Reviving Stricked-off Companies: A Guide to Restoring Your Business to Active Status

"Strike off" refers to either the voluntary cessation of operations by a company or the compulsory removal of its name from the Registrar of Companies' list, based on specified grounds. This action can be initiated voluntarily by the company or mandated by the Registrar of Companies under applicable legal provisions.

Upon incorporation of a company under the Companies Act, the Registrar of Companies issues a Certificate of Incorporation affirming the establishment of the company as of the date of issuance. The certificate acknowledges the entry of the company's name into the Register of Companies maintained by the ROC.

Once a company is registered, its name remains on the Register unless it undergoes dissolution through lawful procedures, such as winding up or amalgamation with another company. However, if a company becomes defunct, the Companies Act offers an expedited route to dissolution by allowing the Registrar of Companies to strike the company's name from the Register under Section 560 of the Companies Act, 1956.

The Registrar retains discretion regarding the removal of a company from the register, even upon receipt of an application indicating the company's non-functionality or reduction of members to fewer than seven. If the application seeks to evade liability in a pending legal action against the company, it must be dismissed by the Registrar.

The following are the topics discussed in this article:

1. Reasons for strike-off of a company by the ROC

2. Eligibility to file an application for the revival of a company

3. Grounds for the revival of a company

4. Process for the revival of a company

5. Conclusion

GROUNDS OF STRIKE -OFF OF COMPANY BY ROC:

Section 560 of the Companies Act 2013 confers authority upon the Registrar of Companies to strike off the names of companies based on the following grounds:

1. Companies that have failed to commence operations within one year of their incorporation.

2. Companies that have not conducted any business or operations for two consecutive financial years, evidenced by non-filing of e-Forms AOC-4 and MGT-7 for the preceding two financial years.

3. Instances where subscribers to the memorandum have not remitted the subscription money and failed to file a declaration (e-Form 20A) to that effect within 180 days.

4. Companies that, upon physical verification of their registered office, are found not to be engaged in any business activities.

In practice, the Registrar of Companies primarily strikes off companies for failing to file e-Forms AOC-4 and MGT-7 for two consecutive financial years. A company dissolved under Section 560 can be reinstated in the Register of Companies through a court order. Upon restoration, the court may issue directions and provisions deemed appropriate to ensure that the company and all affected parties are reinstated to a position as close as possible to if the company had not been struck off. 

WHO CAN FILE AN APPLICATION FOR THE REVIVAL OF A COMPANY:

1. Any individual adversely affected by the Registrar's decision may file an appeal within three years from the date of the Registrar's order.

2. If the Registrar determines that a company's name has been removed from the Register of Companies due to inadvertence or incorrect information provided by the company or its directors, the Registrar may file an appeal within three years.

3. A company, its members, creditors, or employees who are adversely affected by the company's name being struck off from the register of companies may file an appeal within twenty years from the date of publication of the notice of strike off in the Official Gazette. 

In voluntary striking off cases, the appeal period extends to twenty years, whereas for compulsory striking off by the ROC, the appeal must be lodged within three years from the date of the ROC's order for the purpose of revival.