FAQ’s – ROC NOTICE U/S 248 - Series - 355


FAQ’s – ROC NOTICE U/S 248

SHORT SUMMARY:
As PIB Report, during F.Y. 2017-18 ROCs identified and removed from the ROC the names of 2,26,166 companies; 3,09,619 directors disqualified.

2nd drive to be launched during the current financial year 2018-19; a total 2, 25,910 companies identified for being struck-off.

Many ROC’s has issued notices in form STK-5 in the month of May and June, 2018 u/s 248(4) of Companies Act, 2013. Notice has been sent to those Companies, which according to ROC have not been carrying on any business or operation for a period of two immediately preceding financial years.

The main thrust of this editorial is “TO DISCUSS THE FAQ’S, FOOD FOR THOUGHT FOR THE SAME”

FAQ’S
A.   If Company doesn’t reply ROC Notice what are the consequences of same?

I.            Whether ROC can strike off the status of Company?
As per Notice of ROC u/s 248(1), this notice is first step toward struck off of Company. If Company fails to reply such notice within 30 days of publication of notice (i.e. 17th July, 2018 in case of publication of Delhi ROC) ROC shall struck off the name of Company in its records.

II.            Whether Director shall be disqualified?
As per Section 164(2) if a company fails to file its Financial Statement or Annual Return for continuous 3 financial years, in such case Directors shall be disqualified.
In this case, if Company has fails to file financial statement and annual return for continue 3 financial year then directors shall be disqualified, if default is only for 2 years then directors shall not be disqualified.

III.            Personal Liability Director/ Manager/ Officer/ Members.
As per Section 248(&) “The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced diveshas if the company had not been dissolved”

In general words, liability of Directors, manager, other officers and Members of the Company shall be continue even after struck off of Company.
Hence, one can opine that they shall be personally liable for all the statutory and other liabilities of the Company. (Eg. Statutory liability like: Payment of Roc Fees, payment of income tax liability, penalty for non filing of financial statements and annual returns etc.)
  
IV.            Cessation of Bank Account of Company?
If a Company struck off in the record of ROC. Then ROC simultaneously send letter to Banks for cessation of Bank account of Company in the entire Bank. “Earlier when roc struck off approx 2.5 lakh companies has taken the same action’

V.            Companies shall not be able to carry on business, sale/ purchase any assets, bank transactions.
If a Company once struck off in the record of ROC, then such Company:
·         Can’t conduct any business activity in the Company. Company can’t carry on business. (i) Because due to cessation of Bank account they can’t do any transactions. (ii) As Company struck off promoters can’t sign any diveshinvoice or other documents on behalf of the Company.

·         If Company having any assets then Company can’t sell / lease such property. Because Company can’t accept any amount from such transaction due to cessation of Bank Account.

B.     What shall be impact of disqualification of Director on other companies in which they are continuing as Directors?
Detailed answer of this question has been already covered in the below mentioned article. (In simple word disqualified director automatically vacant office from all other companies)

C.     Everything about provision of Disqualification of Director?
Detailed answer about disqualification of director covering section 164 and 167 can be read on the below mentioned link:

D.    Whether directors of the Company could be personally liable for non compliance like non filing of financial statement or annual return after strike off of Company?
As per Section 166 Director have to adhere the duties mentioned in such section. He has to work in best interest of Company, employee, shareholders, community etc. If directors fail to file Annual forms as an officer in default they shall be liable for the penalties/ prosecution. In case company got struck off they shall be personally liable for such statutory liabilities.

E.     Whether Company can be strike off without completion of annual filing.
As per section 560 of the Companies Act, 1956, Registrar of Companies may strike off the name of companies on satisfying the conditions therein. As per Section 560, a company desirous of getting its name struck off has to apply to Registrar of companies in e-form 61. All pending statutory returns are required to be filed along with e-form 61.

In order to give an opportunity for fast track exit by a defunct company, for getting its name struck off from the register of companies the Ministry has decided to modify the existing route through e-form – 61 and has diveshprescribed the new Guidelines. The Guidelines for “Fast Track Exit mode” for defunct companies.

Therefore, from the above provisions it is clear that before 7th June, 2011 (FTE Scheme) if company desired to go for strike off it was mandatory to file all pending statutory returns (Annual Filing Form). But then w.e.f. 7th June, 2011 by FTE scheme a company can go for Fast Track Exit without completion of diveshpending statutory returns, even a dormant company could apply for FTE as discussed in above question.

Latest Provisions: In the latest provisions of Section 248 and in respective rules language are same as was in section 560 of Companies Act, 1956. Section 248 states the provisions of strike off of the Company not for Fast Track Exit of the Company.

One can interpret that if a Company wants to apply for Strike off u/s 248 first it has to file all the pending statutory returns.
Difference between FTE Scheme, 2011 and Companies Strike Off u/s 248

S. No.
Particulars
Provisions under FTE Scheme
Provisions under Section 248 of Companies Act, 2013 along with rules.
1.     
Link for Circular/ Rules
2.     
Not Carrying Business & Activity
Is not carrying over any business activity or operation for last one year before making application under FTE.
not carrying on any business or operation for a period of two immediately preceding financial years
3.     
Dormant Company
Any defunct company identified as dormant by the MCA, may apply for
getting its name strike off
There are no such Provisions in Section 248.
4.     
Completion of Pending Statutory Return
Not- required to file pending statutory returns before apply for Strike Off.
Required to file pending statutory before apply for Strike Off.


 (Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)
Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.

Comments

  1. suppose in case directors of do not want the struck off of pvt company, but directors want to withdraw funds held in the bank account. is there any legal way out?

    ReplyDelete
  2. If company has not done any filing from last 8 to 10 years and we filed for strike off but ROC is asking for filing is there any way out?

    ReplyDelete
    Replies
    1. ROC have to ask for completion of filing as per section 248. there is no exemptions from annual filings.

      Delete
  3. company has strike off, the company does not have any business last 10 years, company does not have bank ac and pan.. can any alternative other than nclt?

    ReplyDelete

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