Exploring Section 248 of the Companies Act 2013

We aim to give a detailed guide on Section 248 of the Companies Act 2013. This section is key for businesses in India. It explains how to remove a company’s name from the Register of Companies. This can happen if the company fails to start business within a year or doesn’t operate for two years.

To remove a company’s name, an application must be filed with the Registrar of Companies. A public notice is then issued to invite objections. If no objections are raised within 30 days, the company’s name can be removed. This is a critical part of the company strike off and voluntary removal under the Companies Act 2013.

Key Takeaways

  • Section 248 of the Companies Act 2013 outlines the procedure for striking off a company’s name from the Register of Companies.
  • The company strike off process can be initiated by the company itself or by the Registrar of Companies under certain conditions.
  • Voluntary removal of a company’s name from the register requires filing an application with the Registrar of Companies.
  • The Registrar of Companies issues a public notice inviting objections before striking off the company’s name.
  • Section 248 is critical for companies in India to understand the company strike off process and follow regulations.
  • The process under Section 248 of the Companies Act 2013 is an important part of company regulations in India.
  • Understanding Section 248 is essential for businesses to comply and avoid legal issues with company strike off and voluntary removal.

Understanding Section 248 of Companies Act 2013

To grasp Section 248, we need to look at its key provisions, the regulatory framework it falls under, and its historical context. It has seen changes over time to meet the needs of India’s corporate world.

The regulatory framework is based on the Companies Act, 2013, and its rules. This ensures striking off a company is clear and follows the right steps. Knowing the historical context of Section 248 helps us understand its growth and why it has been updated.

Key Provisions and Scope

The key provisions of Section 248 cover the reasons for removal, how to apply, and the Registrar’s role. Companies that don’t start operations in a year or haven’t worked for two years can be removed by the Registrar under Section 248(1).

Regulatory Framework

The regulatory framework makes sure striking off a company is clear and follows the rules. The Registrar can remove a company’s name if it doesn’t start business in a year or hasn’t worked for two years.

Historical Context and Evolution

The historical context of Section 248 is key to understanding its changes and updates. Section 248 of the Companies Act, 2013 started on 26th December 2016. The Indian Government has updated it to make the removal process better.

Section 248 of Companies Act 2013

It’s important for companies to know the key provisions, regulatory framework, and historical context of Section 248. This helps them stay compliant and avoid being struck off. By following Section 248’s guidelines, companies can make the process smoother and more efficient.

Section 248 ProvisionsDescription
Grounds for RemovalCompanies that do not commence operations within one year of incorporation or have not carried on business for two consecutive financial years
Application ProcessCompanies must obtain a special resolution with a 75% consent of members to apply for strike-off under Section 248(2)
Role of the RegistrarThe Registrar may remove the name of a company if it fails to commence business within one year of incorporation or if it has not carried on any business for a period of two immediately preceding financial years

Grounds for Company Name Removal

We look at why a company’s name might be removed from the register. The grounds for removal include not starting business within a year, not operating for two years, and other reasons.

Some main reasons for company name removal are:

  • Failure to start business within one year of being formed
  • Not doing business or operations for two years before being struck off
  • Not paying subscriptions to the memorandum

It’s key for companies to know these grounds for removal. This helps avoid company name removal and follow the Companies Act, 2013.

company name removal

Companies have up to 30 days to explain why they’re not active after a notice from the Registrar of Companies. This action is aimed at shell companies, seen as used for tax evasion.

ConditionTimeframe
Failure to commence businessWithin one year of incorporation
Not carrying on any businessTwo preceding financial years

Power of Registrar Under Section 248

The power of Registrar under Section 248 of the Companies Act 2013 is key in removing companies. We’ll look at the investigation authority, notice needs, and action time frame in this section.

The Registrar checks if the reasons for removal are valid. This makes sure the process is fair and clear. The Registrar sends notices to the company and others, asking for objections within a set time. Companies must reply within 30 days after getting a notice about removal.

Investigation Authority and Notice Requirements

The Registrar’s role goes beyond checking removal reasons. They also check if the company is really running. When a company is removed, the Registrar must post a notice in the Official Gazette, as Section 248(4) says. Here are the main notice details:

  • Companies must reply within 30 days after getting a removal notice.
  • The notice of intention to remove a company will also be published in the Official Gazette.
  • Special Acts governing certain companies need extra approval before removal.

 

Timeframe for Action

The time allowed for action is important in removing companies. If no objections are raised, the Registrar will remove the company. This means it will be dissolved. Directors and management must deal with any outstanding debts after dissolution, under Section 248(6) and Section 248(7). The Registrar’s power under Section 248 makes the process fair and follows the law, which is vital for the Companies Act 2013.

SectionDescription
Section 248(1)(a)Company has not started its business within one year of being formed.
Section 248(1)(c)Company has not done business for at least two years in a row.
Section 248(1)(d)Declaration about unpaid subscriptions is not filed within 180 days of being formed.

Voluntary Strike-Off Process

We help companies through the voluntary strike-off process. This involves passing a special resolution or getting consent from 75% of members. Then, the company must file an application with the Registrar of Companies, along with the needed documents.

This process is designed to be quick. It lets companies close their operations legally and in an orderly way. Companies that haven’t started business in a year or have been inactive for two years might qualify for voluntary strike-off.

Here are the main steps for company closure through voluntary strike-off:

  • Pass a special resolution or get consent from 75% of members
  • File an application with the Registrar of Companies
  • Include necessary documents, like a statement of accounts certified by a Chartered Accountant

After applying, the Registrar of Companies will check it. They might ask for more info. If no one objects in 30 days, the company’s name will be removed from the register.

The voluntary strike-off process is easy for companies to close down. But, it’s key to follow the right steps to avoid problems. By knowing the process and what’s needed, companies can close down smoothly.

StepDescription
1Pass a special resolution or get consent from 75% of members
2File an application with the Registrar of Companies
3Include necessary documents, like a statement of accounts certified by a Chartered Accountant

Legal Implications and Consequences

We look at the legal effects of removing a company’s name from the register. This includes how it affects directors, impacts on assets, and what stakeholders need to know. It’s important to remember that directors and officers can’t avoid their responsibilities by striking off the company.

The legal implications of striking off a company are serious. Directors can face legal trouble for actions taken while in charge. Also, the company’s assets might be taken by creditors.

Key Considerations

  • Striking off a company’s name does not necessarily mean that the liabilities of its directors and officers are absolved.
  • The process can have significant legal implications for stakeholders, including creditors and employees.
  • Due diligence and compliance are key to avoiding asset loss and protecting directors.

Between April 1, 2019, and July 12, 2022, 1,12,509 companies were struck off under section 248(1) of the Companies Act, 2013. Most of these were in Delhi. Understanding the legal implications is vital for directors and asset holders to deal with company law complexities.

StateNumber of Struck Off Companies
Delhi19,464
Maharashtra16,023
Uttar Pradesh12,823

Rights of Affected Companies

When a company’s name is removed from the register, it can cause big problems. But, affected companies have some rights and options. They can appeal the Registrar’s decision through the National Company Law Tribunal (NCLT).

The NCLT can review the decision and might put the company’s name back on the register. Companies can also apply for restoration procedures to get their name back. This process is complex but can be necessary for companies wrongly removed.

  • Filing an application with the NCLT
  • Providing evidence to support the company’s claim
  • Attending a hearing to present the company’s case

It’s vital for affected companies to know their rights of affected companies. They should also understand the appeal mechanisms and restoration procedures. With professional advice and the right steps, companies can try to get back their registered status.

ProcedureDescription
Filing an applicationCompanies must file an application with the NCLT to initiate the restoration process
Providing evidenceCompanies must provide evidence to support their claim, such as financial records and business plans
Attending a hearingCompanies must attend a hearing to present their case and respond to any questions or concerns

Recent Developments and Amendments

We’ve seen big changes in the way companies get struck off under Section 248 of the Companies Act, 2013. The amendments in 2023, like the Amendment Rules 2023 and the Second Amendment Rules 2023, have made things easier and faster.

Some important points about these changes include:

  • A fee of ten thousand rupees is needed to apply for company strike-off with Form STK-2.
  • The statement of account with Form STK-2 must be no older than 30 days from the application date.
  • Financial filings needed include overdue financial statements under Section 137 and annual returns under Section 92.

These amendments aim to make the process smoother and easier for companies. The recent developments also show how important it is to keep up with legal changes. This ensures you follow the rules and use the new, simpler ways.

The Centre for Processing Accelerated Corporate Exit (CPACE) now handles applications all over India under section 248. For Form No. STK-2, you need a statement of account and indemnity bonds. These must be no older than 30 days from when you apply.

FormFeeRequired Attachments
Form STK-2₹10,000Statement of account, indemnity bonds

Conclusion

As we wrap up our look at Section 248 of the Companies Act, 2013, it’s clear it’s key in India’s corporate world. We’ve covered why a company’s name can be removed, the Registrar’s power, and the voluntary strike-off process. We’ve also talked about the legal effects and rights of companies affected.

This article shows how vital it is for Indian companies to know about Section 248. We’ve talked about the reasons for removal, like not starting business or not operating for two years. We’ve also looked at the voluntary strike-off process. Knowing these things is important for companies to follow their duties and choices.

The legal effects, like how they affect directors and others, highlight the importance of making smart choices. This is why companies need to understand Section 248 well.

With changes to the Companies Act, it’s important for businesses to keep up and adjust. By being alert and taking action, companies can handle Section 248’s challenges and follow the law.

In short, Section 248 of the Companies Act, 2013, is a big part of corporate rules in India. By knowing its rules, companies can make good choices, avoid risks, and protect their work. As things change, we urge businesses to stay informed, get expert advice when needed, and keep their practices in line with new laws.

FAQ

What is the significance of Section 248 of the Companies Act, 2013?

Section 248 of the Companies Act, 2013 explains when a company’s name can be removed. This includes if the company doesn’t start business within a year or hasn’t been active for two years.

What is the process for striking off a company’s name from the register?

To remove a company’s name, you need to file an application with the Registrar. A public notice is then issued for objections. If no objections are made within 30 days, the company’s name can be removed.

What are the key provisions and scope of Section 248?

Section 248 talks about when a company’s name can be removed. This includes not starting business within a year or being inactive for two years. It also covers the Registrar’s role in this process.

What is the voluntary strike-off process for companies?

The voluntary strike-off process lets companies close legally. It requires shareholder approval and filing an application with the Registrar, along with documents.

What are the legal implications and consequences of striking off a company’s name?

Striking off a company’s name has big legal effects. It impacts directors, assets, and stakeholders. It doesn’t automatically clear the company’s directors’ and officers’ liabilities.

What rights and options do affected companies have?

Companies whose names are removed can appeal the decision. They can try to get their name back on the register. The section explains how to appeal and restore the name.

What are the recent developments and amendments related to Section 248?

Recent changes to Section 248 have made the process easier. Companies should keep up with these updates to follow the new rules and use the simpler processes.

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