Companies Act Section 248 — Power of Registrar to remove name of company from register of companies
CHAPTER XVIII REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF COMPANIES
Commercial / Corporate
Summary
Sub-section (1) sets out the situations where the Registrar may act. These are: a company has not started its business within one year of being incorporated; a company has not carried on any business or operation for the two immediately preceding financial years and has not applied during that time to be treated as a dormant company under section 455; the people who subscribed to the memorandum have not paid the subscription money they agreed to pay at incorporation, and a declaration about this was not filed within one hundred and eighty days of incorporation under sub-section (1) of section 10A; or a company is not carrying on any business or operations, as shown by a physical verification done under sub-section (9) of section 12. In any of these cases, the Registrar must send a notice to the company and all its directors stating the intention to remove the company's name from the register of companies, and asking them to send their representations along with relevant documents within thirty days from the date of the notice.
Sub-section (2) allows a company itself to take the initiative. After settling all its liabilities, the company may file an application with the Registrar to have its name removed from the register, on any of the grounds listed in sub-section (1). This application must be made in the prescribed manner, and it requires either a special resolution or the consent of seventy-five percent of members in terms of paid-up share capital. On receiving such an application, the Registrar must issue a public notice in the prescribed manner. However, if the company is regulated under a special Act, the approval of the regulatory body set up under that Act must also be obtained and attached to the application.
Sub-section (3) states that the provisions of sub-section (2) do not apply to a company registered under section 8.
Sub-section (4) requires that any notice issued under sub-section (1) or sub-section (2) must be published in the prescribed manner and also in the Official Gazette, so that the general public is informed.
Sub-section (5) explains what happens after the notice period ends. If the company has not shown cause to the contrary, the Registrar may strike off the company's name from the register of companies. The Registrar must then publish a notice of this action in the Official Gazette, and once that notice is published, the company stands dissolved.
Sub-section (6) requires the Registrar, before passing an order to strike off the name under sub-section (5), to be satisfied that sufficient provision has been made for realising all amounts due to the company and for paying or discharging its liabilities and obligations within a reasonable time. If necessary, the Registrar may obtain undertakings from the managing director, director, or other persons in charge of the company's management. However, even with such undertakings, the company's assets must still be made available to pay or discharge all its liabilities and obligations, even after the date of the order removing the name from the register.
Sub-section (7) states that any liability of every director, manager, or other officer who was exercising any power of management, and of every member of the company that has been dissolved under sub-section (5), will continue and can be enforced as if the company had not been dissolved.
Sub-section (8) clarifies that nothing in this section affects the power of the Tribunal to wind up a company whose name has been struck off from the register of companies.
Official Text
(1) Where the Registrar has reasonable cause to believe that—
(a) a company has failed to commence its business within one year of its incorporation;4[or] 5* * * * *
(c) a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under 6[section 455; or] 7[
(d) the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under sub-section (1) of section 10A; or
(e) the company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.] he shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice. 4. Ins. by Act 21 of 2015, s. 19 (w.e.f. 29-5-2015).
(2) Without prejudice to the provisions of sub-section (1), a company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent. members in terms of paid-up share capital, file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in sub-section (1) and the Registrar shall, on receipt of such application, cause a public notice to be issued in the prescribed manner:
Provided that in the case of a company regulated under a special Act, approval of the regulatory body constituted or established under that Act shall also be obtained and enclosed with the application.
(3) Nothing in sub-section (2) shall apply to a company registered under section 8.
(4) A notice issued under sub-section (1) or sub-section (2) shall be published in the prescribed manner and also in the Official Gazette for the information of the general public.
(5) At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand dissolved.
(6) The Registrar, before passing an order under sub-section (5), shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company:
Provided that notwithstanding the undertakings referred to in this sub-section, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies.
(7) The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved.
(8) Nothing in this section shall affect the power of the Tribunal to wind up a company the name of which has been struck off from the register of companies.