Striking Off Company in India: A Comprehensive Guide
Introduction
Starting a company is an exciting endeavor, but sometimes circumstances may arise where you need to strike off or close your company in India. The process of striking off company involves legal procedures and compliance requirements that must be followed to ensure a smooth and legally sound closure. In this article, we will guide you through the process of striking off company in India, providing step-by-step instructions and important considerations along the way.
Understanding Company Striking Off
What is Striking Off?
Striking off company refers to the process of removing a company's name from the register of companies maintained by the Registrar of Companies (RoC). It is a formal procedure that marks the closure and dissolution of a company.
Reasons for Striking Off Company
There are several reasons why a company may choose to be struck off, including:
- Business inactivity or non-operation
- Completion of a specific project or venture
- Consolidation of companies within a group
- Non-compliance with statutory requirements
- Financial difficulties or insolvency
Legal Framework
The Companies Act, 2013, governs the process of striking off company in India. It outlines the statutory requirements, procedures, and obligations that must be followed to ensure a legally compliant closure.
Preparing for Company Striking Off
Assessing the Viability of Striking Off
Before initiating the striking off process, it is crucial to assess the viability of the decision. Consider factors such as the company's financial status, legal obligations, and future prospects. Seek professional advice, such as consulting a chartered accountant or a company secretary, to evaluate the feasibility of striking off.
Informing Stakeholders
Inform all stakeholders, including directors, shareholders, employees, and creditors, about the company's intention to strike off. Hold meetings or issue circulars to provide them with a clear understanding of the process and its implications. Obtain necessary approvals and consensus from relevant parties.
Settling Outstanding Obligations
Ensure all outstanding obligations, including loans, debts, taxes, and vendor payments, are settled before proceeding with the striking off process. Clearing financial liabilities will minimize legal complications during the closure process.
Meeting Statutory Requirements
Board Resolution and Shareholders' Approval
Obtain a board resolution approving the striking off and closure of the company. Additionally, seek shareholders' approval through a special resolution, as required under the Companies Act, 2013.
Clearing All Liabilities
Clear all outstanding liabilities, including taxes, duties, and other statutory payments. Obtain necessary clearances and no-objection certificates from relevant authorities, such as the Income Tax Department and Goods and Services Tax (GST) authorities.
Compliance with Income Tax and GST
Ensure compliance with all income tax and GST obligations. File pending tax returns, pay any outstanding taxes, and obtain tax clearance certificates from the tax authorities.
No Pending Litigation or Disputes
Ensure there are no pending litigations, disputes, or investigations involving the company. Settle any ongoing legal matters before proceeding with the striking off process.
Documentation and Application
Preparation of Striking Off Application
Prepare the striking off application in the prescribed format. The application should include necessary details such as the company's name, registration number, reason for striking off, financial statements, and clearance certificates from relevant authorities.
Submitting the Application to the Registrar of Companies
Submit the striking off application, along with the required documents, to the Registrar of Companies (RoC) in the jurisdiction where the company is registered. Pay the applicable fees and ensure the application is complete and accurate.
Publication and Advertisement Requirements
Publish a public notice regarding the striking off application in a widely circulated newspaper and the Official Gazette. Adhere to the prescribed timelines and requirements for publication and advertisement.
Verification and Approval Process
The Registrar of Companies will examine the striking off application, documents, and compliance records. If everything is in order, they will issue a verification and approval letter. Cooperate with the RoC during the verification process and provide any additional information or clarifications as requested.
Striking Off and Closure
Striking Off Order and Deregistration
Upon receiving the verification and approval letter from the RoC, a striking off order will be issued. The company's name will be struck off from the register of companies, and it will be considered dissolved. Obtain the certificate of deregistration as proof of closure.
Public Announcement of Striking Off
Make a public announcement about the striking off and closure of the company through newspapers, the Official Gazette, and the company's website, if applicable. Notify all stakeholders about the company's dissolution and provide relevant contact information for any future correspondence.
Settling Outstanding Legal Matters
After striking off, ensure that any pending legal matters or obligations are addressed promptly. Respond to any legal notices or claims and take appropriate actions to resolve them.
Distribution of Assets and Dissolution
Distribute the company's remaining assets, if any, among the shareholders as per their entitlement. Follow the dissolution procedures outlined in the Companies Act, 2013, and complete the necessary formalities.
Conclusion
Striking off company in India is a well-defined process that involves careful planning, adherence to statutory requirements, and proactive communication with stakeholders. By following the outlined steps and fulfilling all legal obligations, you can successfully close your company in a compliant and efficient manner.
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