Big Dilemma – Strike off of Company without Completion - Annual Filing


Big dilemma – Strike off of Company without Completion - Annual Filing


Short Summary:
We have received queries / questions many persons Like: Professionals / corporate on subject “Whether Completion of Annual Filing Mandatory for Strike Off of Company ?”.
There is difference in views of professionals, business entities even authorities on above mentioned question. In below mentioned editorial author will discuss provision of strike off in concerned to above question.

Background:
There was three phase in History of Companies Act for “Strike off of Companies”.

Phase I:  Under Companies Ac, 1956 Closure of Company was stated under Section 560.
Phase II: Then MCA came with a Scheme ‘Fast Track Exit Scheme’ (FTE) on 7th June, 2011.
Phase III: Then MCA came with Companies Act, 2013, provision of Strike off of Company falls under Section 248 effective from 26th December, 2016.
  
Legal Provisions:
v  Extract of Sections 560:
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. ([1]This language was mentioned in MCA circular no 36/2011 dated 07th June, 2011.)

  v  Fast Track Exit Scheme (FTE):
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 prescribed the new Guidelines. The Guidelines for “Fast Track Exit mode” for defunct companies.

   NOTE: After Effective of Section 248 dated 26th December, 2016, “FTE” scheme has been omitted.        Therefore, legally after 26th December, 2016 there is no FTE Scheme.

   v  Extract Section 248 of Companies Act, 2013:
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.

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 is 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.

 Quick Bite:
Many persons have query in mind that, where in Section 248 it is mandatory to file e-form AOC-4 and MGT-7 before filing of strike off?

There is amendment in rule 4 of Companies (Removal of Name of Companies) rules, 2016 w.e.f. 8th May, 2019 i.eno application in Form No. STK-2 shall be filed by a company unless it has filed overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return), up to the end of the financial year in which the company ceased to carry its business  operations”

Therefore, after amendment in Rule 4 w.e.f. 08th May, 2019 it is very clear that annual filing of AOC-4 and MGT-7 is mandatory up to the end of the financial year in which the company ceased to carry its business operations.

In other words, Company is required to file AOC-4 and MGT-7 up to financial year till company carries its business and operations.

Note: Practically many Registrar of Companies (ROC) has sent e-form STK-2 for resubmission/ non accepting strike off if Annual filing of Company is not completed. Therefore, after above amendment ROC have to approve the STK-2 for strike off of Company even company has not completed annual filing if Company has declared that it has not done any business and profession since annual filing is pending.”
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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. Even though the company is Strike off... It's working regularly as it was doing earlier... No action thereafter by MCA... What should the Director do now... Reviving a strike off company is Very Expensive...!
    There is no big business now...! What should be done?

    ReplyDelete
    Replies
    1. Ravindra ji, as you rightly mentioned that there is a big business in striked off company. Either shift the business in any other existing company or apply for revival of company. Otherwise, ROC may harm the company and officers in default with heavy penalties.

      You may approach my team members for necessary procedure and help at admin@saifinbiz.com

      Delete
  2. Where the co alteady filed strike off form 2 on 31 Dec 2018. after completing annual filing for fy 2017. 18. Where the strike off form still not approved after filling the form on 31st Dec 2018. it is required to annual filling for fractional period ofFy 2018 19. And also Inc 22A.

    ReplyDelete

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