Exit of defunct companies by registrars orders

Exit of defunct companies by registrars orders

In terms of section 560, the registrar has power to strike off from his register. The name of a company following the prescribed steps. If he has reason to believe that the company is not carrying on any business.

How the registrar could arrive at a decision

The section does not provide any criteria for the registrar to consider, before he comes to believe that the company is not doing any business. Therefore he will take into account the annual accounts and reports filed by the company.

Procedure prescribed

He will enquire from the company by letter whether the company is carrying on business or is in operation. He shall ask for a reply within a month. If a reply is received from the company saying that the company will soon start carrying on the business. The registrar will watch the position.

Company being wound up

In a winding up by the tribunal, as soon as the winding up order is passed.  The Tribunal shall cause a copy of the order to be sent to the registrar within 2 weeks- section 444. Similarly in a voluntary winding up the company shall give intimation to the registrar. On commencement of winding up section 493 and 501.

Striking the name by the registrar exit

On the expiry of the period of 3 months or where no cause to the contrary is received from the company within the said period.  The registrar may strike the company name from his register.

Restoration of the dissolution

A member or creditor, if he is aggrieved by the striking off the register by the registrar, may apply to the tribunal before the expiry of 20 years from the publication in the Gazette.

Power given to the company also to make application under sub-section (6)

It is stated in sub-section(6) that the company also is authorized to make the application to the tribunal for restoration. It is a moot question whether a company which has been struck off can continue to function.

Power given vide sub-section(6)

If the striking of name from the register is not proper, it does not require a period of up to 30 years to come to such a decision. It appears that the company or member or creditor should be able to come to a decision within a period of not more than 5 years.

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