Key Points:
- Strike off is a faster, cost-effective alternative to winding up, used to legally dissolve defunct or inactive companies.
- Companies can apply for voluntary strike off if they haven’t started business within a year or remained inactive for 2 years.
- The ROC can suo moto strike off companies for prolonged inactivity after issuing due notice.
- Certain companies, like listed entities or those under investigation, are not eligible for strike off.
- Dissolution takes effect after ROC publishes a notice; appeals to NCLT are allowed within 3 years of strike off.
Introduction
In the lifecycle of a company, cessation of operations can arise for various reasons—lack of business viability, strategic realignment, or prolonged inactivity. Rather than undertaking the formal and often protracted process of winding up, companies that are defunct or have never commenced business may opt for “strike off” under the Companies Act, 2013. Strike off is an expedited mechanism that removes the company’s name from the Registrar of Companies (ROC), resulting in its dissolution. Sections 248 to 252 of the Act prescribe both ROC‑initiated and voluntary routes for strike off, offering a simple, cost‑effective solution for entities seeking to close their doors.
Application For Strike Off Of A Company
Striking off the name of a company is an alternative mechanism for closing the operations of the company. The Registrar of Companies (‘ROC’) can issue a notice to strike off the company name from the Register of Companies for certain reasons. The company can also apply for the ROC to strike off its name from the Register of Companies.
Section 248 to 252 of the Companies Act, 2013 (‘Act’) provides the procedure of striking off company names by the ROC or voluntary by the company. Strike off of a company name means closing a defunct company in a faster manner. It is the simplest way to dissolve a company.
Application for Voluntary Strike Off
A company wishing to pursue voluntary strike off must first secure shareholder approval—either by passing a special resolution at a general meeting or by obtaining written consent from members representing at least 75% of the paid‑up share capital. Prior to filing its application, the company must settle all outstanding liabilities or make adequate provision for their discharge.
An application to the ROC may be grounded on one of two conditions: (i) the company failed to commence business within one year of its incorporation; or (ii) the company remained inactive for two consecutive financial years and did not apply for dormant status under Section 455 of the Act. Upon receipt of a valid Form STK‑2 application, along with the board resolution, indemnity undertakings, and evidence of liability discharge, the ROC publishes a public notice in the Official Gazette. This notice invites any objections before the company’s name is struck off the Register of Companies.
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Companies are not eligible for strike-off by ROC
- Listed companies;
- Companies that have been delisted due to non-compliance of listing regulations or listing agreements or any other statutory laws;
- vanishing companies;
- Companies, where inspection or investigation is ordered and being carried out or actions on such order, are yet to be taken up or were completed but prosecutions arising out of such inspection or investigation are pending in the Court;
- Companies where notices under section 234 of the Companies Act, 1956 (1 of 1956) or section 206 or section 207 of the Act have been issued by the Registrar or Inspector and reply thereto is pending or report under section 208 has not yet been submitted or follow up of instructions on report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the Court;
- Companies against which any prosecution for an offence is pending in any court;
- Companies whose application for compounding is pending before the competent authority for compounding the offences committed by the company or any of its officers in default;
- Companies, which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
- Companies having charges which are pending for satisfaction; and Companies registered under section 25 of the Companies Act, 1956 or section 8 of the Act.
Strike Off Initiated by the ROC
- ROC forms reasonable belief that a company has either:
- Failed to commence business within one year of incorporation; or
- Remained inoperative for two consecutive financial years without applying for dormant status under Section 455.
- ROC issues a show‑cause notice to the company and its directors, stating its intention to strike off the company’s name from the Register of Companies.
- The notice sets a 30‑day deadline for the company to submit:
- Written representations; and
- Copies of all relevant supporting documents.
- If the company’s response satisfactorily addresses ROC’s concerns, further action may be stayed; otherwise, ROC proceeds with strike‑off.
Procedure for Striking Off Company Name
A notice issued by the ROC for striking off the company name or application filed by a company for striking off its name should be published in the Official Gazette for informing the general public. The ROC will strike off the company name from the Register of Companies upon the expiry of the specified time in the notice for striking off unless the company shows the contrary reason for the same within the mentioned time.
The ROC will publish the dissolution notice in the Official Gazette after striking off the company name in the Register of Companies. Upon publication of the notice in the Official Gazette, the company will stand dissolved.
Before passing an order of company dissolution and striking off the company name, the ROC will satisfy itself that sufficient provision is made for the payment or discharge of company liabilities, the realisation of amounts due to the company and its obligations within a reasonable time.
The ROC will also obtain the necessary undertaking from the director, managing director or other persons in charge of the company management in this regard.
However, the company’s assets will be available for the discharge or payment of its obligations and liabilities even after the date of the order of removing the company name from the Register of Companies.
The liability of every manager, director, or other officer exercising any power of management and every member of the dissolved company will continue, and it can be enforced as if the company had not been dissolved.
Effect of a Company Notified as Dissolved
Once the Registrar of Companies issues its dissolution notice in the Official Gazette under Section 248 of the Companies Act, 2013, the company ceases to exist from the exact date specified in that notice. As of that date, it no longer carries on any business or operations and is officially removed from the Register of Companies.
Although the company’s Certificate of Incorporation is deemed cancelled upon dissolution, it retains a narrowly defined residual life solely for the purpose of settling its affairs. Specifically, the cancelled certificate remains effective to enable the payment or discharge of any outstanding liabilities, the recovery of amounts due to the company, and the completion of any remaining obligations.
Appeal to the Tribunal Against Dissolution
Any person aggrieved by the ROC’s strike‑off order issued under Section 248 of the Companies Act, 2013 may appeal to the National Company Law Tribunal (NCLT) within three years from the date of the Gazette notification. If the Tribunal is satisfied that the grounds for striking off were unjustified or absent, it may order the company’s name to be restored on the Register of Companies. Before passing such an order, the Tribunal must provide a reasonable opportunity for the ROC, the company, and any other interested parties to make representations and be heard.
Once the Tribunal issues its restoration order, the company must file a certified copy of that order with the ROC within thirty days of the Tribunal’s decision. Upon receipt, the ROC will reinstate the company’s name in the Register and issue a fresh Certificate of Incorporation, thereby reviving the company’s legal existence from the date of restoration.
Separately, if the ROC discovers—within three years of the dissolution notification—that the strike‑off resulted from incorrect, incomplete, or inadvertent information furnished by the company or its officers, the ROC itself may petition the NCLT to restore the company’s name. In such cases, the same procedural requirements apply: the Tribunal must hear all parties before granting reinstatement.
Conclusion
Strike‑off under Sections 248 to 252 of the Companies Act, 2013 provides a streamlined, cost‑effective route for companies that are defunct or have never commenced business to dissolve their legal existence without resorting to traditional winding‑up proceedings. Whether initiated voluntarily by the company or suo moto by the ROC, the procedure hinges on strict compliance with eligibility criteria, transparent communication via Official Gazette notices, and full discharge—or proper provisioning—of liabilities. Although the company’s name is removed and its Certificate of Incorporation deemed cancelled, residual rights and obligations persist to safeguard creditors and ensure proper settlement of dues. Moreover, the three‑year window for appeal or restoration by aggrieved parties or the ROC underscores the importance of accuracy and completeness in all filings. For directors and stakeholders, meticulous due diligence, timely submissions, and professional undertakings are essential to navigate the strike‑off process successfully and mitigate the risk of future disputes or personal liabilities. In practice, engaging experienced corporate counsel will help ensure that strike‑off is executed seamlessly, delivering a clean and compliant exit for non‑operational entities.
Dipendra Jain is a distinguished professional with extensive expertise in taxation matters and portfolio management services. A fellow member of the Institute of Chartered Accountants of India (ICAI). In addition to his proficiency in taxation, Dipendra Jain provides comprehensive corporate legal advisory services, including company incorporation, MSME Udyam registration, and regulatory compliance. He is also adept at contract drafting, offering meticulously crafted agreements tailored to meet the unique needs of his clients. His versatile skill set and client-centric approach make him a trusted advisor for individuals and organizations seeking expert guidance in financial, corporate, and legal matters.
For any query contact- dkjainca2000@gmail.com
