Prefatory:

As per PIB Press Release, during F.Y. 2017-18 ROCs identified and removed from the ROC the names of 2,26,166 companies; 3,09,619 directors disqualified.

2nd drive to be launched during the current financial year 2018-19; a total 2, 25,910 companies identified for being struck-off.

ROC’s has issued several notices in form STK-5 in the month of May and June, 2018 u/s 248(4) of Companies Act, 2013. Notices has been sent to those Companies, which according to ROC have not been carrying on any business or operation for a period of two immediately preceding financial years.

FAQ's

A. If Company doesn’t reply ROC Notice, what are the consequences of same?

• Whether ROC can strike off the status of Company?

  Ans:As per Notice of ROC u/s 248(1), this notice is first step toward struck off of Company. If Company fails to reply such notice within 30 days of publication of notice (i.e. 17 July,2018 in case of publication of Delhi ROC) ROC shall struck off the name of Company in its records.

• Whether Director shall be disqualified?

  Ans:As per Section 248(&) “The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved”

• Personal Liability Director/ Manager/ Officer/ Members.

  Ans:As per Notice of ROC u/s 248(1), this notice is first step toward struck off of Company. If Company fails to reply such notice within 30 days of publication of notice (i.e. 17 July,2018 in case of publication of Delhi ROC) ROC shall struck off the name of Company in its records.

  In general words, liability of Directors, manager, other officers and Members of the Company shall be continued even after struck off of Company.

  Hence, one can opine that they shall be personally liable for all the statutory and other liabilities of the Company. (Eg. Statutory liability like: Payment of Roc Fees, payment of income tax liability, penalty for non filing of financial statements and annual returns etc.)

• Cessation of Bank Account of Company?

  Ans:If a Company struck off in the record of ROC. Then ROC simultaneously send letter to Banks for cessation of Bank account of Company in the entire Bank. “Earlier when roc struck off approx 2.5 lakh companies has taken the same action’

• Companies shall not be able to carry on business, sale/ purchase any assets, bank transactions.

  Ans:If a Company once struck off in the record of ROC, then such Company: Can’t conduct any business activity in the Company.

  If Company having any assets then Company can’t sell / lease such property. Because Company can’t accept any amount from such transaction due to cessation of Bank Account.

B. What shall be impact of disqualification of Director on other companies in which they are continuing as Directors?

Ans:In simple word disqualified director automatically vacate office from all other companies.

C. Whether directors of the Company could be personally liable for non compliance like non filing of financial statement or annual return after strike off of Company?

Ans: As per Section 166 Director have to adhere the duties mentioned in such section. He has to work in best interest of Company, employee, shareholders, community etc. If directors fail to file Annual forms as an officer in default they shall be liable for the penalties/ prosecution. In case company got struck off they shall be personally liable for such statutory liabilities.

D. Whether Company can be strike off without completion of annual filing.

Ans:As per section 560 of the Companies Act, 1956, Registrar of Companies may strike off the name of companies on satisfying the conditions therein. As per Section 560, a company desirous of getting its name struck off has to apply to Registrar of companies in e-form 61. All pending statutory returns are required to be filed along with e-form 61.

Disclaimer:"The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation."