Preference shareholder consent required or not for striking off pvt. Ltd. Co.
This query is : Resolved
06 May 2024
Respected Sir/Medam,
Want to know whether preference shareholder consent is needed or not for striking off the Pvt. Ltd.company from MCA or a simple board resolution from founder members will be enough.
Will appreciate guidance in the matter.
Want to know whether preference shareholder consent is needed or not for striking off the Pvt. Ltd.company from MCA or a simple board resolution from founder members will be enough.
Will appreciate guidance in the matter.
07 May 2024
Can Anyone help me guiding for my query.
10 July 2024
For striking off a Private Limited Company from the records of the Ministry of Corporate Affairs (MCA) in India, the process typically involves several steps and requirements. Here’s a detailed explanation regarding preference shareholder consent and the necessary procedures:
### Striking Off Process:
1. **Board Resolution**: The first step in initiating the striking off process is to pass a board resolution. This resolution should be passed by the directors of the company in a board meeting. The resolution should include the decision to strike off the company and authorize one of the directors to apply to the Registrar of Companies (RoC) for striking off the name of the company.
2. **Shareholder Consent**: According to the Companies Act, 2013 and related rules, there is no specific requirement for obtaining consent from preference shareholders for striking off the company's name. The decision to strike off the company is primarily a matter for the board of directors, unless there are specific clauses in the company's Articles of Association that require shareholder approval for such actions.
3. **Clearance of Liabilities**: Before applying for striking off, the company must ensure that all its liabilities are cleared, including statutory liabilities like taxes, if any.
4. **Application to RoC**: After passing the board resolution, the company needs to file an application in the prescribed Form STK-2 with the RoC. Along with the application, certain documents such as board resolution, statement of accounts, and affidavit declaring no liabilities should be submitted.
5. **RoC Approval**: If the RoC finds the application and documents in order and is satisfied that the company has no liabilities, it will publish a notice in the Official Gazette and on its website stating its intention to strike off the company.
6. **Objections**: During the notice period, any person aggrieved by the striking off can raise objections. If no objections are received or objections raised are resolved, the RoC will strike off the name of the company from its records.
### Preference Shareholders:
- **Rights**: Preference shareholders have specific rights as outlined in the company’s Articles of Association. These rights typically relate to preference in payment of dividends or during liquidation. However, for the purpose of striking off, unless there are specific provisions requiring their consent in the company’s Articles or through a Shareholders’ Agreement, their consent may not be necessary.
- **Board Resolution**: As per normal corporate governance practices and unless stipulated otherwise in the Articles, a board resolution passed by the founders (who are likely common shareholders) is sufficient to authorize the striking off process.
Conclusion:
In most cases, for striking off a Private Limited Company, preference shareholder consent is not required unless specifically mandated by the company’s Articles of Association or a Shareholders’ Agreement. A board resolution passed by the founders or directors authorizing the application for striking off, along with compliance with other legal requirements, is typically sufficient.
It’s advisable to consult with a company secretary or legal advisor to ensure compliance with all applicable laws and to handle any specific provisions in the Articles of Association or shareholder agreements that might affect the process.
### Striking Off Process:
1. **Board Resolution**: The first step in initiating the striking off process is to pass a board resolution. This resolution should be passed by the directors of the company in a board meeting. The resolution should include the decision to strike off the company and authorize one of the directors to apply to the Registrar of Companies (RoC) for striking off the name of the company.
2. **Shareholder Consent**: According to the Companies Act, 2013 and related rules, there is no specific requirement for obtaining consent from preference shareholders for striking off the company's name. The decision to strike off the company is primarily a matter for the board of directors, unless there are specific clauses in the company's Articles of Association that require shareholder approval for such actions.
3. **Clearance of Liabilities**: Before applying for striking off, the company must ensure that all its liabilities are cleared, including statutory liabilities like taxes, if any.
4. **Application to RoC**: After passing the board resolution, the company needs to file an application in the prescribed Form STK-2 with the RoC. Along with the application, certain documents such as board resolution, statement of accounts, and affidavit declaring no liabilities should be submitted.
5. **RoC Approval**: If the RoC finds the application and documents in order and is satisfied that the company has no liabilities, it will publish a notice in the Official Gazette and on its website stating its intention to strike off the company.
6. **Objections**: During the notice period, any person aggrieved by the striking off can raise objections. If no objections are received or objections raised are resolved, the RoC will strike off the name of the company from its records.
### Preference Shareholders:
- **Rights**: Preference shareholders have specific rights as outlined in the company’s Articles of Association. These rights typically relate to preference in payment of dividends or during liquidation. However, for the purpose of striking off, unless there are specific provisions requiring their consent in the company’s Articles or through a Shareholders’ Agreement, their consent may not be necessary.
- **Board Resolution**: As per normal corporate governance practices and unless stipulated otherwise in the Articles, a board resolution passed by the founders (who are likely common shareholders) is sufficient to authorize the striking off process.
Conclusion:
In most cases, for striking off a Private Limited Company, preference shareholder consent is not required unless specifically mandated by the company’s Articles of Association or a Shareholders’ Agreement. A board resolution passed by the founders or directors authorizing the application for striking off, along with compliance with other legal requirements, is typically sufficient.
It’s advisable to consult with a company secretary or legal advisor to ensure compliance with all applicable laws and to handle any specific provisions in the Articles of Association or shareholder agreements that might affect the process.
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