PROCEDURE FOR REMOVAL OF NAME OF DEFUNCT
COMPANIES SIMPLIFIED
PRESS
NOTE
The matter regarding
striking off of the names of the defunct companies has been engaging
the attention of the Department for quite sometime. In the past
also, the Department had considered and announced simplification
in the operation of the provisions of Section 560 in such a way
that the Registrar of Companies (ROCs) can weed out the defunct
and dormant companies. This enabled the ROCs to strike off the
names of defunct companies exercising, suo moto, the powers vested
in them and on application made by directors confirming that the
company has no assets and liabilities and they have no intention
to carry on the business and undertaking that they would be personally
liable for claims arising in future.
The Department has
now decided to introduce a Simplified Exit Scheme(SES), simplifying
the procedure to be adopted by companies as well as ROCs in striking
off the name of defunct companies, with in-built safeguards to
ensure that unscrupulous promoters/directors/managers do not escape
their liabilities.
There should be an
incentive for the companies to exit, and a penalty for continuing
to remain on the register without complying with the provisions
of the Act. It is, therefore, also proposed that companies which
actually exit may not be prosecuted. If there are any pending
prosecutions for non-filing of Annual Return and Balance Sheet,
these can also be withdrawn. However, if there are other offences,
prosecutions can be withdrawn with the prior permission of the
Department. On the other hand, such companies that continue to
remain registered without complying with the provisions of the
Act, will be prosecuted vigorously.
The Registrar of
Companies on receipt of application shall publish in the prescribed
proforma in one local and in one national daily, the list of companies
that have applied, and are under consideration, for being struck
off u/s 560 of the Companies Act, 1956.
ROCs shall send
this list of companies to the Department to enable it to put the
list on the web sites of the Department/ICAI/ICSI; and also to
Indian Banks Association (IBA) for circulation amongst their constituents/members.
Thirty days after
publication as aforesaid and 45 days after dispatch of the proforma
to IBA, if no objections are received, and if the case is otherwise
in order, the Registrar of Companies will strike off the name
of the companies from the Register and get them duly published
in the Official Gazette.
The scheme will
be in operation upto 31.12.2003 from the date of issue of circular.
