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Removal Of Name From Register Of Companies (Section 248 & 249)

Updated: Oct 4, 2022

Ways to Remove Company's Name from Register of Companies

Under the Companies Act of 2013, there are two options for ending a company's activities and removing its name from the register of companies.

To begin, the Registrar has the authority to remove the Company's name from the Register of Companies if he has reasonable grounds to think that the requirements set out in Section 248(1) have been met.

Second, the company can make an application with the Registrar of Companies under Section 248(2), requesting that the firm's name be removed from the Register of Companies.

Section 248 to Section 252 of the Companies Act establish the structure and procedure to be followed when a company is struck off, whether by the Registrar of Companies or by the company itself suo moto. The striking-off is a process that allows a failed corporation to be closed quickly and efficiently.

If the following requirements as laid down in Section 248 of the Companies Act are met, the company can approach the ROC for removal of its name/strike off, and the ROC will remove the company's name from the Register of Companies, subject to the fact that the company is given the opportunity to deliver representations in regard to the notice sent:

1. Even after a year has passed since its establishment, the worried firm has yet to begin its interactions or commercial transactions.

2. The subscribers to the Memoranda haven't yet paid the subscription sum they were required to pay. A declaration noting the same has not been completed or filed within the 180-day period following the Company's incorporation.

As a result, the legislative requirements that must be met before a business's name may be deleted or struck off are the same for both the company and the ROC. The distinction is that the company must file an application with the Registrar of Companies, whereas the Registrar must send a notice to the company and directors and consider their representations before striking off the company.

Procedure for striking off company name by the registrar of companies

If the Registrar has reasonable grounds to think that the requirements listed above have been met, he can send a notice to the company and its officers/directors informing them of his decision to remove the firm's name from the ROC. The Company has the right to provide statements to the ROC, together with relevant documents, in response to the ROC's statement in the notice given, and such representations must be sent to the ROC within thirty days of the date the said notice was sent.

A Special Resolution must be passed by the company's members in the general meeting in order for the firm to file such an application with the Registrar of Companies. The application can be brought to the ROC for striking off the business name once the Special Resolution has been approved with the assent of 75% of members in respect of the paid-up capital. When such an application is filed with the ROC, it must first publish a public notice in accordance with the Act's requirements before striking off the business name.

In order for the company to file such an application with the Registrar of Companies, the members of the general meeting must approve a Special Resolution. Once the Special Resolution has been accepted with the consent of 75 percent of members in respect of the paid-up capital, the application for striking off the company name can be filed with the ROC. When such an application is submitted to the ROC, it must first issue a public notice before striking off the business name as required by the Act.

Limitations on a company's ability to file an application under Section 248

The company has the authority to make an application for the removal of its name from the Register of Companies on its own initiative; nevertheless, Section 249(1) limits and restricts the business's ability to file such an application in specific circumstances. According to Section 249, a firm cannot make a Suo moto application under Section 248(2) if, within the previous three months:

The company's name has been changed or its registered office has moved from one state to another. If the firm has moved its registration from one district to another, there is no obstruction to moving for name removal; however, if the move crosses a state boundary into a different state, such an application will be denied for a period of three months. When a business moves its registered office from one state to another, it must obtain clearance from the Registrars of both jurisdictions, and the Registrar of State must issue a new certificate of incorporation within 30 days in the state where the company's registered office will be transferred.

Right before the end of a transaction, the corporation sells the worth of its prerogative or precious possessions/property for the only purpose of generating profit in the usual course of business. When a firm sells its assets right before closing its doors, it is barred from filing an application to have its name removed from the ROC for a period of three months. The embargo was enacted because firms used to fraudulently dispose of their properties, defrauding their creditors and other stakeholders, and then shut down their business. As a result, the abovementioned limitation was enacted to avoid such misappropriation of money.

The Company has filed/moved an application with the National Company Law Tribunal (Adjudicating Authority) for approval of the arrangement or compromise, but the application has not yet reached its conclusion. As a result, if an application has been filed under Section 230 of the Companies Act and the Tribunal has not approved a compromise or agreement, the business cannot legally take measures or actions to strike it off in the meanwhile. Because the approval of a scheme of arrangement or compromise is a lengthy procedure with several criteria and compliances to meet, no coercive measures are permitted in the meanwhile that might jeopardise the scheme under the direct observation of the National Company Law Tribunal.

The company is engaged in or participating in any activity that is not necessary or expedient in nature, such as filing an application, determining or taking steps for the execution/registration of such an application, adhering to the required legislative compliances, or concluding the company's affairs.

The firm was wound up in compliance with or according to the procedure introduced under Chapter XX of the Companies Act or the Insolvency and Bankruptcy Procedure Code, 2016. Section 255 of the IBC was recently replaced for the provision about the company's winding up in the manner indicated in the Eleventh Schedule, and it went into effect on November 15, 2016.

If the above-mentioned circumstances incorporated under sub-section (1) of Section 249 are met, the company should not file an application with the Registrar of Companies to have the company struck off, as this would put the company in direct violation of the rules enacted thereunder, and the company would be subject to a fine of up to one lakh rupees under Section 248. (2). Section 249(2) also states that the Registrar of Companies must rescind the application filed under Subsection 248 as soon as the ROC is notified that the requirements set out in Subsection 248 have been met (1).

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