REMOVAL OF NAMES OF COMPANIES
&
VOLUNTARY LIQUIDATION PROCESS
PRESENTED BY: ASHOK TYAGI, FCS
E-130, GREATER KAILASH–1
NEW DELHI 110048
E-mail:[email protected]
Mob: 9810070575
Removal of Name of Companies
MCA has notified the Sections 248 to 252 of the Companies Act, 2013 (the Act) and
Companies (Removal of Names of Companies from the Register of Companies)
Rules, 2016 on 26th December, 2016.
 Registrar of Companies (ROC) shall issue a notice for strike off of name of a
company on the following reasons:
a) if a company has failed to commence its business within one year of its
incorporation, or
b) if a company is not carrying on any business or operation for a period of two
immediately preceding financial years and has not made any application
within such period for obtaining the status of a dormant company under
Section 455 of the Act.
 A Company may, after extinguishing all its liabilities, by a special resolution or
consent of 75% members in terms of paid-up share capital, file an application to
the Registrar of Companies on all or any of grounds stated above for removing
the name of the company from the register of companies.
 The following companies shall not be removed from Register of
Companies under Rule 3 and Rule 4 of the Companies (Removal of
Names of Companies from Register of Companies) Rules, 2016:
•
Listed companies;
•
Delisted companies due to non-compliance of listing regulations;
•
Vanishing companies;
•
Companies under inspection or investigation;
•
Companies against which any prosecution is pending or an application for compounding of
offences is pending;
•
Companies which have defaulted in repayment of public deposit etc.;
•
Companies having charges pending for satisfaction;
•
Companies registered under Section 8 of the Companies Act, 2013 or Section 25 of the
Companies Act, 1956.
Restrictions On Making Application Under Section 248
A company shall not make an application for removal of name, if at any time in previous
three months, it has:
• Changed its Name or Shifted its Registered Office from one state to another;
• Disposed of any property or rights held before cesser of trade or otherwise
carrying on business;
• Changed its activity except the one which is necessary or expedient for the purpose
of making an application under Section 248, or deciding whether to do so or
concluding the affairs of the company, or complying with any statutory
requirement;
• Made an application to the Tribunal for sanctioning the scheme of compromise or
arrangement and the same is pending before the Tribunal.
• Companies under winding up process.
 Note:- If a company files an application under Section 248(2) in violation of these
restrictions, it shall be punishable with fine which may extend to one lakh rupees.
The Process…
The ROC shall send a notice in Form STK-1 to all the directors of the company containing
reasons for removal of name of the company and seeking representations along with copies
of the relevant documents, if any, against the proposed action within a period of 30 days
from the date of notice;
OR
A company may file an application in E-Form STK-2 along with the fee of Rs. 5000 to the
ROC for removing the name of the company from the register of companies on all or any of
the ground specified in Section 248(1) and the Registrar shall, on receipt of such application,
cause a public notice to be issued. (Section 248(1) read with Rule 4).
Every application under Rule 4(1) shall be accompanied with a No Objection Certificate
(NOC) from appropriate Regulatory Authority, as applicable.
Form STK-2 shall be certified by a Chartered Accountant or a Company Secretary or a Cost
Accountant in whole time practice.
ROC shall publish the notice in Form STK 5 or STK 6, as the case may be,
which should be placed on MCA website, published in the Official Gazette and
also in an English and vernacular newspaper as prescribed.
ROC shall, simultaneously intimate the concerned regulatory authorities having
jurisdiction, seeking their objections, if any within 30 days from the date of
issue of letter of intimation.
ROC thereafter shall strike-off/remove the name of the company from the
register of companies and publish a notice of dissolution of company in the
Official Gazette in Form STK-7.
If a company files an Application with an intention to deceive or defraud any
creditor or other person or evade its liabilities, then the person in charge of the
management shall be liable to such person or creditor who incurred loss or
damage and such person shall be punishable for fraud in the manner provided in
Section 447 of the Act.
.
Attachments to E-Form STK-2
 Indemnity bond duly notarized by every director in Form STK 3;
 A statement of accounts containing assets and liabilities of the company made
up to a day, not more than 30 days before the date of application and certified by
a Chartered Accountant;
 An affidavit in Form STK 4 by every director of the company;
 A copy of the special resolution duly certified by each of the directors of the
company or consent of 75 per cent of the members as on the date of
application;
 A statement regarding pending litigations, if any, involving the company (it
should be given in affidavit format).
Appeal to Tribunal
 Any person aggrieved by an order of the Registrar, notifying a company as
dissolved under Section 248, may file an appeal to the Tribunal (NCLT) within a
period of 3 years from the date of the order of the Registrar and if the
Tribunal is of the opinion that the removal of the name of the company from
the register of companies is not justified in view of the absence of any of the
grounds on which the order was passed by the Registrar, it may order
restoration of the name of the company in the register of companies.
 ROC may also make an appeal to the Tribunal within a period of 3 years from
the date of the order under Section 248 if he is satisfied that name has been
struck off either inadvertently or on the basis of incorrect information.
 The Tribunal may also order the restoration of name of the company on the
application made by any member or creditor or workman before the expiry of 20
years from the publication in Official Gazette.
REMOVAL OF NAMES UNDER COMPANIES ACT, 2013
vs
REMOVAL OF NAMES UNDER COMPANIES ACT, 1956
A COMPARATIVE ANALYSIS…..
COMPANIES ACT, 2013
COMPANIES ACT, 1956
• Section 248 and Companies (Removal • Section 560 and Fast Track Exit
of Names of Companies from the
Scheme introduced by MCA
Register of Companies) Rules, 2016.
• Board Resolution was required for
• Special Resolution is required for
striking off the name of the company
striking off the name of the company • An aggrieved person could appeal
• An aggrieved person can appeal
against the order of the Registrar
against the order of the Registrar
before the expiry of 20 years
before the expiry of 3 years
Voluntary Liquidation of Companies under
Companies Act, 2013
Any corporate person who intends to liquidate itself voluntarily may initiate
voluntary liquidation proceedings under the provisions of Section 59 of Chapter
V of Part II of the Insolvency and Bankruptcy Code, 2016.
A ‘corporate person’ as defined in Section 3 of Part I of the said Code means:
• A Company;
• A Limited Liability Partnership;
• Any other person incorporated with limited liability under any law
A corporate person does not include a financial service provider.
The Process…
The conditions and procedural requirements for the voluntary winding up are as
follows:
• The corporate person should not have committed any default
• A declaration along with affidavit from the majority of the directors is
required stating that a full inquiry has been made into the affairs of the
company, the company will be able to pay its debts in full and the liquidation is
not to defraud any person
(The declaration shall be accompanies with the audited financial
statements for the previous two years and a valuation report of the
assets of the company, if any prepared by the registered valuer.)
• A special resolution/ resolution for the voluntary liquidation of the company
and appointment of insolvency professional as liquidator to be passed by the
company within four weeks of giving the above declaration
• Where the company owns any debt to any person, such resolution should be
approved by creditors being 2/3rd in value within seven days of passing such
resolution
• The resolution so passed should be notified to the Registrar of Companies and
the Insolvency and Bankruptcy Board within seven days. The voluntary
liquidation process shall be deemed to have been commenced from the date of
passing such resolution.
• Where the affairs of the corporate person have been completely wound up and
its assets are completely liquidated, the liquidator shall make an application to
the Adjudicating Authority for dissolution and the Adjudicating Authority shall
pass an order for dissolution of such corporate person.
‘Adjudicating Authority’, defined under Section 5 of Chapter I of Part II
of the Code shall mean National Company Law Tribunal.
• The order of the NCLT shall be forwarded to the authority with which the
corporate person is registered within 14 days of date of such order.
Who Should Be Appointed As a Liquidator?
An insolvency professional shall be eligible to be appointed as a liquidator if he, and every
partner or director of the insolvency professional entity of which he is a partner or director
is independent of the corporate person.
An ‘insolvency professional’ means a person enrolled under Section 206 with an insolvency
professional agency as its member and registered with the Board as an insolvency
professional under Section 207.
A person shall be considered independent of the corporate person, if he:
• is eligible to be appointed as an independent director, where the corporate person is a
company;
• is not a related party of the corporate person;
• has not been an employee or proprietor or partner of a firm of auditors/ company
secretaries/ cost auditors of the corporate person or of a legal or a consulting firm having
transactions with the corporate person contributing 10% or more of the gross turnover of
such firm at any time in the last three years.
An insolvency professional shall not be appointed as a liquidator if he is under a restraint
order of the Board or represents any other stakeholder in the same liquidation.
Powers And Functions of the Liquidator
• To verify the claims of all the creditors;
• To take into his custody or control all the assets, property, effects and actionable claims
of the corporate debtor and to take such measures to protect and preserve the assets and
properties of the corporate debtor;
• To obtain any professional assistance from any person or appoint any professional, in
discharge of his duties, obligations and responsibilities;
• To invite and settle claims of creditors and claimants and distribute proceeds in
accordance with the provisions of the Code;
• To take such actions, steps, or to sign, execute and verify any paper, deed, application,
affidavit or instrument for liquidation, distribution of assets and in discharge of his
duties as liquidator;
• To make an application before the NCLT for such orders for liquidation of the corporate
debtor and to report the progress of the liquidation process;
• To perform such other functions as may be specified by the Board
Reporting By the Liquidator
The liquidator shall prepare and submit Preliminary Report, Annual Status Report, Minutes of
consultations with Stakeholders and Final Report in such manner as specified under the
Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017.
Preliminary Report
To be submitted to the corporate person within 45 days from the liquidation
commencement date detailing the capital structure of the corporate person and the
estimates of its assets and liabilities as on the liquidation commencement date.
Final Report
To be submitted to NCLT along with the application under Section 59(7) and also to be
sent to the Registrar and the Board on completion of the liquidation process. The
Final Report shall consist of:
(a) audited accounts of the liquidation;
(b) a statement demonstrating that the assets has been disposed of, the debt has been
discharged and no litigation is pending against the corporate person;
(c)
a sale statement in respect of all assets containing the realized value, cost of
realization, manner and mode of sale, the person to whom the sale is made, any
other relevant details of the sale.
Public Announcement By the Liquidator
The liquidator shall make a public announcement in Form A of
Schedule I to the aforesaid Regulations, within five days from his
appointment in one English and one regional language newspaper and
on the website of the corporate person, if any.
The public announcement shall call upon stakeholders to submit their
claims as on liquidation commencement date and provide for last date
for submission of claims which shall be thirty days from the liquidation
commencement date.
Claims By the Stakeholders
CLAIMS BY OPERATIONAL CREDITORS
A person claiming to be an operational creditor of the corporate person shall
submit proof of claim to the liquidator in Form B of Schedule I.
CLAIMS BY FINANCIAL CREDITORS
A person claiming to be a financial creditor of the corporate person shall
submit proof of claim to the liquidator in Form C of Schedule I.
CLAIMS BY WORKMEN AND EMPLOYEES
A person claiming to be a workman or an employee of the corporate person
shall submit proof of claim to the liquidator in Form D (for individual
claimant)/E (for a group of claimants) of Schedule I.
CLAIMS BY OTHER STAKEHOLDERS
A person claiming to be a stakeholder other than those mentioned above, of
the corporate person shall submit proof of claim to the liquidator in Form F
of Schedule I.
The liquidator shall verify the claims submitted within 30 days from the last
date for receipt of claims and may either admit or reject the claim, in whole
or in part, as the case may be. The liquidator shall prepare the list of
stakeholders on the basis of claims submitted within 45 days from the last
date for receipt of claims.
Distribution of Proceeds and Unclaimed
Proceeds of Liquidation
• The liquidator shall open a bank account in the name of the corporate person
followed by the words ‘ in voluntary liquidation’ in a scheduled bank for receipts
and payments of all monies.
• The liquidator shall distribute the proceeds from realization within six months
from the receipt of amount to other claimants and the stakeholders.
• If there are any unclaimed proceeds of liquidation or undistributed assets, the
liquidator shall make an application before the NCLT for an order to pay such
proceeds into the Companies Liquidation Account in the Public Account of India
before the order of dissolution is passed under Section 59(8) and necessary
intimation of such payment has to be given to the Registrar.
Completion of Liquidation
The liquidator shall complete the liquidation process within 12 months from the
liquidation commencement date. If the liquidation process continues for more than
12 months, the liquidator shall hold a meeting of the contributories within 15 days
from the end of 12 months from the liquidation commencement date and at the end
of every succeeding twelve months till the dissolution of corporate person.
The liquidator shall present the Annual Status Report indicating the progress in
liquidation including the settlement of list of stakeholders, details of assets
remaining to be sold and realized, distribution made to the stakeholders etc.
Preservation of Records
The liquidator shall preserve a physical or an electronic copy of the reports,
registers and books of account for at least 8 years after the dissolution of the
corporate person either with himself or with an information utility.
Thank You
FCS, ASHOK TYAGI