Ministry of Corporate affairs has become very aggressive nowadays for the compliance and to cut down the shell companies they had introduced many new initiatives like Director KYC, Registered office KYC etc.
Now the companies which have not made its past compliances for the Annual filing decide to strike off the name of its companies but by doing so they have to bear a huge amount of late fees which is Rs.100/- per day and there is no upper cap, So when Ministry of Corporate affairs aware about this hardship they have introduced Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2019 which was effective from 10.05.2019.
After the introduction of above Rules there is still a dilemma in the general public that whether before filing an application for striking off the name of the Company, company is required to complete its Annual filing or not. Now through this Article we are putting our efforts to clear this ambiguity.
Q. Whether Company is required to complete its Annual filing first before filing STK - 2?
Section 248 of the Companies Act, 2013 talks about the Voluntary application for striking off the name of the Company which provides certain conditions for filing an application for Striking off the name of the Company in the e form STK 2 which are reproduced below:
- a company has failed to commence its business within one year of its incorporation; or
- 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.
Now if the Company fulfills any one of the above conditions than Company can apply for the striking off its name. Now as per the (i) conditions the Company firstly shall complete one Financial Year and if in that Financial Year Company has not started its business, the Company can apply for Striking off its name.
Whereas if a Company has started its business and mid of the year wants to strike off its name the Company will be barred for filing an application under Section 248 as condition (ii) restricts it for filing the same and when the Company has started its business operation than Company shall wait for a period of 2 Financial Year and after completion of 2 Financial Year it can make an application to Registrar of Companies for striking off its name in the e form STK – 2.
Now the biggest dilemma comes that if a Company fails to file its Annual financial statement for such 2 period than before filing the STK 2 is it mandatory to complete its Annual filing first or Company can straight away file an application in form STK 2.
Now the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2019 clear this picture and the proviso is inserted in the original Rule 4 which is reproduced below:
Rule 4: Application for removal of name of company.
An application for removal of name of the company under sub-section (2) of section 248 shall be made in Form STK-2 along with the fee of ten thousand rupees.
PROVIDED THAT NO 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:
Provided further that in case a company intends to file Form No. STK-2 after the action under sub-section (1) of section 248 has been initiated by the Registrar, it shall file all pending 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) before filing Form No. STK-2:
Provided also that once notice in Form No. STK-7 has been issued by the Registrar pursuant to the action initiated under sub-section (1) of section 248, a company shall not be allowed to file an application in Form No. STK-2.]
Now the first proviso as inserted in Rule 4 clearly states that Company has to complete its Annual filing first but only for those Financial Years under which Company was carried its business operation, So if a Company was not carrying its business operation from the last 2 Financial Years than there is no requirement to complete its Annual filing first before filing STK 2.
By virtue of this Amendment some other points are also updated which are reproduced below:
- The Government Fees has been increased to Rs.10,000/- (Rupees Ten thousand);
- The format of Statement of Accounts has been prescribed in the form “STK – 8”;
- Clause viii in Form No. STK-4 shall be added only in a case an application under sub-section (2) of section 248 has been filed after the initiation of action under sub-section (1) of section 248] and the clause shall be
(viii) The company has fulfilled all pending compliances, if any
Inference: This clause shall be added only in case when a Registrar of Companies has issued a notice to the Company and after receiving the same Company filed the application than in such case Company first complete its all the pending compliances including its Annual filing
Documents to be attached in the E form STK 2:
- Certified copy of Board Resolution authorizing for filing of this application in E form STK 2;
- Certified copy of Special Resolution, if General Meeting was called for the same;
- Consent letter from all the Members of the Company for filing an application of Striking off the name of the Company, if General Meeting was not called for the same;
- Indemnity Bond in the Form STK 3 on a Stamp paper as per the respective State Stamp Law;
- Affidavit in the Form STK 4 on a Stamp paper as per the respective State Stamp Law;
- Declaration for NIL creditors (as an optionally attachment);
- Statement of Account in the form STK – 8 duly certified by all the Directors of the Company and by a practicing chartered Accountant along with his/her UDIN number on that statement.
After attaching all the above documents in the E form STK 2 the same shall be filed before the Registrar of Companies and if the Registrar is satisfied with all the attachment the name of the Company shall be published in the Form No. STK – 6 and after the completion of time as given in the form STK 6 the name shall be published in the STK 7 and the name of the Company shall be strike off from the Register of companies as maintained by the Registrar of Companies.
The author can also be reached at sdeepak.cs@gmail.com.
Disclaimer: This article is for the purpose of information and shall not be treated as a solicitation in any manner and for any other purpose whatsoever. It shall not be used as a legal opinion and not to be used for rendering any professional advice
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