Removal of names of companies from register of companies

REMOVAL OF NAMES OF COMPANIES FROM REGISTER OF COMPANIES

INTRODUCTION:

In the Companies Act, 2013 Sections 248-252 deals with Removal of names of companies from register of companies.

SECTION 248:

Power of Registrar to remove name from register of companies: There may be a reason for which the Registrar believe that the (a) after the incorporation, the company has failed to start off its business within one year. (b) The company is not carrying on any business for two immediately preceding financial years and has not applied for obtaining the status of the dormant company. In this similar situation the Registrar has to send a notice to the company and all its directors telling them that he has the intention to remove the name of the company from the registrar. After receiving the notice, they have to accordingly send their representations along with the copies of relevant documents within 30 days. Hence, such removal will also affect the company’s own application.

There are certain procedures that should be duly formed by the company. First they have to extinguish all their liabilities. In terms of paid up share capital, the company has to obtain the consent of 75 members and has to pas a special resolution. After this method, application has to be filed in the prescribed manner with Registrars of company for removing the name of the company. The receipt of the application should be made by the registrar to issue a public notice in the prescribed manner.

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The notice that has been published should be made in a prescribed manner and also it should be made in the Official Gazette for information of the general public. If after the publishing the Notice, and on the expiry of the time mentioned in the notice, if no change or cause to the contrary is shown by the time, Then the Registrar has to strike off the name of the company from the register.

SECTION 249:

Restrictions on making application under Section 248: An application under Section 248(2) on behalf of the company for removal of its name is not to be made if during the previous three months the company (a) the company has changed its name or shifted its office from one state to other state. (b) it has made a disposal for value of property (c) has engaged in any other activity except the one mentioned for the purpose of making an application under section 248 (d) also has made an application to the Tribunal for sanctioning for a compromise or arrangement and the matter has not been finally concluded.

Filing of an application by a company in violation of these provisions is punishable with the fine extending to Rs 1, 00,000. Such an application has to be withdrawn by the company or rejected by the Registrar as soon as contravention of the restrictions is bought.

SECTION 250:

Effect of company notified as dissolved: Where a company becomes dissolved under Section 248, it has to cease to operate as a company from the date of notice of dissolution. Its certificate of registration is deemed to be cancelled except for the purpose of realizing the amount due to it or discharge of its liabilities or obligations.

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SECTION 251:

Fraudulent application for removal of name: Where it is found that an application has been made by the company with the object of evading its liabilities or with the intention to deceive its creditors or to defraud any other person, in order to incur liability even if the company has been dissolved. As a result of the company, they become jointly and severally liable to every person to whom the loss is incurred, even being notified as dissolved. Under Section 447, they are also punishable for the fraud. The registrar may also recommend prosecution of the persons responsible for filing fraudulent application.

SECTION 252:

Appeal to Tribunal and restoration: Any person aggrieved by the order of dissolution may file an appeal to the Tribunal. The period that is available is three years from the date of order. If the Tribunal is of opinion that the removal of name was not justified because no applicable ground was there, it may order for the restoration of the name of the company in the Registrar of Companies. Before passing such order, the Tribunal has to give a reasonable opportunity for bring heard, and to make representations to the Registrar, and all the persons concerned with it.

If the registrar is satisfied that the name of the company happened to be struck off on the basis of incorrect information furnished by the company or its directors and therefore it deserves to be brought back to the register, the registrar has to make an application to the Tribunal within three years from the date of the order of striking off for an order of registration. Then the company has to file a copy of the Tribunal’s order of restoration with the registrar within 30 days of the date of the order. The registrar will then put back the name on the register and issue a fresh certificate of incorporation.

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It is clear from the section that on the restoration of a company back to the register after being struck off the consequence is though it had never been struck off the register. The company will be deemed to have its existence although. Another consequence is that the rights of all parties would be as though there had been no cessation or interruption in the existence of the company on account of the striking off and the subsequent restoration.

CONCLUSION:

The registrar can go for the Removal of the name by itself, or can Company can go itself for the removal. Unlike other methods, the way prescribed under Section 248 of the Companies Act, 2013 is the most efficient and the speedy method for the removal of company. The Registrar of company plays a vital role in the removal or closure of the company. Hence, the company should respect the decisions while making replies to the notices of the Registrar of companies. The method prescribed in the Section 248 of the act, is long-lasting.

Author: Saba banu,
Pendekanti law college, 3rd year BA LLB student

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