THE MASS STRIKING OFF BY REGISTRAR OF COMPANIES

By Ishaan Madaan, Advocate

The Ministry of Corporate Affairs identified lakhs of companies across India, which have not filed Annual financial statements and annual returns for over two years. The result of such identification was a series of notifications by way of which the Ministry notified such companies and then struck off their names from the Register of Companies. The move aimed at weeding out companies that have not been doing business. The Registrar of Companies (RoC) Delhi alone struck off names of over 50,000 Companies.

 

In most such cases, the Directors were also disqualified where the compliances have not been made by Companies for over 3 years. The question, however, remains, “was such mass striking off justified?”. The answer to that is a bold “YES”!

 

Over the decades, several companies have existed in the Registers of Companies but have failed to commence business. There is also the apprehension that most inactive companies are only shell companies which need to be taken out of the system. But then there are several thousands of companies which are active, have been doing business but may not have been diligent with their filings and maintenance of records.

 

Section 248(5) of the Companies Act, 2013 empowers the Registrar of Companies to strike off a Company’s name from the register, after giving due notice to the company and publishing the same in the official gazette. While many companies may feel aggrieved about not receiving any notice, they would still have to avail of the remedies as provided under law; should they wish to restore their names in the register and continue functioning.

 

As regards the disqualification of Directors, over 3 Lakh directors have been disqualified alongwith the mass striking off. The ministry has also offered a one time settlement scheme, about which you can read here.

 

 

Remedy:

 

If your company’s name has been struck off, you can approach the National Company Law Tribunal under section 252 of the Companies Act, 2013 seeking restoration of your Company’s name in the Register of Companies.

 

All that you need to do is file an appeal while pleading grounds to satisfy the NCLT on some of these grounds:

  • At the time of striking off, the company was carrying on business
  • was in operation
  • there was a crisis or a situation that prevented the company from filing the annual returns and financial statements
  • there was lack of professional guidance
  • the company regularly held its general meetings
  • the company and its directors had been filing tax returns
  • non-receipt of notice by the registrar

 

If the NCLT is satisfied with your grounds, the NCLT may allow the restoration subject to a nominal cost and with directions to ensure compliances with the law. The NCLT Delhi has been deciding such appeals expeditiously where the companies have been able to satisfy the Tribunal.

 

In case your director(s) have also been disqualified, the NCLT will have the power to remove the disqualification subject to immediate compliances by the Company.

 

 

 

All views expressed in this article are of the author and Lawclik assumes no responsibility for any misinformation.