Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 23 February 2010
Company fails to achieve minimum paid up capital
Where a private company, with a paid up capital of less than rupees one lakh or a public company, with a paid up capital of less than Rupees Five Lakhs, existing on 13th December, 2000 [on the commencement of the Companies (Amendment) Act, 2000] fails to enhance its paid up capital within a period of two years. i.e. on or before 12th December, 2002, the Registrar may on the verification of the balance sheet, annual return and other relevant documents shall take suitable action to struck the name off from the Register of companies as per the provisions given under section 560 of the Companies Act, 1956. [Sections 3(3), 3(4) and 3(5)]
VOLUNTARY APPLICATION BY THE COMPANY TO THE REGISTRAR FOR DEFUNCT OF THE COMPANY
Types of companies eligible to apply under section 560 of the Act
The following types of companies, which are not having any assets and liabilities as per the Financial Statement or Statement of Accounts drawn are eligible to apply subject to fulfillment of the conditions laid down hereinafter:—
(i) Companies that did not carry out any business at any time since their incorporation;
(ii) Companies that carried out some business activity but discontinued the same thereafter;
(iii) Non-Banking Financial Company (NBFC) as defined under section 45-I(f) of Reserve Bank of India Act, 1934:
(iv) Government Companies, which have no assets and liabilities and submit an approval letter issued by the concerned administrative ministry with the application.
Passing necessary resolutions for authority to make application
It should be ensured that the company is having minimum number of directors to constitute a valid quorum for the meeting.
If the company fulfills the criteria prescribed under section 560, the Managing Director/Whole-time Director/Director/Secretary or the authorised officer should give a notice in writing to all the directors of the company as per provisions of section 286 of the Companies Act, 1956 and should pass resolution in the meeting of the Board of Directors for the following purposes:
(i) for approval of the Board to make an application for striking off the name of the company from the Register in accordance with the provisions of section 560 of the Companies Act, 1956 in the prescribed form 61;
(ii) to authorise the directors of the Company for execution and signing the Affidavits and Indemnity Bond;
(iii) to approve the audited financial statement or statement of accounts as prepared for a period not prior to the one month from the date of application;
(iv) to authorise the Managing Director/Whole-time Director/Director(s) of the company to apply in the prescribed form to the Registrar of Companies for striking off name of the company.
Application cannot be filed if any prosecution is pending which is not compoundable
A company shall not be allowed to apply under section 560, if any prosecution for an offence which is non-compoundable under the Companies Act, 1956 or pertains to any other Act is pending against the company.
Requirement to apply in the prescribed form
The application shall be made to the Registrar electronically in the e-Form 61 as specified by the Notification No. GSR 56(E) Dated 10th Feb., 2006 (previously there was no form prescribed for that purpose) together with the Affidavit and Indemnity Bond should be made.
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 23 February 2010
Specimen of the Board resolution
RESOLVED THAT the consent of the Board of Directors of the Company be and is hereby accorded to make an application to the Registrar of Companies, Uttar Pradesh under provisions of section 560 of the Companies Act, 1956 for striking off the name of the Company from the Register of Company.
FURTHER RESOLVED THAT any Directors of the Company be and is hereby, authorized equested to make an application and to give necessary affidavit and indemnity bond under section 560 of the Companies Act, 1956, as per the draft of the same as placed before the meeting duly initialed by the Chairman for the purpose of identification in order to get the name of company struck off from the Register of Companies maintained by the Registrar.
RESOLVED FURTHER THAT any Director of the Company be and is hereby authorized to sign and give any information, clarifications, explanations and to do all such acts and deeds as may be required under the Act, to implement the above said resolution.
CourseCart.in
(Mentor at SHAYVIDZ Academy)
(3756 Points)
Replied 23 February 2010
Ankur Ji,
I know all the procedure for Sec 560..
I wanna know the practical steps to be taken for the above mentioned case..
How much it will cost, n what liabilities may arise to the company & directors in these defualts, n what steps to be taken for making good these defaults etc..
i am not able to explain the cost, fees, & liabilities to the client as i dnt know the details about that..
I need it in practical approach...
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 23 February 2010
Okay!!! I'll try and figure out something.
Avika, ACS
(HR Legal and Management Consultant)
(172 Points)
Replied 25 February 2010
Dear Adarsh,
Section 3(5) of the Companies Act, 1956, states that where a Company fails ot enhance its paid-up capital as specified in section 3(3) & 3(4), such company would be deemed to be defunct Company within the meaning of Section 560 and its name shall be struck off from the register by the Registrar.
So in this case, technically, the ROC should have struck off the name of the Company from the register.
Thanks & Regards,
Avika Kapoor
CourseCart.in
(Mentor at SHAYVIDZ Academy)
(3756 Points)
Replied 25 February 2010
Section 3(5) of the Companies Act, 1956, states that where a Company fails ot enhance its paid-up capital as specified in section 3(3) & 3(4), such company would be deemed to be defunct Company within the meaning of Section 560 and its name shall be struck off from the register by the Registrar.
So in this case, technically, the ROC should have struck off the name of the Company from the register.
Thanks & Regards,
Avika Kapoor
Dear Avika,
Agreed wid wat u said according to provision in the act...
But that company's master data is still showing its status "active" .. n not strit off...
the company want to get certificate u/s560...
whether it has to file all the pending annual returns too??
n wat penalties can be levied in case of this default?
Mitali Agarwal
(Company Secretary)
(638 Points)
Replied 27 February 2010
Hello Adarsh,
I think that of ROC has not strike off the name of the co. even after such default and the promoters are intending to get the name struk off, then the company will have to comply all the provisions i.e. increase in paid up capital and then filing off all the pending annual filings and then go for procedure u/s 560.
I know it will be expensive and will be of no use, but for voluntary winding up accounts need to be audited till date.
Or better would be to first talk to ROC people and bring to their notice that still there are some of the cos. who are under default u/s 3(5) and their name has not been striken off. Let's see what's their reply.
Avika, ACS
(HR Legal and Management Consultant)
(172 Points)
Replied 27 February 2010
I agree with Mitali, you should discuss the matter with the ROC officials and see what they have to say in the matter.
Technically, they hav eto take action and strike off the name of the Company on account of non-compliance with law.
Thanks & Regards,
Avika Kapoor
CourseCart.in
(Mentor at SHAYVIDZ Academy)
(3756 Points)
Replied 27 February 2010
Mitali & Avika...!
Thanks.. I'll discuss wid ROC officials..
Manish
(COP)
(22 Points)
Replied 28 September 2010
Mr. Ankur,
I would like to know the validation period of the Affidavit and Indemnity bond prepared by the Directors of the company. say for example, Company would like to File Form 61 on 30th Sept than within what period of Affidavit and Indemnity Bond is valid like 20th Aug or 1st Sept.?
CAclubindia
