Starting a company requires proper registration, compliance, and adherence to corporate laws. However, sometimes businesses become inactive or promoters decide to discontinue operations. In such cases, it is necessary to close the company in a legal way instead of simply stopping operations. This process is called “Strike Off of Company” under the Companies Act, 2013. Striking off ensures that the company is removed from the records of the Registrar of Companies (RoC) and ceases to exist as a legal entity. In this guide, we will explain the meaning, eligibility, procedure, documents required, and important considerations for striking off a company in India.

What Does Strike Off Company Mean?

A strike off company is one that is formally removed from the register maintained by the Registrar of Companies. Once a company is struck off, it no longer has any legal existence and cannot carry out business activities. It is an easier and cost-effective alternative to winding up, especially for companies that are non-operational or have no liabilities.

Legal Provisions for Strike Off

The provisions related to strike off are covered under Section 248 of the Companies Act, 2013 and the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. A company can be struck off either voluntarily by the company (via application to RoC) or by the Registrar of Companies, if it has reasonable cause to believe that the company is not carrying on any business.

Who Can Apply for Strike Off?

Not all companies are eligible to apply for strike off. The following types of companies can file for strike off, provided they meet the required conditions: Private Limited Company, One Person Company (OPC), Public Company (subject to compliance), and Section 8 Company (with approval).

When Can a Company Apply for Strike Off?

A company can apply for strike off in the following cases: the company has not commenced business since incorporation, has not carried on any business for the last two financial years, does not have any liabilities or pending obligations, and has extinguished all its assets and settled its debts.

Who Cannot Apply for Strike Off?

Certain companies are restricted from applying for strike off. These include companies incorporated within the last one year, companies that have not filed financial statements or annual returns in the last two financial years, companies that have pending charges (loans or secured debts), companies under inspection, investigation, or prosecution, listed companies, and companies delisted due to non-compliance.

Modes of Strike Off

There are two primary modes through which a company can be struck off: (1) Voluntary Strike Off by the Company – A company may voluntarily file an application for strike off using Form STK-2 with the Registrar of Companies. (2) Strike Off by Registrar (Compulsory) – The RoC can initiate strike off proceedings if the company has failed to commence business within one year of incorporation or the company is not carrying on any business for the past two financial years and has not applied for dormant status.

Procedure for Voluntary Strike Off

The voluntary strike off process involves the following steps: Step 1: Board Meeting – Hold a Board Meeting to pass a resolution for strike off and authorize a director to make the application. Step 2: Settlement of Liabilities – Clear all liabilities, debts, and obligations before filing, and close all bank accounts of the company. Step 3: Shareholders’ Approval – Conduct a General Meeting and pass a special resolution with at least 75% shareholders’ consent. Step 4: Filing of Application – File an application for strike off in Form STK-2 with the RoC, attach the required documents, and pay the prescribed government fee. Step 5: Examination by RoC – The Registrar reviews the application and documents submitted, and a public notice is published in the Official Gazette to invite objections. Step 6: Strike Off Order – If no objections are raised, the RoC issues an order and removes the company’s name from the register.

Documents Required for Strike Off

When filing Form STK-2, the following documents are generally required: Board Resolution authorizing strike off, Special Resolution passed by shareholders, Affidavit by Directors confirming accuracy of information, Indemnity Bond signed by directors, Statement of Accounts (not older than 30 days from application date) certified by a Chartered Accountant, PAN and Identity Proof of directors, and consent from lenders if applicable.

Timeline for Strike Off

The entire process usually takes around 3 to 6 months, depending on the RoC’s review and publication of public notices.

Advantages of Strike Off

Striking off a company has several benefits for business owners: it is a low cost alternative compared to winding up or liquidation, has a quick process (3–6 months), provides relief from compliance and reporting obligations, ensures closure of inactive companies in a legal manner, and avoids penalties for non-compliance in future.

Key Points to Remember

Ensure that the company has no liabilities before applying. File all pending annual returns and financial statements before strike off. Directors are responsible for maintaining company records even after strike off, in case of future investigations. If required, the company can be revived within 20 years by filing an appeal before the National Company Law Tribunal (NCLT).

Conclusion

The process to strike off company in India is a simple and cost-effective method to close an inactive or non-operational business. It allows promoters to legally exit the corporate structure without going through the lengthy winding-up procedure. However, it is important to ensure all liabilities are cleared and statutory compliances are completed before applying. If you are planning to strike off your company, consulting with a professional advisor or company secretary is highly recommended to ensure the process is carried out smoothly and in compliance with the Companies Act.

FAQs

Q1. What does it mean to strike off company in India?
It means removing the company’s name from the register of the Registrar of Companies, making it legally non-existent.

Q2. How long does it take to strike off a company in India?
The process usually takes around 3 to 6 months, depending on RoC scrutiny and publication of notices.

Q3. Can a company with liabilities apply for strike off?
No, all liabilities must be settled and assets extinguished before applying for strike off.

Q4. Can a struck-off company be revived?
Yes, a struck-off company can be revived within 20 years by filing an appeal before the National Company Law Tribunal (NCLT).

Q5. What form is required to apply for strike off company?
The application is filed using Form STK-2 along with necessary documents and fees.