cancellation of company registration in india
Cancellation of Company Registration in India
In today’s business landscape, it is not uncommon for companies to face various challenges and circumstances that may necessitate the cancellation of their registration. The cancellation of company registration in India is a legal process that involves terminating the existence of a company under the Companies Act, 2013. This vital step must be undertaken carefully and in accordance with the provisions laid down by the Ministry of Corporate Affairs (MCA) to ensure a smooth and lawful dissolution.
The process of cancellation of company registration in India can be initiated by voluntary, as well as regulatory means. There are essentially two ways in which a company can be dissolved in India – namely, striking off the name of the company or winding up the company. Let us delve deeper into each of these processes.
Striking off the name of the company is a relatively simpler method and is applicable to companies that are not carrying out any business or have become defunct. Companies that have not commenced operations within one year of their incorporation or are not conducting any business activities for a continuous period of two years can apply for striking off their names from the register of companies. This process is governed by Section 248 of the Companies Act, 2013.
Before applying for strike off, it is important for companies to ensure that they have no assets or liabilities as any such remaining assets or liabilities shall be vested with the central government once the strike off process is complete. Moreover, all pending compliances and taxes should be duly fulfilled to avoid any roadblocks during the striking off process. It is also imperative to obtain the approval of all shareholders before initiating the strike off procedure.
The other method of cancellation involves winding up the company. This method is applied when a company wishes to dissolve voluntarily or when it faces insolvency or bankruptcy. There are two types of winding up – voluntary winding up and compulsory winding up.
Voluntary winding up occurs when the members of the company pass a special resolution for the dissolution of the company. This method can be further categorized into members’ voluntary winding up and creditors’ voluntary winding up. Members’ voluntary winding up is applicable when the directors of the company make a declaration stating that the company is able to pay all its debts in full within a specified period not exceeding one year from the date of commencement of winding up. On the other hand, creditors’ voluntary winding up is relevant when the company directors make a declaration that the company is unable to pay its debts in full.
Compulsory winding up, on the other hand, is initiated by order of the court. This can happen when the affairs of the company are conducted in a fraudulent manner, when the company breaches the provisions of the Companies Act, or when the company is unable to pay its debts. The process of compulsory winding up is governed by the provisions of the Insolvency and Bankruptcy Code, 2016.
Regardless of the method chosen, the cancellation of company registration in India involves several crucial steps that should not be overlooked. To commence the cancellation process, companies need to file the requisite forms and documents with the Registrar of Companies (RoC) after paying the prescribed fees. The RoC will then examine the application and, if satisfied, will issue a notice to the company stating its intention to strike off or liquidate the company.
In the case of voluntary winding up, a liquidator is appointed to realize the assets, pay the liabilities, and distribute any remaining surplus among the members of the company. This appointment needs to be approved by the Tribunal. The liquidator is entrusted with the responsibility of winding up the affairs of the company, preparing the final accounts, and submitting a final report to the Tribunal. Once accepted, a notice regarding the dissolution of the company is published, bringing an end to its legal existence.
In the case of striking off, once the Registrar is satisfied that all the necessary conditions have been met, a public notice is issued in the Official Gazette declaring the company’s name as being struck off from the register of companies. Subsequently, the company is deemed dissolved from the date mentioned in the Gazette.
It is crucial to ensure that all the regulatory and legal requirements are meticulously fulfilled during these processes to avoid any complications or legal repercussions down the line. Failure to comply with these requirements may result in penalties for the company and its directors.
In conclusion, cancellation of company registration in India is a significant step for companies that need to dissolve their operations. Whether by striking off the company’s name from the register or through the winding up process, it is essential to follow the prescribed legal procedures and fulfill all necessary requirements to achieve a smooth and lawful cancellation. By understanding and adhering to the relevant provisions of the Companies Act, companies can ensure a proper and hassle-free dissolution in compliance with Indian laws.,
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cancellation of company registration in india
This article is only published for informational purposes. Please consult your Chartered Accountant or Financial Advisor before making any important financial decisions.
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