Following the provisions of Section 248(1) of the Companies Act, 2013, the Registrar of Companies in the fiscal year 2017-18 struck off many Companies. In its first channel and consequently, launched its second drive to strike-off lakhs of Companies again in August 2018.
Strike off means temporary closure of Companies following the provisions of the Companies Act, 2013 that is a substitute to winding up of the Company where the Company can get the Company revived for a period of ‘twenty years’ from the date of strike off of the company.
Who can appeal to Tribunal for revival in case ROC struck off the Company?
- Any person can file an appeal within three years from the date of order of Registrar, who is aggrieved by order of Registrar.
- On being contended that the name of the Company has been struck off from the Register of Companies, it depends on incorrect information furnished by the Company or inadvertently. Moreover, its Directors can file an appeal within three years.
- By Company, or creditor or any member or workman aggrieved by Company devising its name struck off from the register of companies (ROC) can appeal file from the date of 'publication of notice' of strike off in the Official Gazette within ‘20 years’
At this juncture, it is important to diverge that the appeal has to be filed within three years of the date of order of the ROC in case of compulsory striking off by ROC. The limitation period is twenty years in case of voluntary striking off. It is on condition that the application shall be made before the expiry of twenty years w.r.t. it is striking off the Company's name from the date of publication in the Official Gazette of the notice.
What are the grounds on which ROC can Strike off Companies?
- The Companies within one year of its certification of incorporation have failed to carry on the business actions.
- The Companies which are not obtaining and carrying on any business or operations for the next two financial years. (It means the non-filing of e-Forms AOC-4 and MGT-7 during preceding two fiscal years)
- It also depends on whether subscribers to the memorandum of association of a company have not paid the subscription money. A declaration has not been filed within (e-Form 20A) 180 days to this consequence.
- If it got revealed from the physical verification of its registered office, that the Company is not carrying on any business.
However, fundamentally, the ROC has struck off the companies' names only on account of non-filing of MGT-7 e-Forms and AOC-4 during preceding two financial years only.
What are the grounds for Revival?
The grounds on which NCLT does the revival of Companies are as follows:-
- If the Company has any property which is immovable.
- Apart from ROC, if Company has all done other compliances with GST, Income tax, Provident Fund, and such authorities.
- In case there are evidencing the Company to be an on-going one of active transactions in the bank statements of the Company’s account.
- In case the Company is opting for renewing any license like FSSAI license, Excise, etc. on an annual basis, which is compulsory to be taken. Any other documents contingent upon the circumstances. It differs from case to case basis.
- The primary watchword of the logic that needs to be established that there should be some document screening that the Company is an on-going one, and it is in the ‘public interest’ to revive the Company.
Why the Struck off Company must opt for Restoration Immediately? Know the Benefits given by Companies Fresh Start Scheme- 2020 (CFSS-2020).
There are numerous benefits that the revival of stuck off the company would enjoy. Those are as follows:-
- To recover their overdue sum with interest, creditors of such Companies may start an action.
- The company can be enforced for discharging the company's liabilities/ obligations, and the Liability of every director & officer shall continue.
- If any Company has not filed annual returns or financial statements for any continuous period of three fiscal years, it may disqualify the Directors of such Companies.
- Registrar may also recommend the prosecutions of the persons responsible for the non-filing of the documents and returns.
- Moreover, five years from the date on which the said company fails to do so, this disqualification will be outcome with ineligibility to be appointed in another company or re-appointed.
- The office of the director will/must become vacant in all the companies leading to such disqualification as mentioned above, wherever he is holding the director's post.
- Such director shall be required to inform the company concerned about his disqualification even when the disqualification gets removed (under sub-section (2) of section 164) before he is re-appointed or appointed.
- The following benefits can be availed if the Promoter Shareholder opt for the revival of the Company’s name by taking instant action within the accord of this scheme:-
a. Such a company can now opt for filling of overdue returns and documents only with a nominal fee of "300/- or 400/- or 500/- or 600/-", which has not filed returns for preceding years. The fees will depend as the case may be and can get the thorough waiver of, and additional business fees can commence its actions if so anticipated.
b. For imposing penalties on accounts of delay associated with specified forms and returns, no proceedings against the "Company and its Officers" shall be initiated if overdue documents must be filed within the overall occupancy of the scheme.
c. If proceedings or prosecution, initiated shall be withdrawn if the scheme's necessities will be obeyed in time.
What are the documents that shall be filed with the attachments exhibiting that the Company was actually in operations?
The application to restore the name of the Company shall be filed, exhibiting that the Company was actually in operations (recommendatory) with the following attachments. Those are as follows:-
- 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.
Overall Procedure
What is the Procedure to appeal before National Company Law Tribunal (NCLT)?
Legal Application For The Process Of Revival Of Company
- Appeal to National Company Law Tribunal (NCLT) under Section 252
- Appeal by Anyone – Within three years under Section 252(1)
- Appeal by Company/ Members/ Creditors/ Workman under Section 252(3) – Within 20 years
Planning And Provision Of Petition
An appeal or Application must be made in the format of NCLT-9 along with a demand draft of "Rs. 1000" in favor of "Pay and Accounts Officer, Ministry of Corporate Affairs (MCA)." Link:- https://nclt.gov.in/content/national-company-law-tribunal-benches The petition under Section 252(3) shall be filed with the Tribunal (NCLT) for the revival of the name of struck Company.
Submission Of The Revival Petition With ROC
Not less than Fourteen days before the date fixed for hearing of the Application, a copy of the petition should be served to the Registrar of Companies. It may also serve on such other persons as the Tribunal may allow.
Trails And Hearing By Tribunal (NCLT)
During the trials and hearings, the Tribunal shall hear the Petitioner and Respondent (ROC- Registrar of Company). If any, it will also take note of the observations/objections received during the proposed dates of hearing. It can order the revival of the name of the Company in the record of the ROC after hearing both the parties if it is satisfied.
Tribunal Instructions
The order shall direct the following where the Tribunal makes an order restoring the name of a company in the register of companies. Those orders are as follows:-
- Within 30 days by the latest, the applicant should deliver a certified copy of the order to the ROC.
- After receiving all the certified copies, the ROC will do the needful consideration name and seal and publish the Final order in the Official Gazette websites.
- Until and unless the Tribunal directs otherwise, the applicant must pay the ROC his costs of the appeal or Application, and any other occasion by.
- The Company should comply with the requirements of the Companies Act, 2013, and file pending annual returns and financial statements with the Registrar. They should abide by all the rules made within such time as may be focused and directed by the Tribunal.
Abiding ROC Orders For Filing
Within thirty days from the order's date, the Company should file a copy of the order in form 'INC-28' with the Registrar of Companies (ROC).
In Gazette: Order Publication
After receiving all the certified copies, the ROC in his office will do the needful consideration name and seal and publish the order in the Official Gazette.
Completing The Pending Filing Documents With ROC
The Company should comply with the requirements of the Companies Act, 2013, and file pending annual returns and financial statements with the Registrar. They should abide by all the rules made thereunder within such time as may be focused and directed by the Tribunal.
What is the position of Company and its Assets and Liabilities after strike off?
The liability of every single director, manager, or other officers, who was working out any power of management, and every member of the Company counted under sub-section (5), must continue and maybe obligatory enforced even after strike off.
Company will be anxious for many reasons, and one of it may also count as whose name has been struck-off by the ROC is that Cash balances Asset, Rights, and other Current or Non-current Assets of the Company is consigned with whom? It is a highly debatable issue regarding the status of assets after strike off in the absence of any particular provisions in the Companies Act, 2013.
Latest: Revival Of Struck Off Companies By Companies Fresh Start Scheme, 2020 (CFSS-2020)
Following the power under Section 248(1)(c) to curb the operations of shell and increase the transparency of Companies, the Registrar of Companies struck off many Companies in 2017, 2018, and 2019. Accordingly, having jurisdictions to date, there have been three tranches of striking off done by the Registrar of Companies (ROC).
Everyone was facing difficulty in reviving their Companies before this date on account of hefty penalties elaborated and included in filing annual returns of the Company. However, additional fees on filing yearly returns have been waived off by the government amid widespread of Novel Corona Virus after the introduction of Companies Fresh Start Scheme, 2020 (CFSS-2020).
Therefore, many people again have started giving thought to in receipt of getting their Companies revived. (Under Section 252 of the Companies Act, 2013, read with Rule 87A of the National Company Law Tribunal (Amendment) Rules, 2017). Company Fresh Start Scheme (CFSS-2020) covers a golden opportunity to revive your Company without connecting any in-exorbitant or heavy penalties or fees.