What is a Strike Off Company & How to Restore it?

Embarking on the journey of entrepreneurship is filled with excitement and ambition. However, as the business market changes, the circumstances of a corporation (startup or well-established organization) can shift as well. Sometimes, due to inactivity or the need for formal closure, it becomes necessary to strike off a company.

This blog explains the strike off company meaning, its process, its legal and financial implications, how to check the strike off date, and the steps for restoring a struck off company.

What is a Strike Off Company?

Strike off company meaning: A strike off company refers to an entity from which the Registrar has officially removed the name from the Register of Companies (RoC). This process dissolves the company and ends its legal existence. It’s a faster and less complex method of shutting down a company compared to winding up a company. 

A strike off can be initiated voluntarily by the company or involuntarily by the RoC due to non-compliance. Knowing a company’s status and its date of cessation is crucial for stakeholders because it affects legal liabilities, asset ownership, and the possibility of revival.

Legal Framework: Strike Off Under the Companies Act 2013

The Companies Act, 2013 (Sections 248–252) and the Companies (Removal of Names) Rules, 2016, govern the process of striking off a company. The RoC, a key authority under the Ministry of Corporate Affairs (MCA), oversees this process. 

Since April 2023, the Centre for Processing Accelerated Corporate Exit (C-PACE) has handled the administrative aspects of striking off companies, making the process more efficient.

The RoC can initiate a suo moto (on its own) strike off under specific conditions, such as:

• The company has failed to commence business within one year of its incorporation.
• The company has not carried out any business or operations for a period of two years immediately preceding the financial year and has not applied for dormant status.
• The subscribers to the memorandum have not paid the subscription money, and they have not filed a declaration to that effect within 180 days of incorporation.

Companies can also apply for a voluntary strike off. Earlier, companies applied for strike off under the Fast Track Exit (FTE) mode introduced by the Companies Act, 1956. Now, they file Form STK-2 under the Companies Act, 2013.

Who is Eligible to Strike Off a Company in India?

The following types of companies can apply for strike off if they meet the prescribed conditions:

• Private Limited Companies
• One Person Companies (OPCs)
• Section 8 Companies – These companies can apply for strike off, but only if they have not received any government grants or subsidies, or if they have fully settled any such obligations.

Certain companies are not allowed to apply for strike off, such as:

• Public companies
• Companies with ongoing inspections or investigations
• Listed or delisted companies on any stock exchange
• Companies with pending prosecutions or court cases
• Vanishing companies (companies that fail to file returns after raising funds from the public)
• Companies where a receiver or manager has been appointed
• Companies with outstanding charges (not satisfied with RoC)
• Companies with pending tax obligations (GST, Income Tax, etc.)

Voluntary Strike Off a Company: Step-by-Step Procedure

The voluntary procedure to strike off a company requires the following steps:

1. Board Resolution: The company’s board must pass a resolution approving the strike off.
2. Closure of Liabilities: All liabilities must be settled.
3. Filing Form STK-2: The company must file Form STK-2 with the RoC/C-PACE, along with the required documents and declarations.
4. Public Notice: The RoC publishes a public notice to invite objections, providing a waiting period for stakeholders to raise concerns.
5. Final Confirmation: If no objections are received, the RoC confirms the strike off of a company. The company’s name is then removed from the register, leading to its dissolution.

Involuntary Strike Off a Company by RoC (Suo Moto)

The RoC can initiate an involuntary or suo moto strike off a company if it believes the company is not carrying on business. This process is a measure to clean up the register of companies.

Process:

1. Notice (STK-1): The RoC first sends a notice in Form STK-1 to the company and its directors, asking them to respond within 30 days and explain why the company should not be struck off. The RoC sends these notices to directors at their registered email IDs and addresses on record.
2. Public Notice (STK-5): If the company fails to respond, the RoC publishes a public notice in Form STK-5 on the MCA website and in official gazettes, inviting objections from the public, creditors, or other stakeholders within 30 days.
3. Final Notification (STK-7): If there are no objections, the RoC officially removes the company’s name from the register. The final dissolution is confirmed through a notice in Form STK-7, which is published in the Official Gazette. The date of cessation is the date of this gazette notification.

Consequences:

• For the Company: The company loses its legal identity and can no longer conduct business. All of its assets legally vest with the government.
• For Directors and Shareholders: Directors can be disqualified from holding directorships in other companies for five years. They remain personally liable for any outstanding debts, dues, or liabilities of the company, even after the strike off.
• For Creditors: Creditors may face significant challenges in recovering their dues as the company no longer exists. They must act swiftly to file objections during the public notice period.

How to Find the Strike Off Date of a Company?

Finding the date of the strike off a company is a critical step for due diligence. Here’s how you can check the company’s strike off date:

1. MCA Portal

The most reliable method is to check the official Ministry of Corporate Affairs (MCA) portal (mca.gov.in).

• Go to “MCA Services” and select “View Company/LLP Master Data”.
• Enter the company’s Corporate Identification Number (CIN) or name.
• The search results will display the company’s details, including its company status, strike off, and the date of cessation.

2. Official Gazette Notification

The date of the strike off of the company is formally established by the STK-7 notice in the Official Gazette. You can check the e-gazette portal to find this notification and its publication date, which serves as the official dissolution date.

3. Public Notices and Third-Party Tools

• Public Notices (STK-5): While not the final date, the date of publication of the public notice in a newspaper or on the MCA website can help you trace the timeline of the strike off process.
• Third-Party Databases: Websites like Firmway, Finanvo, or SignalX maintain databases of struck-off companies and their dates. These can be useful for quick checks, but should always be cross-referenced with the official MCA records for accuracy.

Why Does the Date Matter?

Knowing the exact strike off date is crucial for several reasons, including:

• Revival Timelines: A company can be restored by the National Company Law Tribunal (NCLT) within three years from its strike off date.
• Liability Timelines: It helps in determining the period for which directors and shareholders can be held liable.
• Transaction Disclosures: It’s a key data point for financial and legal disclosures, especially when dealing with entities that have a history of non-compliance.

Implications of a Strike Off Company

A strike off company has far-reaching consequences for all stakeholders involved.

• For the Company: The company is legally dissolved. It cannot operate or transfer assets. Any assets become the property of the government.
• For Directors and Shareholders: Their personal liability for any unresolved obligations continues. They may face fines and other legal consequences. The possibility of reviving the company exists, but it requires a formal application to the NCLT.
• For Creditors and Vendors: Recovering outstanding dues becomes a significant challenge. Creditors must monitor the MCA strike off list to take timely action, such as filing objections or pursuing legal remedies against the directors.
• For Investors or Buyers: A company’s strike off status is a major red flag. It indicates a history of non-compliance and a risk of hidden or restored liabilities if the company is ever revived.
• For Compliance and Disclosure: Under Schedule III of the Companies Act, 2013, companies must disclose any dealings with entities that the Registrar has struck off, highlighting the importance of monitoring this information.

Revival / Restoration of a Struck Off Company

A company that has been struck off can be revived. Here’s how:

• Administrative Restoration: The RoC can restore the company’s name if the strike off was an error, within a certain period.
• Tribunal Restoration: The company, its members, or creditors can file an application with the National Company Law Tribunal (NCLT) for restoration within three years of the official strike off date. Additionally, creditors, the RoC, or other parties with a legitimate interest can request restoration even up to 20 years after the company was struck off.

Upon restoration, the company regains its legal status and must complete all pending compliances, including filing overdue returns and paying the applicable fees and penalties.

Practical Tips to Strike Off a Company

Here are some simple yet effective ways to deal with company strike off situations:

1. Due Diligence Checklist for Struck-Off Companies

Always verify a company’s legal status before entering into any transaction:

• MCA Portal Check – Search with CIN or name and confirm “Struck Off” status.
• Official Gazette – Cross-check the MCA status with the STK-7 notification.
• Director Identification – Review director lists, as disqualified directors cannot hold new appointments.
• Third-Party Tools – Use platforms like Firmway or SignalX, but always confirm with MCA records.

2. What to Do If You Find a Company Has Been Struck Off?

If you discover that a company is struck off, take the following steps without delay:

• Legal Implications – Stop all business dealings; new contracts are invalid.
• Accounting Implications – Write off outstanding dues as bad debts.
• Transactional Implications – Consider legal action against directors personally, as their liability may continue.

3. How to Avoid Unintended Strike Off?

Timely compliance and proactive steps can help keep your company safe:

• Stay Compliant – File annual returns (AOC-4, MGT-7) on time.
• Regular Audits – Keep financial and statutory records updated.
• Settle Liabilities – Pay creditors, employees, and tax authorities.
• Dormant Status – Apply for dormant status if the business is inactive.
• Voluntary strike off – Choose voluntary exit instead of waiting for RoC action.

4. Strike off vs. Winding-Up vs. Dormant Status

Understand the difference between strike off, winding-up, and dormant status for better decision-making:

Feature	Voluntary strike off	Winding-Up (Liquidation)	Dormant Status
Purpose	Dissolve the defunct company	Close the company by selling assets	Suspend operations temporarily
Process	File Form STK-2 with RoC/C-PACE	Involves liquidator + NCLT process	Apply to RoC
Liability	Directors liable for past obligations	Liquidator settles liabilities	The company remains active but dormant
Cost	Low	High	Low
Revival	Possible via NCLT in 3 years	Not possible	Possible by application

5. When to Consult Professionals?

In complex matters, professional guidance ensures a smooth and compliant process:

• Company Secretaries (CS) – Assist with documentation and strike off filings.
  
• Chartered Accountants (CA) – Handle accounts, liabilities, and tax matters.
  
• Legal Advisors – Guide in litigation, revival cases, or creditor disputes.

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