Strike Off of a Company in India: Process, Eligibility, Documents, Fees & Timeline

What is the Strike Off of a Company?

A strike off of a company is the legal process of removing a company’s name from the Register of Companies (RoC) maintained by the Registrar of Companies (RoC) under the Companies Act, 2013. Once a company is struck off, it ceases to exist as a legal entity and is no longer required to comply with annual filing and other statutory obligations.

Strike off is a cost-effective option for companies that have never commenced business or have stopped carrying on business and have no future operational plans.

What Does Company Strike Off Mean?

Company strike off is a voluntary closure process through which eligible companies apply to the Registrar of Companies to remove their name from the official records. The process is governed by Section 248 of the Companies Act, 2013.

After approval, the company is dissolved and loses its legal identity.

Reasons for Striking Off a Company

A company may apply for strike off for several reasons, including:

• Business was never started after incorporation.
• Company has ceased business operations.
• Promoters want to close a non-operational business.
• No assets or liabilities remain.
• Company restructuring or merger.
• To avoid unnecessary annual compliance costs.

Eligibility for Company Strike Off

A company can apply for strike off if it meets the following conditions:

• It has not commenced business after incorporation, or
• It has not carried on business for the previous two financial years.
• All liabilities have been settled.
• No pending legal disputes affecting closure.
• Consent of all shareholders has been obtained through a Special Resolution.
• All statutory filings are completed up to the date of application.

Companies Not Eligible for Strike Off

The following companies generally cannot apply for voluntary strike off:

• Listed companies.
• Companies that have changed their name or registered office recently (within the prescribed period).
• Companies involved in ongoing legal proceedings.
• Companies with pending prosecution.
• Companies having outstanding public deposits.
• Companies with unpaid loans or secured creditors’ dues.
• Section 8 Companies (without following applicable provisions).
• Companies under inspection, investigation, or inquiry.

Documents Required for Company Strike Off

The following documents are generally required:

• Board Resolution approving strike off.
• Special Resolution passed by shareholders.
• Indemnity Bond from all directors.
• Affidavit by directors.
• Statement of Accounts certified by a Chartered Accountant.
• PAN Card of the company.
• Certificate of Incorporation.
• Identity and address proof of directors.
• No Objection Certificate (NOC) from creditors, if applicable.
• Copy of latest Income Tax Return, if filed.

Step-by-Step Procedure for Company Strike Off

Step 1: Hold a Board Meeting

The Board of Directors approves the proposal for strike off and authorizes a director to complete the process.

Step 2: Clear All Liabilities

Before filing the application, the company should:

• Pay all creditors.
• Close bank accounts.
• Dispose of assets.
• Settle statutory dues.

Step 3: Pass Shareholders’ Resolution

A Special Resolution is passed by shareholders approving the strike off application.

Step 4: Prepare Financial Statements

A Chartered Accountant certifies the Statement of Accounts, which should not be older than 30 days from the filing date.

Step 5: File Form STK-2

The company files Form STK-2 with the Registrar of Companies along with all supporting documents.

Step 6: ROC Verification

The Registrar verifies the application and may request additional information if required.

Step 7: Public Notice

The Registrar issues a public notice inviting objections from stakeholders within the prescribed period.

Step 8: Strike Off Order

If no objections are received and all requirements are satisfied, the Registrar publishes the notice in the Official Gazette and removes the company’s name from the Register of Companies.

Government Filing Fee

The government filing fee for Form STK-2 is prescribed by the Ministry of Corporate Affairs. Professional fees may vary depending on the complexity of the case and pending compliances.

Timeline for Company Strike Off

The entire strike off process generally takes 3 to 6 months, depending on:

• Accuracy of documents.
• Pending ROC filings.
• Verification process.
• Objections received from stakeholders.
• Workload of the Registrar of Companies.

Benefits of Company Strike Off

Some major advantages include:

• Saves annual compliance costs.
• Eliminates penalties for inactive businesses.
• No need to maintain statutory records.
• Removes unnecessary legal responsibilities.
• Better than leaving a dormant company inactive.

Important Compliance Before Strike Off

Before filing the application, ensure that:

• Annual Returns are filed.
• Financial Statements are updated.
• GST registration is surrendered (if applicable).
• PAN-related tax compliances are completed.
• Bank accounts are closed.
• Employees’ dues are cleared.
• All creditors are paid.

Can a Struck-Off Company Be Revived?

Yes. Under the Companies Act, a struck-off company may be restored by applying before the appropriate authority if there is sufficient cause, subject to the applicable legal provisions and timelines.

Common Reasons for Rejection of Strike Off Application

Applications may be rejected if:

• Pending ROC filings exist.
• Outstanding liabilities remain.
• Incorrect documents are submitted.
• Ongoing litigation exists.
• Income tax issues are unresolved.
• Company owns undisclosed assets.
• Required shareholder approvals are missing.

Why Choose Professional Assistance?

Company strike off involves legal documentation, ROC filings, financial certifications, and statutory compliance. Professional assistance helps ensure:

• Accurate documentation.
• Faster processing.
• Reduced risk of rejection.
• Proper closure of statutory obligations.
• Compliance with MCA requirements.

Frequently Asked Questions (FAQs)

Is strike off the same as company closure?

Yes. Strike off is one of the legal methods of closing a company under the Companies Act, 2013.

How long does company strike off take?

Typically between 3 and 6 months, depending on ROC processing and documentation.

Can a company with liabilities apply for strike off?

No. All liabilities should generally be settled before applying.

Is audit mandatory before strike off?

A certified Statement of Accounts from a Chartered Accountant is generally required. Depending on the company’s status, additional compliance may apply.

Can ROC reject a strike off application?

Yes. Incorrect documentation, pending filings, or unresolved liabilities can result in rejection.

Can directors start another company after strike off?

Yes. Directors may incorporate another company, provided there are no legal restrictions or disqualifications.

Conclusion

A strike off of a company is an efficient solution for businesses that are no longer operational. By fulfilling the eligibility conditions, clearing liabilities, and submitting the required documents through the prescribed process, companies can legally close their business while avoiding unnecessary compliance costs. Consulting experienced professionals can make the process smoother and help prevent delays or rejection.