Striking Off the Name of a Defunct Company — Section 248

Formal winding up through the Tribunal is a fairly long and expensive process. For a genuinely defunct or inactive company — one with no real business, few or no assets, and no significant liabilities — the Companies Act, 2013 provides a simpler and cheaper alternative: striking off the company's name from the Register of Companies, under Section 248.

Removal on the Registrar's own initiative — Section 248(1). The Registrar of Companies may, on his own motion, remove the name of a company from the register where he has reasonable cause to believe that:

• the company has failed to commence its business within one year of incorporation; or
• the subscribers to the memorandum have not paid the subscription they undertook to pay, and no declaration of commencement of business has been filed within 180 days; or
• the company has not been carrying on any business or operation for two immediately preceding financial years and has not applied to be recognised as a "dormant company" during that period.

Before actually removing the name, the Registrar must give the company a reasonable opportunity to be heard, by sending a notice and allowing the company (and its directors) to respond and show cause.

Removal on the company's own application — Section 248(2). A company may itself apply to the Registrar to have its name struck off, after extinguishing all its liabilities, by a special resolution or with the consent of at least 75% of its members (in terms of paid-up share capital). In practice, this is done by filing the prescribed e-form (commonly referred to as Form STK-2) along with supporting documents such as an indemnity bond, a statement of accounts, and an affidavit.

Procedure and effect. On receiving such an application, or when acting on his own motion, the Registrar publishes a public notice inviting objections from stakeholders within a specified period. If no valid objection is received, the Registrar strikes off the company's name and publishes a notice in the Official Gazette; the company stands dissolved from the date of that publication. …