Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023
Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023
The Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023, were recently introduced by the Ministry of Corporate Affairs. These new rules govern voluntarily removing a company’s name from the Register of Companies, providing clarity and updated procedures. The amendments aim to streamline the process and ensure efficient handling of name removal applications. In this article, we will explore the key features and provisions of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023.
Synopsis of Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023
The Ministry of Corporate Affairs has introduced significant amendments to the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, via the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023, which came into effect on May 1, 2023.
- Revision of Rule 4 (1) Regarding Application for Company Name Removal: Rule 4 (1) has undergone revision, specifying that companies seeking to remove their names under Section 248 (2) must now apply to the Registrar, Centre for Processing Accelerated Corporate Exit. This application is to be made in Form No. STK-2 requires a fee of Rs. 10,000.
- Insertion of Rule 4 (3-A) for Application Submission: A new provision, Rule 4 (3-A), has been inserted, addressing the application process for company name removal.
- Establishment of Registrar for Processing and Disposal: The Registrar, Centre for Processing Accelerated Corporate Exit, will be established under Section 396 (1) and will hold jurisdiction over the processing and disposal of applications made in Form No. STK-2, as well as all matters related to Section 248, across India.
- Revised Form STK-2 for Company Name Removal Application: Form No. STK-2, which pertains to the “Application by the company to Registrars of Companies (ROC) for removing its name from the register of companies,” has been revised to align with the updated requirements.
- Revisions Made to Form STK-6 for Public Notice: Form No. STK-6, used for publishing public notices regarding company name removal, has been updated to reflect the recent changes.
- Amendments to Form STK-7 for Notice of Striking Off and Dissolution: Form No. STK-7, which deals with the issuance of notices for striking off and dissolution, has been revised to accommodate the revised rules and procedures
Companies (Removal of Names of Companies from Register of Companies) Rules, 2016
The Ministry of Corporate Affairs introduced Sections 248-252 of the Companies Act 2013 on December 26, 2016. These sections outline removing or striking a company’s name from the Register of Companies. Section 248 grants authority to the Registrar of Companies (ROC) to remove a company’s name from the register if it meets specific criteria.
Section 248 also allows a company to voluntarily apply for the removal of its name based on the same grounds mentioned above. To support Section 248, the Ministry also notified the Companies (Removal of Names of Companies from Register of Companies) Rules, 2016, on the same day, i.e., December 26, 2016. These rules provide detailed guidelines and procedures for removing company names from the register.
Removal of Names of Companies from the ROC
Winding Up of Companies can be initiated by following two processes:
Voluntarily Removing Company Name using Form Form STK-2
A company can choose to remove its name from the register of companies voluntarily by submitting Form STK-2.
Removal of Company Name from Register of Companies by Registrar
According to Sections 248 to 252, the Registrar of Companies possesses the authority to remove a company’s name from the Register of Companies. The Registrar can exercise this power if there is reasonable cause to believe that:
- One year after incorporation, the company has not begun doing business.
- For two consecutive financial years, the company has not engaged in any business or operation and has not applied for dormancy status.
Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023
The amendments primarily focus on the application process for removing a company’s name from the Register of Companies.
Application for the removal of a company’s name
As per the updated rules, an application for removing a company’s name must be submitted to the Registrar, Centre for Processing Accelerated Corporate Exit (C-PACE), using Form No. STK-2. Along with this application, a fee of Rs 10,000/- is required.
Registrar, Centre for Processing Accelerated Corporate Exit (C-PACE)
The Registrar, Centre for Processing Accelerated Corporate Exit, established under sub-section (1) of section 396, now serves as the Registrar of Companies responsible for processing and disposing applications made in Form STK-2. This Registrar holds territorial jurisdiction across all of India.
These recent amendments streamline the application process for removing a company’s name from the Register of Companies and ensure a centralized and efficient system for processing such applications through the Registrar, Centre for Processing Accelerated Corporate Exit.
Revised Forms for Removal of Company Name from Register of Companies
Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023 releases amended Form STK-2, Form No. STK–6 and Form No. STK-7.
- Form STK-2: As mentioned above, Form STK-2 is used by a company to apply to the Registrar of Companies to remove its name from the Register of Companies. The form must be submitted with the required Rs 10,000/-fee.
- Form STK-6: This form is used for the prescribed Public Notice. Once the Registrar of Companies receives the application in Form STK-2, they will publish a public notice in Form STK-6 on the Ministry of Corporate Affairs (MCA) website and in at least one English newspaper and one vernacular newspaper.
- Form STK-7: This form is used for issuing the notice of striking off and dissolution. After three months after the publication date of the public information in Form STK-6, the Registrar of Companies has the authority to strike off the company’s name from the ROC, they will then issue a notice of striking off and dissolution in Form STK-7.
The revised Form STK-2, Form No. STK–6 and Form No. STK-7 is attached here for reference:
Form STK-2, Form No. STK–6 and Form No. STK-7Procedure for Voluntarily Removing Company Name using Form STK-2
By filing Form STK-2, the company can initiate the process of removing its name from the register of companies. Following the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023, the application must be submitted in Form STK-2 along with a fee of INR 10,000.
The procedure followed by the company for removal is as follows:
- Board Approval: The board of directors must approve the name in a board meeting to remove it. The company also approves the notice for an Extraordinary General Meeting (EGM).
- Shareholder Approval: The shareholders pass A special resolution at the general meeting to remove the name.
- Authority Approval: If any other authority regulates the company, approval from such authority is also required.
- Filing of Application: After obtaining the necessary approvals, the company applies Form STK-2 and the relevant documents to the Registrar, Centre for Processing Accelerated Corporate Exit (C-PACE).
Note: A company name removed from the Companies Register of Companies is governed by the Amendment Rules for Companies, 2022. The Registrar will notify the applicant within 15 days of any deficiencies or incompleteness in the application or documents. The Registrar will inform the applicant of the invalidity of the form if the applicant does not comply with this request.
- Public Notice: Upon receiving the application, the Registrar publishes a public notice (STK-6). If there are any objections to the removal, they must be raised within 30 days from the date of publication.
- Name Removal: After completing all the necessary processes, the Registrar removes the company’s name from the register. Notice of such removal will be sent to the official gazette in Form STK-7.
By following this procedure and fulfilling the requirements, a company can voluntarily remove its name from the register of companies.
