Struck Off Company India: Understanding the Process and Implications

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Introduction

In India, the process of striking off a company from the register of the Registrar of Companies (RoC) is known as "striking off." It is a legal procedure through which a company can voluntarily cease its operations and be removed from the official records. This article aims to provide a comprehensive understanding of the process and implications of striking off a company in India.

Struck Off Company India: What Does It Mean?

A struck off company in India refers to a company that has been removed from the register of companies maintained by the RoC. This action effectively terminates the legal existence of the company and brings an end to its corporate activities. Once struck off, the company is no longer recognized as a legal entity and cannot carry out any business operations.

Why Would a Company Choose to be Struck Off?

Reasons for Voluntary Striking Off

  1. Completion of Objectives: A company might choose to be struck off if it has achieved its objectives or is no longer able to continue its operations.
  2. Financial Difficulties: Companies facing severe financial difficulties may opt for striking off as a means to avoid further liabilities and obligations.
  3. Restructuring: In cases where a company wishes to undergo significant restructuring or reorganization, striking off can be a viable option.
  4. Non-Operational Status: If a company has remained non-operational for a considerable period and has no intention of reviving its activities, striking off can be a prudent choice.

Consequences of Striking Off

  1. Legal Existence: Once a company is struck off, it ceases to exist as a legal entity. It cannot sue or be sued in its name, enter into contracts, or carry out any business activities.
  2. Asset Dissolution: The assets and properties of the struck off company become the property of the Indian government. They are transferred to the Companies Liquidation Account.
  3. Ongoing Legal Proceedings: Striking off does not absolve the company from any ongoing legal proceedings. It remains liable to face legal actions even after being struck off.
  4. Disqualification of Directors: Directors of a struck off company are disqualified from being appointed as directors of any other company for a specified period.

Struck Off Company India: The Process

Step 1: Board Resolution

To initiate the process of striking off, the board of directors must pass a resolution approving the decision. The resolution should be recorded and maintained for future reference.

Step 2: Clearing All Dues

Before proceeding with striking off, the company must ensure the settlement of all outstanding liabilities, including taxes, debts, and statutory dues.

Step 3: Closure of Bank Accounts

The company should close all its bank accounts and ensure the transfer of remaining funds, if any, to the Companies Liquidation Account.

Step 4: Application to Registrar of Companies (RoC)

The company is required to submit an application in the prescribed form to the RoC, along with the necessary documents and information as specified by the authorities.

Step 5: Publication of Notice

Upon receipt of the application, the RoC publishes a notice in the Official Gazette and on its official website, inviting objections, if any, within a specified period.

Step 6: Verification and Approval

The RoC verifies the application and conducts necessary checks. If satisfied with the information provided, the RoC approves the striking off and publishes a final notice in the Official Gazette.

Step 7: Striking Off

After the completion of the above steps, the company is officially struck off from the register of companies maintained by the RoC.

FAQs about Struck Off Company India

  1. Q: Can a struck off company be revived? A: Yes, a struck off company can be revived by following the process of company restoration prescribed by the Companies Act.
  2. Q: How long does the striking off process take? A: The duration of the striking off process can vary depending on various factors. It usually takes several months to complete.
  3. Q: Can a struck off company still own properties? A: No, once struck off, the company's properties are transferred to the government. The struck off company no longer owns any assets.
  4. Q: Are the directors personally liable for the company's debts after striking off? A: In general, after striking off, the directors are not personally liable for the company's debts. However, they may still face legal consequences for any fraudulent or unlawful activities.
  5. Q: Can a struck off company be investigated by authorities A: Yes, a struck off company can still be investigated by authorities if there are suspicions of misconduct or any illegal activities.
  6. Q: Is it mandatory for a company to be struck off if it is non-operational? A: No, striking off is not mandatory for non-operational companies. However, it is a recommended course of action to avoid ongoing compliances and liabilities.

Conclusion

Understanding the process and implications of striking off a company in India is crucial for business owners and stakeholders. It provides insights into the legal procedures involved and the consequences of choosing this path. While striking off can be a strategic decision in certain circumstances, it is essential to consult legal professionals and comply with the regulations to ensure a smooth process.
Location: India

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