Cancelation of company registration under the Companies Act, 2013:
Cancelling company registration under the Companies Act, 2013 in India involves a legal process that typically follows specific steps. It’s important to note that the process may vary based on the circumstances and the type of company you are looking to cancel. Here is a general overview of the steps involved in canceling a company registration:
Board Resolution:
The first step is to convene a board meeting to discuss and pass a resolution for the cancellation of company registration. The resolution should outline the reasons for cancellation and authorize a director or authorized signatory to initiate the process.
Creditors and Shareholders Approval:
If the company has creditors or shareholders, their approval is required for cancellation. Special resolutions need to be passed during separate meetings for creditors and shareholders. You will also need to provide notice to the Registrar of Companies (ROC) regarding these meetings.
Clearance of Debts:
Ensure that all outstanding debts, including those to creditors, employees, and government authorities, are cleared. This includes clearing any pending taxes, statutory dues, and loans.
Asset Liquidation:
If the company holds assets, these should be liquidated and the proceeds used to settle any outstanding liabilities.
File Application with ROC:
Prepare the necessary documents, including the application for cancellation, and submit them to the ROC. The application should include:
Board resolution for cancellation
Special resolutions from creditors and shareholders
Statement of assets and liabilities
Income tax clearance certificate
Affidavit from directors stating that the company has not been carrying on business for the specified period (usually a year or more)
NOC (No Objection Certificate) from various government authorities, if applicable
Other required documents as per the ROC’s guidelines
Publication in Official Gazette:
Once the ROC is satisfied with the application, they will publish a notice in the Official Gazette, giving an opportunity for objections from the public. If there are no objections within the specified period, the ROC proceeds with the cancellation.
Obtaining ROC Approval:
If no valid objections are received, the ROC will issue a notice stating that the company’s registration is canceled. This notice will also be published in the Official Gazette.
Liquidation of Remaining Assets:
If any assets remain after settling all liabilities and expenses, these should be distributed among the shareholders as per their shareholding.
Filing Final Documents:
After the cancellation is approved by the ROC, you will need to file final documents, including the notice of dissolution, with the ROC.
Dissolution Certificate:
Once all the necessary steps are completed, the ROC will issue a dissolution certificate, officially confirming the cancellation of the company’s registration.
There are many Reason to Cancel company registration:
Closure of Business:
The primary reason for canceling a company’s registration is the closure or cessation of its business operations. If the company is no longer carrying out its intended business activities and there is no foreseeable future for the business, it may make sense to wind up and cancel its registration.
Financial Insolvency:
If the company is financially insolvent, meaning it cannot pay its debts or meet its financial obligations, it may choose to cancel its registration through a formal winding-up process. This can help in the equitable distribution of remaining assets to creditors and shareholders.
Merger or Amalgamation:
Companies may opt to cancel their registration as a result of mergers or amalgamations with other entities. In such cases, the existing companies may cease to exist as separate legal entities, and a new entity may be formed.
Change in Business Structure:
A company may choose to cancel its registration if it wishes to change its business structure, such as converting from a private limited company to a partnership or sole proprietorship.
Non-Compliance or Legal Issues:
Companies that have consistently failed to comply with statutory requirements, such as filing annual returns or paying taxes, may face legal consequences. In such situations, the company may opt to cancel its registration to avoid legal actions or penalties.
Owner’s Decision:
Sometimes, the owners or promoters of a company may simply decide to close the business for personal reasons, retirement, or a change in career objectives. This can be a valid reason to cancel the company’s registration.
The Documents Required To Cancel Company Registration:
To cancel company registration under the Companies Act, 2013 in India, several documents and forms are typically required.
- Board Resolution
- Special Resolutions
- Statement of Assets and Liabilities
- Income Tax Clearance Certificate
- Affidavit
- No Objection Certificates
- Consent of Liquidator
- Notice of Application
- Consent of Creditors
- Final Accounts
- ROC Forms
- Other Relevant Documents
The Strike Off or Cancellation Of Company Registration:
Strike Off:
Strike off refers to the process of removing a company’s name from the register of companies maintained by the Registrar of Companies (ROC). It is typically used when a company is defunct, inactive, or has not been carrying on business for a specified period. Here are key points about strike off:
- Eligibility: Strike off is generally suitable for companies that have ceased operations, have no assets or liabilities, and have not filed their financial statements and annual returns for several years.
- Procedure:The company initiates the strike-off process by applying to the ROC through Form STK-2.
The company must clear all pending statutory dues, file its financial statements, and annual returns before applying for strike off.
The ROC will publish a notice of the strike off application and give an opportunity for objections from the public.
If no valid objections are received within the specified period, the ROC will issue a notice in the Official Gazette striking off the company’s name.
Effect: Once the name is struck off, the company ceases to exist as a legal entity. Its assets, if any, become the property of the government.
Advantages: Strike off is relatively simpler and less costly compared to the formal liquidation process. It is suitable for companies with no significant assets or liabilities.
Cancellation of Registration:
Cancellation of registration is a more formal process used when a company has assets and liabilities to be dealt with, or when stakeholders prefer a more structured dissolution process. Here are key points about the cancellation of registration:
Eligibility:
Cancellation of registration is suitable for companies with assets and liabilities that need to be properly liquidated and distributed among creditors and shareholders.
Procedure:
- The company must convene board and shareholder meetings to pass resolutions for the cancellation of registration.
- It is necessary to appoint a liquidator, who will be responsible for winding up the company’s affairs, settling debts, and distributing assets.
- The company files an application for cancellation with the ROC, along with various documents and forms, including financial statements, affidavits, and NOCs from government authorities, if applicable.
- The ROC publishes notices in the Official Gazette and provides an opportunity for objections from the public.
- Once the ROC is satisfied, it issues a dissolution certificate confirming the cancellation of registration.
Effect:
Cancellation of registration ensures the proper settlement of the company’s affairs, including the distribution of assets and liabilities among stakeholders.
Advantages:
This process provides a more structured and legally compliant approach to closing down a company with assets and liabilities. It protects the interests of creditors and shareholders.
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