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Strike Off of a Company
The process of striking off a company is a crucial aspect of business Strike Off. It will make sure that the company has been removed legally from the official register of companies.
Businesses can officially end their existence without going through liquidation with the help of procedure of strike-off, whether due to inactivity, voluntary dissolution, or regulatory non-compliance.
What is the Strike-Off of a Company?
Company strike-off is the process of removing the name of the company legally from the official register that has been maintained by the regulatory authority like ROC i.e. Registrar of Companies in India. Once struck off, the company ceases to exist as a legal entity, and all its obligations as well as liabilities will be dissolved.
You can simply apply to the ROC i.e. Registrar of Companies in order to strike off its name from ROCs (*subject to certain terms & conditions).
Types of Strike Off of Company in India
There are two primary methods are available for the Strike Off of a company which are as given below:
Voluntary Strike Off
This method has been initiated by the owner of the company in India. It will be due to numerous reasons including completion of the project, financial problems, business becoming inoperative, rapid decrease in customers & revenue and many more.
Compulsory Strike Off
Sometimes the striking off of the company has been directed by the regulatory authorities, court orders, or creditors due to non-compliance, non-payment of debts or any other legal reasons.
Reasons of Company Strike Off in India
Financial Problems
The most common reason for striking off of a company can be financial difficulties. The owner of the company will be forced to close their company if it is not able to generate enough profit in order to cover its cost.
Strategic Decision
Sometimes the owner of the company may decide to make major changes in the strategy of their business or to move on to the new venture, in such cases they need to strike off their current company.
Non-Compliance with Regulatory Requirements
When a company is not able to comply with all the regulatory requirements, it will lead to the compulsory strike off of that particular company.
Mergers or Taken Over
If your company has been taken over by another company or another company overlaps the products or services of your company, then striking off your company becomes mandatory.
Business is inoperative
One of the major reasons is that if your company in India is inoperative now, then your company will need to strike off.
Lost Customers & Revenue
Sometimes a company loses its customers or revenue due to a rapid decrease in the demand of products or services of the company. In such cases, the owner of the company may decide to strike off the company.
Advantages of Company Strike Off in India
Simple & Cost-Effective
As compared to the liquidation, the process of strike off is quicker as well as less expensive.
No Legal Liabilities
After the striking off of the company, it cannot be sued for the business activities.
No Further Compliance Burden
After striking off of the company, it will be free from all the statutory obligations.
Relief for Directors & Owners
It will be a great relief for directors as well as shareholders and they can focus on new business opportunities.
Disadvantages of Company Strike Off in India
Can be Reversed if Debt Exists
The strike off of the company can be cancelled in case any liabilities will be discovered after completion of the process.
Limited Creditor Protection
After the strike off, creditors may not be able to claim their debts.
Legal Consequences for Non-Compliance
Directors may face penalties in case a company is forcibly struck off.
Assets Get Frozen
If any assets of the company were not transferred before strike-off, it may become government property.
Process of Voluntary Striking Off of the Company
After that, you need to prepare all the essential documents that have been required for striking off the company in India. the requisite documents include:
- Affidavit which confirms that there are no liabilities on the company and all the dues are cleared.
- The other important document is a statement of accounts that reflect the financial position of the company & must be certified by a Chartered Accountant.
- A certified copy of a special resolution passed by the directors of the company for the striking off of the company.
Process of Compulsory Strike Off of the Company
Essential Documents Required for Strike Off of Company
- Board Resolution Approving the Strike-Off
- Consent from Shareholders (if required)
- Latest Financial Statements
- Statement of No Pending Liabilities
- Indemnity Bond (in some jurisdictions)
- Application Form prescribed by the Regulatory Authority
Post Strike-Off Considerations
Restoration of the Company
In some specific cases, a company can be restored to the register, if required.
Impact on Business Owners
Owners cannot use the name of the company or conduct business under it.
Outstanding Liabilities
If any liabilities remain, directors may be held personally liable.
Common Challenges in NGO Darpan Registration in India
The major consequences of Company Strike Off in India:
- The remaining assets will be transferred to the crown or government.
- The name of the company will become available for re-registration by another entity.
- The company will cease to exist and cannot conduct any business.
- Directors & Shareholders will lose their over the assets of the company.
- Any legal claims or liabilities against the company may not be enforceable, once it is struck off.
How to Avoid Compulsory Strike Off of a Company?
In order to prevent the company from compulsory strike off, just make sure about some crucial things which are:
- File annual returns as well as financial statements on time.
- Maintain proper statutory records and filings.
- Keep tax payments up to date.
- Respond to regulatory notices quickly on time.
How Can We Help With Striking Off Company?
Our dedicated team of experts will offer you the professional assistance in the following ways:
- Preparing and Filing Necessary Documents
- Handling communications with regulatory authorities
- Advising on alternative business closure options if needed
- Evaluating eligibility for voluntary strike off
- Making sure about compliance with statutory requirements
- Assisting in settling liabilities before strike off
Why Choose Click To Professionals?
- Hassle-Free Process
We will handle all legal and procedural aspects, making sure about a smooth closure.
- Compliance Assurance
We will make sure that all legal obligations have been met before striking off.
- Experienced Professionals
Our dedicated team has in-depth knowledge of company law and regulatory requirements.
- Affordable Pricing
We will provide cost-effective solutions as per your needs.
