Strike off without annual filing

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Strike off without annual filing
Category: Adjudication, Posted on: 12/05/2023 , Posted By: CS DIVESH GOYAL

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We have received queries / questions from many persons Like: Professionals / corporate on subject “Whether Completion of Annual filing is Mandatory for Strike Off of Company through filing of STK-2?”.

There is a difference in the views of professionals, business entities, even authorities on above mentioned question. In below mentioned editorial author will discuss provision of strike off in concerned to above question.

BACKGROUND:

There are four phase in History of Companies Act for “Strike off of Companies”.

Phase I: Under Companies Ac, 1956 Closure of Company was stated under Section 560.

Phase II: Then MCA came up with a Scheme ‘Fast Track Exit Scheme’ (FTE) on 7^th June, 2011.

Phase III: Then MCA came with Companies Act, 2013, provision of Strike off of Company falls under Section 248 effective from 26^th December 2016.

Phase IV: MCA issued notification on 01^st May, 2023 and created a new Centralized Department C-Pace for Strike off of Companies and eform override by web form on MCA V-3 portal.

LEGAL PROVISIONS:

Extract of Sections 560:

As per section 560 of the Companies Act, 1956, Registrar of Companies may strike off the name of companies on satisfying the conditions therein.

As per Section 560, a company desirous of getting its name struck off has to apply to Registrar of companies in e-form 61. All pending statutory returns are required to be filed along with e-form 61. ([1]This language was mentioned in MCA circular no 36/2011 dated 07^th June, 2011.)

Fast Track Exit Scheme (FTE):

In order to give an opportunity for fast-track exit by a defunct company, for getting its name struck off from the register of companies the Ministry has decided to modify the existing route through e-form – 61 and has prescribed the new Guidelines. The Guidelines for “Fast Track Exit mode” for defunct companies.

NOTE: After Effective of Section 248 dated 26th December 2016, “FTE” scheme has been omitted. Therefore, legally after 26th December, 2016 there is no FTE Scheme.

Extract Section 248 of Companies Act, 2013:

In the latest provisions of Section 248 and in the respective rule’s language are same as was in section 560 of Companies Act, 1956. Section 248 states the provisions of strike off the Company not for Fast Track Exit of the Company.

Difference between FTE Scheme, 2011 and Companies Strike Off u/s 248 on or before 8^th May, 2019

S. No.	Particulars	Provisions under FTE Scheme	Provisions under Section 248 of Companies Act, 2013 along with rules.
	Link for Circular/ Rules	https://www.mca.gov.in/Ministry/pdf/Circular_36-2011_07jun2011.pdf	http://www.mca.gov.in/Ministry/pdf/Rules_28122016.pdf
	Not Carrying Business & Activity	is not carrying over any business activity or operation for last one year before making application under FTE.	not carrying on any business or operation for a period of two immediately preceding financial years
	Dormant Company	Any defunct company identified as dormant by the MCA, may apply for getting its name strike off	There is no such Provisions in Section 248.
	Completion of Pending Statutory Return	Not- required to file pending statutory returns before applying for Strike Off.	Required to file pending statutory before applying for Strike Off.

QUESTION FOR DISCUSSION

Whether Annual Filing (i.e. AOC-4 and MGT-7) is required to complete before applying for Strike off suo-moto?

As per the amendment made in rule 4 in May 2019 and amendment made on May 2023 “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”

Therefore, after amendment in Rule 4 w.e.f. 08^th May, 2019 read with notification dated 10^th May 2023,

it is very clear that annual filing of AOC-4 and MGT-7 is mandatory up to the end of the financial year in which the company ceased to carry its business operations.

In other words, Company is required to file AOC-4 and MGT-7 up to financial year till company carries its business and operations.

Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).

Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.

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