Voluntary vs Involuntary Strike Off Company in India

A company in India can remove itself from the official register voluntarily, or the Registrar of Companies (ROC) can remove it involuntarily. Understanding the difference helps business owners stay compliant and avoid legal trouble.

Voluntary Strike-Off

Under the Companies Act, 2013, a company can voluntarily strike off its name from the Registrar of Companies (ROC) records. This process applies to dormant or inactive companies that do not intend to continue their business operations.

Eligibility for Voluntary Strike-Off

A company can apply for a strike-off if it:

• It never started business after registration.
• It stopped doing business for the last two years.
• It has no legal cases or unpaid debts.

Legal Provision

Section 248(2) of the Companies Act, 2013 provides the procedure for companies to apply for voluntary strike-off.

Process for Voluntary Strike-Off

• Board Approval : The company’s directors agree to close the company.
• Shareholder Approval : At least 75% of the shareholders must agree.
• Clear Dues : The company must pay off any outstanding debts.
• File Application (STK-2) : Submit necessary documents like:
  • A statement of accounts showing no assets or liabilities.
  • A declaration from directors confirming no pending dues.
• Public Notice : The ROC publishes a notice to allow objections.
• Final Closure : If no objections come up, the ROC removes the company’s name, and it no longer legally exists.

Important Things to Know

• Directors remain responsible for any past issues of the company.
• Once struck off, the company cannot restart unless revived by a court order.
• This is different from liquidation, which is used when a company has assets and debts to settle.

Involuntary Strike-Off

In India, involuntary strike-off happens when the Registrar of Companies (ROC) removes a company’s name from official records because it is not following legal rules. This means the company stops existing legally.

Reasons for Involuntary Strike-Off

The ROC may strike off a company if:

• It doesn’t start business within one year of registration.
• It doesn’t file annual returns or financial statements for two years in a row.
• It isn’t active or running any business.
• It fails to follow government rules under the Companies Act, 2013.

Process of Involuntary Strike-Off

• ROC Sends a Notice (STK-1) : The company and its directors get a warning.
• Company Can Respond : The company has 30 days to prove it is active.
• Public Announcement (STK-5) : If no response, the ROC announces it in newspapers and the government gazette.
• Final Strike-Off (STK-7) : The company’s name is officially removed.

What Happens After Strike-Off?

• The company stops existing legally.
• Directors may have to pay any pending debts.
• The government may take over company assets.

Can a Struck-Off Company Be Restored?

Yes, the company can apply to the National Company Law Tribunal (NCLT) within 20 years to bring it back.