The Registrar of Companies has the right to remove a company’s name from the register of companies on reasonable grounds. He can do so if the firm has failed to operate within one year of its incorporation or has yet to carry on any business or operation for the two most recent financial years. A defunct company can be wound up by applying STK-2 Form to the ROC. Following that application, the ROC will remove the company’s names.
What is STK 2 form?
Form STK-2 is a Suo-motto application to the ROC for removing a company’s name from the register of companies. Filing Form STK-2 requires the company to remove all its liabilities. It must accomplish a special resolution for removing the company name from the Registrar of Companies with the consent of 75% of members in terms of paid-up share capital. Details regarding whether the company is monitored under a particular Act and its approval by the statutory body constituted or established under that Act should also be mentioned and enclosed with the application.
Ways to strike a company
Any company determined to stop its operation and withdraws the idea of future operation can apply to the ROC. The ROC will remove the company’s name from the register and close the company.
The procedure of striking off can be performed in the following manner:
- The Registrar of companies will order for Company Strike off – Suo Moto
- Strike off by voluntary application by the company
When does a company need to strike off?
- If a company fails to commence its business within one year of its incorporation, it can be stroked off according to Section 248,
- If a company does not carry any business operations for two immediately preceding fiscal years.
- If the company failed to change as a dormant company within the period under section 455.
- In the event of Non-Receipt of subscription money from the company Subscribers. Non-filing of Forms for the establishment of the business.
- In case of Non-Operation of any business activities from the registered office of the company
Requirements to file STK 2 form
Any company can apply for closure using Form STK-2. All types include private limited companies, Person Companies and Public limited companies. The following enclosure must be enclosed along with Form STK-2:
- Consent by the company’s Creditors
- Indemnity bond duly notarized by every company director in Form STK 3.
- An up-to-date statement of accounts comprising assets and liabilities of the company certified by a Chartered Accountant, not exceeding thirty days before the date of application
- Consent Letter and an affidavit by every director of the company in Form STK 4
- A copy of the special resolution accordingly certified by directors of the company or approval of 75 per cent of the company members in terms of paid-up share capital as provided on the date of application
- CTC of Special Resolution that is duly signed by every director of the company
- Aadhaar card, Digital Signature, and PAN of directors
- A statement regarding any pending litigation concerning the company.
Effect of removing the name from ROC
ROC receives and files Form STK-2. In that case, the company will be dissolved under section 248 of the Companies Act 2013. Following the dissolution, the company will be terminated to operate as a company. Also, the Certificate of Incorporation issued shall be cancelled from that date except for the amount due to the company and the remittance or the company’s debts or liabilities are discharged.
Even if the firm is shut down using Form STK-2, all directors, managers, and other officers who exercised managerial authority will still be liable for whatever debts they accrued during that time. It will be obligatory that the company is not dissolved.
STK 2 is a mandatory requirement or procedure for all companies that have decided to terminate their business. Every business that decides to cease its existence in a legalized manner must apply for Form STK-2. The Ministry of Corporate Affairs released this Form to make the winding up hassle-free. If otherwise, winding up a company is a complex process with lots of complicated paperwork. The company will cease to exist once the Form is applied, acknowledged and authorized by the ROC.