Revival of Struck off Companies- An Overview
Revival of struck off companies is the formal process in which a company or undertaking is revived and its name is brought back in the registrar of companies (ROC). With the introduction of the Companies Act, 2013 the provisions related to revival of struck off companies is present under section 248 of the Companies Act, 2013.
During the financial year 2017-18 many companies had their names struck off the register. Strike off means to cancel the operations of the company for a temporary period of time. This would form as an alternative for winding up of a company, where the company can get revived within a period of 20 years. This period or date would be known as period of revival.
Criteria or Grounds for Revival of Struck Off Companies
The following are the grounds or criteria for revival of struck off companies from the register:
- Three years from Order
An aggrieved individual can file an appeal against the order of the tribunal. The appeal must be filed within 3 years from the date or order of the tribunal.
- Incorrect Information Furnished
The register of companies (ROC) would usually strike off the company name from the register if some form of incorrect information or irrelevant information is provided. The shareholders or directors have a time period of three years to file the appeal for such revival.
- An employee can file this appeal within 20 years
Any aggrieved employee or workmen can make an application for reviving the company within 20 years from the date of striking off the company from the registrar. Suppose a company is closed on 01 February 2021 then from this date to 01 February 2041 the company has the time to make an appeal regarding the revival. Usually this period would be referred to as the period of limitation regarding the revival. This form of revival refers to voluntary revival of a company.
When can a company be struck off the register of the ROC?
The following grounds would be admissible for a company to be struck off or removed from the ROC:
- No Business for One Year
From the date of incorporation of the company the business operations have not been carried out. The date of incorporation of the company would be considered as the date where the company has received its certificate of incorporation from the ROC.
- Not Filing Forms
Usually when the forms and e-forms have not been submitted by the company. Then it can be a ground for striking off the name of the company. Such forms have to be submitted within the previous two financial years or the fiscal years. The relevant forms are AOC- 4 and MGT-7.
- Subscription Money Not Paid
If the members or shareholders, have not paid the proceeds related to the paid up money or subscription money for the memorandum of association, then such grounds would be valid for striking off the company. Such declaration has to be filed within 180 days from such date. Usually for the above process e-Form 20A would be considered.
- Physical Verification
The registrar of companies has gone and physically verified that the office or the business has not commenced any operations.
The following are the grounds which are usually considered by the registrar in striking off a company.
What can be considered for Revival of Struck Off Companies?
The National Company Law Tribunal has specific criteria for revival of struck off companies:
- If the company has secured or has acquired some form of immovable property which comes under the provisions related to transfer of property act.
- If the company has ensured to carry out all the other form of relevant compliances as per the law related to GST, Provident Fund and other compliances.
- If there is some form of evidence that transactions have been carried out by the company. Usually the bank statement of the company would be utilised for this process.
- If the company is carrying out operations related to Food Business, then securing the license from the concerned FSSAI would be mandatory for its operations. In such circumstances the company would be considered to be revived by the NCLT.
- Another ground is general public interest that the company formed has to be revived. Public interest is one of the major grounds for revival of struck off companies.
Updates as per the Companies Fresh Start Scheme for Revival of Struck off Companies
- Companies would have to be restored in order to comply with the requirements of the Companies Act, 2013. Also it is beneficial if a company is restored as early as possible.
- Creditors may require the company to start an action for recovery of all the proceeds.
- All the respective liabilities of respective officers can be enforced. Such liabilities would be categorised as continuous liabilities.
- Where companies have not filed annual returns or statements the period of three years. Such companies can disqualify the directors on the grounds of this.
- ROC may consider prosecuting individuals for non-compliance with respect to filing the documentation.
- This would lead to the disqualification of the company if the above is not carried out within a period of 5 years.
- Section 164(2) speaks about the criteria for disqualification of a director. This would also cover specific aspects related to removal of a director. If the director is reappointed again, then such requirements have to be stated by the director.
- Promoters can secure some form of benefits related to revival- Any form of overdue returns can be filed within the appropriate period. A nominal fee would be charged regarding this. The fee would be between Rs 300/- to Rs. 600/-. Apart from this the promoters or the shareholders can also ask for imposing some form of penalties on officers who have not carried out their duties related to compliance.
Procedure for Revival of Struck off Companies
The procedure related to revival of struck off companies has been laid down by the National Company Law Tribunal. Such procedure has to be followed and compliance has to be met. The following is the procedure:
- Application for Process of Revival
In this the aggrieved person or applicant would consider filing the application. Such application would be in the form of an appeal to the NCLT. Such provisions would be governed under section 252 of the Companies Act, 2013. The provision related to the appeal procedure has to be made by any aggrieved individual within a period of three years. This provision is as per section 252(1) of the Companies Act, 2013. If the appeal or the application is made by any employee or concerned workman then the limitation period for making this is 20 years from the date of striking off the company. Such provision is present under section 252(3) of the Companies Act, 2013.
- Petition Planning and Drafting
All the planning related to the above petition must be made to the NCLT through form NCLT-9. Along with this, a demand draft has to be made in favour of the ‘Accounts and Pay Officer’ of the Concerned Ministry of Corporate Affairs. Such petition must be filed along with the grounds.
- Submitting Petition
Before 14 days of the application hearing, a copy of the petition for revival of struck off companies must be provided to the Registrar of Companies. Such companies can be given to any other form of interested individuals related to the petition.
- NCLT Trail
The tribunal would hold the appeal hearing by summoning the petitioner and the respondent. Here the respondent would be the registrar of Companies. After reviewing the facts related to the petition, the company would provide the judgement regarding the revival of the struck off company.
- Instructions from Tribunal
The tribunal can make an order related to restoring the struck off company. The following orders can be provided by the tribunal :
• The applicant has to deliver a certified copy of the order to the ROC. This must be carried out within the period of 30 days.
• After securing this the ROC would go through the requirements related to compliance. After this the official seal would be provided in accordance to the requirement of the gazette.
• If the tribunal requests, then the applicant must pay the costs related to appeal for the revival order.
• The company must carry out all forms of compliance.
- ROC Orders
After the tribunal passes the appeal, the company must file Form INC-28 to the registrar of companies within 30 days of the order.
- Gazetted Publication
Once all the certified copies are provided, the ROC would carry out the requirements related to publication in the official gazette.
- Final Filing of Documents by ROC
As per the requirements of the ROC the company has to provide the documents at the request of the ROC.
What would happen after the revival of struck off companies?
After the revival order has been carried out, then all the liabilities of every single director, manager, or other officers, would deem to continue as if the company had not come to an end.
Documents Showing Company has been in Operations
- Up-to-date bank statements
- Quickly Obtainable signed balance sheets.
- AGM Minutes/CTC of Board Minutes
- Copy of acknowledgments paid concerning ITR/ TDS/ Gratuity/ PF by the Company.
- Copy of latest sales bills/invoices
- The Company may give any other government document as evidence that it will materialize as on date.
- in the form NCLT 6, an Affidavit is required verifying the petition
- The order passed by the ROC for striking off
- Certificate of Incorporation
- Memorandum of Association and AOA
- Copy of audited financial statements will be required from when the fiscal year it has not been filed with the ROC
- Memorandum of Appearance
- Any other documents conditional upon the circumstances and case to case base.
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