Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023

The Ministry of Corporate Affairs (MCA) has recently introduced stricter regulations for the closure of companies through the Companies (Removal of Names of Companies from the Register of Companies) Second Amendment Rules, 2023. The amendment came into effect on May 10, the date of the notification. These amendments introduce additional requirements for companies seeking to remove their name from the register of companies, emphasizing compliance with financial reporting and transparency obligations. These new rules aim to enhance the scrutiny and control over removing company names from the register.

Recent Amendments and Provisions for Removing Company Names from the Register

The Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 provide a detailed framework for removing a company's name. These rules were initially introduced in 2016 and have been revised by the MCA periodically.

Section 248 of the Companies Act of 2013 empowers the Registrar to remove the company name from the register of companies under specific circumstances listed in the provision.
Recently, on April 17, 2023, the MCA issued the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2023, which introduced significant changes to the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023. These changes pertain to the application process for removing a company's name from the register of companies.

Furthermore, the MCA notified on May 10, 2023, introducing the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023. These rules include provisos that will be inserted under Rule 4(1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023

The Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, Rule 4(1), addresses the application for removing a company's name. Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023 add three provisos to this rule, imposing statutory requirements on companies when applying for the removal of their name from the Register of Companies:

Rule 4 relates to "Application for removal of the name of the company," which says that an application for removal of the name of a company under Section 248(2) will be made to the Registrar, Centre for Processing Accelerated Corporate Exit in Form No. STK-2 along with a fee of Rs. 10000. 2. New Provisions have been inserted regarding the same:
The Company must file all overdue financial statements and annual returns by the end of the financial year when it ceased its business operations...
Where the Registrar's action has already been initiated against the Company, it can only apply for the removal of names after filing pending financial statements and annual returns.
A Company will not be allowed to apply for the removal of names once the Registrar has issued notice for publication.

Requirements before submitting a Form SKT-2 - Voluntarily Removing Company Name

Under the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, companies must fulfill specific requirements before submitting a removal application. These requirements include:

Submission of Overdue Financial Statements and Annual Returns:

Companies are not permitted to submit a removal application unless they have completed filing all pending financial statements and annual returns by the end of the year, during which the Company is prohibited from conducting business operations.

Pending Financial Statements and Annual Returns:

If a company plans to submit a removal application after the Registrar acquires the authority to strike off its name from the register of companies, it must fulfill certain conditions. These conditions include a reasonable belief that

The Company did not initiate its business activities within one year of its incorporation,
The Company did not conduct any business during the two immediately preceding financial years,
Its subscribers failed to fulfill their subscription payments.

In such cases, the Company must file all pending financial statements and annual returns before submitting the removal application.

Prohibition after Registrar Strikes Off:

Suppose the Registrar strikes off a company's name from the register of companies and publishes a notice in the official gazette regarding the same. In that case, the Company will not be permitted to apply Rule 4(1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. Companies must adhere to these requirements as outlined in the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, to ensure compliance and a smooth name removal process.

Process for removing a company's name from the register of companies

The process for removing a company's name from the Register of Companies, according to the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, is as follows:

Ensure Compliance: Make sure to submit all pending financial statements and annual returns until the conclusion of the financial year in which the Company is prohibited from carrying out its business operations.
Application Submission: Submit a removal application to the Registrar of Companies (RoC), including necessary documents like financial statements, board resolutions, and consent letters from directors.
Public Notice: The RoC publishes a notice on its website and in newspapers, inviting objections or representations from the public within a specified period, usually 30 days.
Objection Period: During this time, anyone can raise objections by submitting written objections and supporting documents to the RoC.
Registrar's Decision: The RoC evaluates the application and objections, deciding whether the Company's name should be removed from the register. Additional information may be requested from the Company if needed.
Removal Order: If approved, the RoC issues a removal order specifying the effective date of removal, usually 30 days from the order.
Publication of Removal: The Registrar of Companies (RoC) issues an official notice in the Official Gazette, formally declaring that the company name has been removed from the register of companies.

It is critical to comply with this Amendment Rules, 2023, and provide accurate documentation during the name removal process.

Back to Learn

Frequently Asked Questions

Common questions about Companies Removal of Names from Register.

The primary purpose of the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, is to introduce stricter regulations and additional requirements for companies seeking to remove their names from the register of companies. This amendment aims to enhance scrutiny, compliance, and transparency in the process of closing companies.

According to the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, companies must fulfill the following key requirements before applying for the removal of their names: a) File all overdue financial statements and annual returns by the end of the financial year when they ceased business operations, b) File pending financial statements and annual returns if the Registrar has already initiated action against the company, and c) Not apply for removal once the Registrar has issued a notice for publication.

No, under the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, a company will not be allowed to apply for the removal of its name once the Registrar has issued a notice for publication regarding striking off the company's name from the register of companies.

The process for removing a company's name from the register of companies, as outlined in the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, involves ensuring compliance with financial reporting requirements, submitting a removal application to the Registrar of Companies (RoC), publication of a public notice, an objection period, evaluation by the RoC, issuance of a removal order, and final publication in the Official Gazette.

Filing overdue financial statements and annual returns is a crucial requirement under the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023. It ensures that companies comply with their financial reporting obligations and maintain transparency before seeking to remove their names from the register of companies.

If a company plans to submit a removal application after the Registrar has initiated action against it, the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, require the company to file all pending financial statements and annual returns before submitting the removal application.

The public notice and objection period during the name removal process, as outlined in the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, are intended to provide transparency and allow any interested parties to raise objections or provide representations regarding the company's name removal. This helps the Registrar make an informed decision based on all available information.

Yes, according to the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, a fee of Rs. 10,000 must be paid along with the submission of Form No. STK-2 when applying for the removal of a company's name from the register.

The Registrar of Companies (RoC) plays a crucial role in the process of removing a company's name from the register, as outlined in the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023. The RoC is responsible for evaluating the removal application, considering any objections, requesting additional information if needed, and ultimately deciding whether to approve or reject the removal request.

If a company's name is successfully removed from the register of companies, as per the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023, the Registrar of Companies (RoC) will issue an official notice in the Official Gazette, formally declaring that the company's name has been removed from the register of companies. This signifies the effective closure of the company.