Revival of Struck Off Companies:- An Overview

Revival of struck off companies is the formal process in which a company or undertaking is revived and its name is brought back in the registrar of companies (ROC). With the introduction of the Companies Act, 2013 the provisions related to revival of struck off companies is present under section 248 of the Companies Act, 2013.

During the financial year 2017-18 many companies had their names struck off the register. Strike off means to cancel the operations of the company for a temporary period of time. This would form as an alternative for winding up of a company, where the company can get revived within a period of 20 years. This period or date would be known as period of revival.

Criteria or Grounds for Revival of Struck Off Companies

The following are the grounds or criteria for revival of struck off companies from the register:

• Three years from OrderAn aggrieved individual can file an appeal against the order of the tribunal. The appeal must be filed within 3 years from the date or order of the tribunal.
• Incorrect Information FurnishedThe register of companies (ROC) would usually strike off the company name from the register if some form of incorrect information or irrelevant information is provided. The shareholders or directors have a time period of three years to file the appeal for such revival.
• An employee can file this appeal within 20 yearsAny aggrieved employee or workmen can make an application for reviving the company within 20 years from the date of striking off the company from the registrar. Suppose a company is closed on 01 February 2021 then from this date to 01 February 2041 the company has the time to make an appeal regarding the revival. Usually this period would be referred to as the period of limitation regarding the revival. This form of revival refers to voluntary revival of a company.

When can a company be struck off the register of the ROC?

The following grounds would be admissible for a company to be struck off or removed from the ROC:

• No Business for One YearFrom the date of incorporation of the company the business operations have not been carried out. The date of incorporation of the company would be considered as the date where the company has received its certificate of incorporation from the ROC.
• Not Filing FormsUsually when the forms and e-forms have not been submitted by the company. Then it can be a ground for striking off the name of the company. Such forms have to be submitted within the previous two financial years or the fiscal years. The relevant forms are AOC- 4 and MGT-7.
• Subscription Money Not PaidIf the members or shareholders, have not paid the proceeds related to the paid up money or subscription money for the memorandum of association, then such grounds would be valid for striking off the company. Such declaration has to be filed within 180 days from such date. Usually for the above process e-Form 20A would be considered.
• Physical VerificationThe registrar of companies has gone and physically verified that the office or the business has not commenced any operations.

The following are the grounds which are usually considered by the registrar in striking off a company.

What can be considered for Revival of Struck Off Companies?

The National Company Law Tribunal has specific criteria for revival of struck off companies:

• If the company has secured or has acquired some form of immovable property which comes under the provisions related to transfer of property act.
• If the company has ensured to carry out all the other form of relevant compliances as per the law related to GST, Provident Fund and other compliances.
• If there is some form of evidence that transactions have been carried out by the company. Usually the bank statement of the company would be utilised for this process.
• If the company is carrying out operations related to Food Business, then securing the license from the concerned FSSAI would be mandatory for its operations. In such circumstances the company would be considered to be revived by the NCLT.
• Another ground is general public interest that the company formed has to be revived. Public interest is one of the major grounds for revival of struck off companies.

• Companies would have to be restored in order to comply with the requirements of the Companies Act, 2013. Also it is beneficial if a company is restored as early as possible.
• Creditors may require the company to start an action for recovery of all the proceeds.
• All the respective liabilities of respective officers can be enforced. Such liabilities would be categorised as continuous liabilities.
• Where companies have not filed annual returns or statements the period of three years. Such companies can disqualify the directors on the grounds of this.
• ROC may consider prosecuting individuals for non-compliance with respect to filing the documentation.
• This would lead to the disqualification of the company if the above is not carried out within a period of 5 years.
• Section 164(2) speaks about the criteria for disqualification of a director. This would also cover specific aspects related to removal of a director. If the director is reappointed again, then such requirements have to be stated by the director.
• Promoters can secure some form of benefits related to revival- Any form of overdue returns can be filed within the appropriate period. A nominal fee would be charged regarding this. The fee would be between Rs 300/- to Rs. 600/-. Apart from this the promoters or the shareholders can also ask for imposing some form of penalties on officers who have not carried out their duties related to compliance.

Procedure for Revival of Struck off Companies

The procedure related to revival of struck off companies has been laid down by the National Company Law Tribunal. Such procedure has to be followed and compliance has to be met. The following is the procedure:

• Application for Process of Revival: In this the aggrieved person or applicant would consider filing the application. Such application would be in the form of an appeal to the NCLT. Such provisions would be governed under section 252 of the Companies Act, 2013. The provision related to the appeal procedure has to be made by any aggrieved individual within a period of three years. This provision is as per section 252(1) of the Companies Act, 2013. If the appeal or the application is made by any employee or concerned workman then the limitation period for making this is 20 years from the date of striking off the company. Such provision is present under section 252(3) of the Companies Act, 2013.
• Petition Planning and Drafting: All the planning related to the above petition must be made to the NCLT through form NCLT-9. Along with this, a demand draft has to be made in favour of the ‘Accounts and Pay Officer’ of the Concerned Ministry of Corporate Affairs. Such petition must be filed along with the grounds.
• Submitting Petition: Before 14 days of the application hearing, a copy of the petition for revival of struck off companies must be provided to the Registrar of Companies. Such companies can be given to any other form of interested individuals related to the petition.
• NCLT Trail: The tribunal would hold the appeal hearing by summoning the petitioner and the respondent. Here the respondent would be the registrar of Companies. After reviewing the facts related to the petition, the company would provide the judgement regarding the revival of the struck off company.
• Instructions from Tribunal: The tribunal can make an order related to restoring the struck off company. The following orders can be provided by the tribunal :
• The applicant has to deliver a certified copy of the order to the ROC. This must be carried out within the period of 30 days.
• After securing this the ROC would go through the requirements related to compliance. After this the official seal would be provided in accordance to the requirement of the gazette.
• If the tribunal requests, then the applicant must pay the costs related to appeal for the revival order.
• The company must carry out all forms of compliance.
• ROC Orders: After the tribunal passes the appeal, the company must file Form INC-28 to the registrar of companies within 30 days of the order.
• Gazetted Publication: Once all the certified copies are provided, the ROC would carry out the requirements related to publication in the official gazette.
• Final Filing of Documents by ROC: As per the requirements of the ROC the company has to provide the documents at the request of the ROC.

What would happen after the revival of struck off companies?

After the revival order has been carried out, then all the liabilities of every single director, manager, or other officers, would deem to continue as if the company had not come to an end.

Documents Showing Company has been in Operations

• Up-to-date bank statements
• Quickly Obtainable signed balance sheets.
• AGM Minutes/CTC of Board Minutes
• Copy of acknowledgments paid concerning ITR/ TDS/ Gratuity/ PF by the Company.
• Copy of latest sales bills/invoices
• The Company may give any other government document as evidence that it will materialize as on date.
• in the form NCLT 6, an Affidavit is required verifying the petition
• The order passed by the ROC for striking off
• Certificate of Incorporation
• Memorandum of Association and AOA
• Copy of audited financial statements will be required from when the fiscal year it has not been filed with the ROC
• Memorandum of Appearance
• Any other documents conditional upon the circumstances and case to case base.

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Frequently Asked Questions

What is the meaning of revival?

The meaning of revival would include bringing the company back in the list of the ROC. The company would have been struck off due to various grounds.

What is the meaning of struck off?

When a company is struck off it means, that the company is temporary removed from the register of the Registrar of Companies.

What is the limit for revival of struck off companies?

Usually there is a particular period or threshold for revival of struck off companies:

• The appeal must be carried out within 3 years of the order of the tribunal

• If there is some form of error then the same must be carried out 3 years from the order of the tribunal

• If the request for revival is made by an employee or workman then the same must be carried out within 20 years from the date which the company is struck off the register.

What is the limitation period for companies that are struck off?

The limitation period is 3 years for some instances. However, when it comes to workman and workforce then the limitation period is 20 years.

Can a director or a managing director make a request for revival of the company?

Yes such request can only be made if there is some form of error or omission in the information which is present in the register.

For non filing of e-forms can the ROC make an order for striking off?

Yes for non filing of e-forms such as MGT-7 and AOC-4 the ROC can make an order. However, such order can only be made if the filing requirements have not been completed in the previous two years.

Which sections would govern the revival procedure?

Section 252 would be an application by the NCLT. An appeal by anyone would be made under section 252(1) and appeal by members/creditors can be made within a span of 20 years would be governed by section 252(3).

Striking of A Company

Striking Off A Company: A Guide

Dissolving a Company, also known as striking off, can be a simple, cost-effective way to close down a solvent company with no assets.

Striking off allows the directors to retain full control of the business throughout the process and, although creditors must be repaid before the closure, there is no requirement to hold a formal creditors’ meeting.

This article will explain company dissolution in detail, covering all the key points if this is something you’re considering.

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Every company is started with a vision to run its business forever, but not all business are successful in long run. As we already are aware, that there is certain procedure to incorporate a company, run a company, likewise there is specific procedure to close a company. As on date, there are two ways to close a company.

1. Strike off company

2. Winding up of company

There is difference between both above methods, But my topic is about striking of company, so I will discuss about that only in my this article. Though, I am sorrowful about writing this article as a company is closing but this is the practical situation, where we as professionals on day to day basis consult management of the company to strike off their company, as their company is not working or say is defunct. Lets get started and know more about this topic and I have prepared this article in question and answer forms for easy understanding of readers.

What is meant by striking off of company name?

Striking off of company simply means closing of a defunct company, in fast way. It is simplest way to close a company.

Which company can get strike off?

Any company can get strike off whether it’s a

• Private company
• One-person company
• Public company
• Section 8 company

Note that even a dormant company can apply for striking of company.

What section governs Striking of company name from the register of companies?

The companies are governed by the Companies Act, 2013 and its section 248 governs the striking off of company.

What are ways to strike off a company?

A company can get strike off in two ways:-

A) By company itself as Voluntary Striking off

B) By Registrar of Companies

Note that section 8 company cannot get strike off voluntary.

When a company cannot make application for voluntary striking off?

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

(a) has changed its name or shifted its registered office from one State to another;

(b) 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;

(c) 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;

(d) has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or

What are the conditions before applying for striking of company?

As discussed above the pre-conditions are given as follows in both the cases.

A) A company can get apply for striking off voluntary after satisfying the below given conditions:-

i) Extinguishing all its liabilities and

ii) Taking approval from Members by special resolution

B) By Registrar of companies on finding of any of below given grounds:-

i) a company has failed to commence its business within one year of its incorporation or

ii) 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 or

iii) 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

iv) the company is not carrying on any business or operations, as revealed after the physical verification after registered office of company is found by Registrar of Companies.

What are the forms required to be filed?

While applying for striking off of company, two forms are required:-

a) E-form MGT-14

b) E-form STK-2

What are the fees associated with E-forms?

While E-form MGT-14 has normal associated fees, E-form STK-2 has fees of INR 10,000/-

What is the procedure to strike of company in case of voluntary striking off of company?

The procedure is very simple and is done step wise:-

i) Authorize officer or any director of company to convene a Board Meeting

ii) Sending of Board Meeting Notice atleast seven (7) days prior to board meeting along with detailed agenda.

iii) Convene Board Meeting and passing of Board resolution.

iv) Sending of Annual General Meeting / Extra-Ordinary General Meeting as the case may be

v) Convene General meeting and passing of Special Resolution.

vi) Filing of MGT-14 along with required attachments.

vii) Filing of STK-2 along with required documents.

viii) Registrar of companies after finding that all the attachments are fine and all the conditions are fulfilled and it is just and equitable to strike off the company, will strike off the company after publishing a public notice.

What are the documents which are required to attach with the forms?

The following documents are attached with the E-forms:-

• Indemnity Bond duly notarized by all directors (in Form STK 3).
• A statement of liabilities comprising of all assets and liabilities of the companies (certified by a Chartered Accountant).
• Certified true copy of Special Resolution (duly signed by every director of the company).
• Copy of Board resolution authorizing the filing of this application.
• Indemnity bonds in Form No. STK-3
• An affidavit in Form STK-4
• A statement concerning any pending litigations with respect to the company.
• Copy of relevant order of delisting, if any, from the concerned stock exchange.
• No objection certificate from relevant regulatory department in case company is governed by such department.

How long it takes to strike of company name from the register of companies?

Once an application is made for striking off of company by filing E-form STK-2, the concerned Registrar of Companies (ROC) after verifying the documents will strike off the name of company and this procedure normally takes 3-4 month. However, if any objection is received from Registrar of Companies (ROC)this process might take extra time or even reject the application.

What is the procedure to strike of company in case registrar strike off company (ROC)?

If, as discussed in above point, ROC is satisfied that it is just and equitable to strike off company, after giving Public notice and sending notice to company and its directors and if no response is received within the time period stated in notice, strike off company.

STRIKE OFF YOUR LLP

Before we understand LLP Strike off, let us have a brief idea on LLP (Limited Liability Partnership :

LLP means an alternative corporate business form that it gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its name.

The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.

LLP Strike Off:

In case the LLP wants to close down its business or where it is not carrying on any business operations for the period of one year or more, it can make an application to the Registrar for declaring the LLP as defunct and removing the name of the LLP from its register of LLP’s.

An LLP need to be closed down / LLP Strike off can be done on the following conditions:

• LLP is inoperative from the date of incorporation or inactive for a period of at least one year
• LLP does not have any assets / liabilities as on the date of application.
• Closure of current account of the LLP has been done
• LLP Obtain the consent of the parties i.e any other authority, creditors and partners.

Reasons why an LLP may close its business / Reasons for LLP Strike off?

• The statutory compliance of maintaining an LLP are higher than the cost of winding up. If the LLP is dormant it’s better to wind up than fulfill the compliance.
• To avoid fines and penalty for late filing, it is better to officially Wind Up LLP’s which are inactive.  

When the LLP has incorporated a Certificate of Incorporation is issued by the Registrar of Companies which acknowledges the existence of the LLP. Once the name of the LLP is entered into registrar it cannot be removed unless the LLP applies for strike off or it is processed by law. When the LLP fails to commence its business or fails to submit yearly returns, the registrar may suo motto strike off the LLP.

Striking Off Name of LLP

Often, entrepreneurs form Limited Liability Partnerships but are not able to maintain the same. Also, the penalty for LLPs defaulting in filing of any statutory return is Rs.100/- per day, without any maximum limit. Hence, it is often best to strike off/close dormant LLPs so that there is no requirement to file LLP Form 11, LLP Form 8 and Income Tax Return for the LLP each financial year to maintain compliance and avoid penalty.

In this article, we shall study about the various aspects of striking off a LLP:

The provisions of striking off of LLP are governed by Rule 37(1) of the LLP Rules, 2017. Accordingly, the LLP can be stroked off in following two ways, likewise that of a Company:

Mandatory Striking of the LLP:

Under mandatory striking off, the ROC shall send a notice to the LLP of his intention to strike off the name of the LLP from the register and requesting them to send their representations within a period of one month from the date of the notice in the case the LLP is not carrying on any business for a period of two preceding years. Here it is important to note that the ROC shall have reasonable cause to believe that the LLP is not doing any business in case Form 8 and Form 11 are not filed for previous two years.

Voluntary Striking off the LLP:

Under voluntarily striking off of LLP, the LLP may make an application in e-Form 24 to the Registrar with the consent of all the partners of the LLP for striking off its name from the register.

Now, we shall discuss the important points after interpretation of the relevant rule with respect to striking off the LLP:

1. Where the Limited Liability Partnership is regulated under a special law, the application for removal of name shall be accompanied by approval of the regulatory body constituted or established under that law.

2. The contents of the notice issued the ROC and the application made by the LLP shall be placed on the website of the Ministry of Corporate Affairs for the information of the general public for a period of one month.

3. As discussed, in case of mandatory strike off, the Registrar shall send a notice to the LLP to give reasonable opportunity of being heard as to why the LLP shall not be dissolved. The correspondence of the said notice shall have to be made within a period of one month or else the Registrar shall strike its name off the register, and shall publish notice in the Official Gazette thereof.

4. The liability of the every designated partner of the LLP dissolved as such shall continue and may be enforced as if the LLP had not been dissolved.

Further, it is important to note that the following shall be the attachments to e-Form 24:

• Affidavit signed by the designated partners [as per the format given sub clause (b) of clause (II) of sub rule (1A) to rule 37)];
• Copy of authority to make the application duly signed by all the partners;
• Copy of acknowledgement of latest ITR, in case filed;
• Consent of all the partners;
• Statements of accounts disclosing nil assets and nil liabilities certified by a Chartered Accountant in practice made up to a date not earlier than thirty days of the date of filing; and
• Application disclosing the reasons for strike off and the operative status of the Company.

FAQS REGARDING STRIKING OFF THE LLP

1. In case the LLP has not opened any bank account and has not carried on any operations since incorporation, then also can we file Form 24?

Yes, in case the LLP has been inoperative since incorporation, then Form 24 can be filed giving the same reason.

2. In case the Company has been operative for initial two years and thereafter got inoperative, then also the LLP can get itself stroked off without filing Form 11 and Form 8?

Yes, in accordance with the provisions, the LLP shall file overdue returns in Form 8 and Form 11 only the financial year till when it has ceased to carry on business operations. For instance, the LLP shall worked for FY 2013-14 and 2014-15 and thereafter ceased to carry on operations, then also it can make an application for strike off in Form 24 in the year 2018 without filing overdue Form 8 and Form 11.

3. What shall be format to issue a statement of assets and liabilities by the Chartered Accountant?

In accordance with the provisions of the LLP Act, 2009, there is no fixed format for statement of assets and liabilities of an LLP. However, in general parlance, the auditors prepare the accounts of the LLP as per the format of Form 8 and accordingly, the said format shall be followed for preparing the said statement of assets and liabilities.