NOTE ON POWERS OF ROC FOR STRIKING OFF/ WINDING UP OF THE COMPANY This note has been prepared to explain the powers of ROC for striking off the company when it becomes dormant/inactive or for winding up of the company.

1. -Noopur K. Dalal
Strike Off & Winding Up as per Section 248 & Section 271-
272 Of Companies Act, 2013

2. This note has been prepared to explain the powers of
ROC for striking off the company when it becomes
dormant/inactive or for winding up of the company.

3. DEFINITION
Dormant Company
The concept of Dormant Company
has come into existence with the
implementation of the new
Companies Act, 2013 vide section
455 of the Act. Dormant Company is
a company, which is formed and
registered under this Act, for a
future project or to hold an asset or
intellectual property and has no
significant accounting transaction,
such a company or an inactive
company.
Inactive Company
“Inactive company” means a company,
which has not been carrying on any
business or operation, or has not made
any significant accounting transaction
during the last two financial years, or has
not filed financial statements and
annual returns during the last two
financial years.
In addition, ‘Inactive Company’ means
which is inactive i.e. it has not been
carrying on any business or the company
has not made any significant
transactions during the last two years or
it has not filed annual returns for the last
two financial years.

4. CIRCUMSTANCES UNDER WHICH COMPANY MAY BE
WOUND UP BY TRIBUNAL AS PER SECTION 271 AND
SECTION 272 OF THE COMPANIES ACT, 2013

5. POWERS OF REGISTRAR FOR MAKING
AN APPLICATION OF WINDING UP
• Section 271 sub section (e) of the act provides that if the company has
made a default in filing with the Registrar its financial statements or
annual returns for immediately preceding five consecutive financial
years, an application for winding up of the Company can be made by
the Registrar (ROC).
• Also, as per Section 272 sub section (e) of the act the Registrar (ROC) can
file a petition for ordering winding up of a Company.
• However, the Registrar shall be entitled to present a petition for winding up
under subsection (1) on any of the grounds specified in sub-section (1) of
section 271, except on the grounds specified in clause (b), clause (d) or
clause (g) of that sub-section:

6. • Provided that the Registrar shall not present a petition on the ground that
the company is unable to pay its debts unless it appears to him either from
the financial condition of the company as disclosed in its balance sheet or
from the report of an inspector appointed under section 210 that the
company is unable to pay its debts;
• Provided further that the Registrar shall obtain the previous sanction of the
Central Government to the presentation of a petition
• Provided also that the Central Government shall not accord its sanction
unless the company has been given a reasonable opportunity of making
representations.

7. STRIKING OFF NAMES OF COMPANIES AS PER
SECTION 248 OF THE COMPANIES ACT, 2013
• Chapter XVIII of the Companies Act, 2013 (‘Act’ for short) provides the
procedures for removal of names of companies from the Register of
Members in Sections 248 to 252 which came into effect from
26.12.2016. For this purpose the Government made ‘The Companies
(Removal of Names of Companies from the Register of Companies) Rules,
2016 (‘Rule’ for short) which came into effect from 26.12.2016.
• Section 2(74) of the Act defines the term ‘Register of companies’ as the
register of companies maintained by the Registrar on paper or in any
electronic mode under this Act.

8. POWERS OF THE REGISTRAR
Section 248(1) provides that where the Registrar has reasonable
cause to believe that:
• A company has failed to commence its business within one year of
its incorporation; or
• 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 with such period for obtaining the status of a dormant
company,
he shall send a notice to the company and all 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 relevant documents, if any, within
a period of 30 days from the date of the notice.

9. STRIKE OFF NAME
• Section 248(5), provides that at 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 in Form No STK – 7. The same shall be placed on the
Official Website of the Ministry of Corporate Affairs.. On such notification,
the company shall stand dissolved.
• Section 248(6) provides that the Registrar, before passing an order, shall
satisfy himself that sufficient provision has been made for the realization 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 person in charge of the management of the company.

10. • 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.
• Section 248(7) provides that 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, shall continue and may be
enforced as if the company had not been dissolved.
• Section 248(8) provides that 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.

11. COMPANIES THAT CANNOT BE REMOVED AS PER
SECTION 248 OF THE COMPANIES ACT, 2013
Rule 3 provides that the following categories of companies shall not be
removed from the register of companies:
• listed companies;
• companies that have been delisted due to non-compliance of listing
regulations or listing agreement or any other statutory laws;
• vanishing companies;
• companies where inspection or investigation is ordered and being carried
out or actions on such order are yet to be taken up or were completed but
prosecutions arising out of such inspection or investigation are pending in
the Court;
• companies where notices under Section 234 of the Companies Act, 1956 or
Section 206 or 207 of the Act have been issued by the Registrar or
Inspector and reply thereto is pending or report under

12. Section 208 has not yet been submitted or follow up of instructions on
report under Section 208 is pending or where any prosecution arising out
of such inquiry or scrutiny, if any, is pending with the Court;
• companies against which any prosecution for an offence is pending in
any court;
• companies whose application for compounding is pending before
competent authority for compounding the offences committed by the
company or of any of its officers in default;
• companies, which have accepted public deposits which are either
outstanding or the company is in default in repayment of the same;
• companies having charges which are pending for satisfaction; and
• companies registered under Section 25 of the Companies Act,
1956 or Section 8 of the Act.

13. CONCLUSION
• If the Company is a closely held Company and there are no major debts/
liabilities in the books of the Company then the Registrar can order for
Striking off of the name of the Company from the register of Companies.
• However, in case of a Company with Outside liabilities and Assets held in
joint ownership with any other Company/ Individual/ entity, the Registrar can
make an application to the tribunal for order of Winding up of the Company
proceeded by Liquidation of assets and liabilities of the Company.
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