.

Reasons of Removal of Company’s name by the Registrar

The registrar can remove the name of the company if:

• The company fails to commence its operation within one year of its incorporation.
• The company is not carrying any operation for a period of two immediate periods and has not made an application for obtaining the status of a dormant company.
• If the subscription amount is not paid by the subscriber which is undertaken at the time of incorporation and has not filled the form INC 20A within 180 days of its incorporation.

Conditions Before Removal of Name of the Company by the Registrar

The conditions before the Removal of Name of Company from Register of Companies by Registrar of Companies (ROC) are as follows:

• The Registrar will send the notice to all the directors stating the intention of removal of the name from the register of the company.
• The directors will send the reply with a copy of relevant documents to the registrar of the company.
• The company will set off all the assets and liabilities before removing the name from the register of the company.
• There should be no pending litigation against the company.
• By passing the special resolution in an extraordinary general meeting or consent of 75% of shareholders needed before the removal of name from the register.
• The company will fill the annual returns and the financial statement till the end date before the removal of the name.

Companies Excluded From Removal of Name

• Listed Companies.
• Vanishing Companies.
• Delisted companies, which is due to non-compliance of the listing regulations or agreements or any other statutory law.
• The companies having default in repayment of public deposits.
• The companies whose inspection, investigation or order is pending in the court.
• Charges are pending for satisfaction.
• Compounding application is pending before the competent authority.
• Prosecution of offense is pending.
• Actions are pending in the court under sections 206, 207, and 208 of the Companies Act, 2013.
• Incorporated companies, under section 8 of the Companies Act, 2013.

Procedure for Removal of name of the Company by the Registrar

Steps to be followed by the registrar for the removal of the name of the company from the register:

• The registrar will send the notice in SKT-1 to the company and all the directors for the removal of the name of the company. Notice will be sent to the address available on record by the registered post or by speed post.
• The reason for the removal of the name will be provided in the notice by the registrar. And the directors of the company will send the reply and represent in front of the registrar within 30 days of such notice with the relevant documents.
• If the representation is satisfactory then the registrar will terminate the removal and if not then the registrar will carry on the removal process.
• The notice will be published in Form STK-5,Form STK-6, and on the official gazette to inform the general public.
• After the expiry of the time which is provided in the notice, the registrar can remove the name of the company from the register. The registrar will publish it in the official gazette and on the publication, the company should stand dissolve.
• Before passing the order under section 248(5), the registrar of the company will inquire about the payment of all the liabilities and obligations of the company.
• After such an inquiry, the registrar will remove the name of the company. The registrar will publish the notice in the Official Gazette in form SKT-7 and on the website of the Ministry Of Corporate Affairs.

Procedure Followed By the Company for Removal

• The company will conduct a board meeting for approval from the board of directors for the removal of name and the company shall approve EGM notice.
• The company will take approval from the shareholder bypassing the special resolution in the general meeting for the removal of the name.
• If any other authority is regulating the company then approval of such authority is necessary.
• After the approval, the company will file an application in Form STK-2 along with the relevant documents:
• An indemnity bond from all the directors (SKT-3)
• An affidavit by all the directors of the company(SKT-4)
• Statements of assets and liability of the company but not more than thirty days from the date of filing the application and certificate from the chartered accountant.
• Copy of the special resolution duly certified by all the directors or consent of 75% of shareholders having paid-up share capital as on the date of application.
• Statement regarding the pending litigation, if any, involvement the company.
• After receiving the application the registrar of the company will publish a public notice (SKT-6). If there is any objection for the removal should be sent within 30days of serving such publication.
• After complying with all the process, the registrar will remove the name of the company and the notice of such removal will be sent to the official gazette in Form SKT-7

Prohibition of Application

If any company performs the following activities in the last three months of making an application then that company cannot make the application to the registrar:

• Changed the name of the company.
• The registered office of the company shifts from one state to another.
• Winding up is done as per the provisions of the Companies Act, 2013 or under the Insolvency and. Bankruptcy Code, 2016.
• The company files an application to the tribunal seeking permission to compromise or arrangement and the matter will not finally concluded.
• The company is engaged in any other activity except which one is necessary for making the application.

Effect of Suspension

• The company will end the business operation and the certificate of incorporation will cancel.
• The liabilities of the managers, directors, and officers will remain same as before the dissolution of the company.

Conclusion

Section 248 of the Companies Act, 2013 is the most efficient and speedy way for the closure of the company. The registrar of the company plays a very important role in the closure of the company. The company has to take proper care when the registrar serves the notice.  The process under this section is lengthy and long-lasting. If once the process of closure is complete it will not be easy to restore the name of the company.