Sec 560 Striking Off Company Name - Old Act Versus New Bill

Sr. No.

Points

Section 560 of Companies Act 1956

Chapter 18 of Company Bill 2011

1.

Causes for sending Notice for inquiring whether the company is carrying on business or in operation by ROC :

If the ROC has a “reasonable cause” to believe that a company is not carrying on business, it will send the Notice.

Thus, there was no clarity regarding “reasonable cause”.

Notice will be sent if the Registrar has “reasonable cause” to believe that :

1.      A company has failed to commence it’s business within 1 year of it’s incorporation.

2.      The subscribers to the Memorandum of Association have not paid the subscripttttion amount within 180 days from the date of incorporation.

3.      A company is not carrying on any business for a period of 2 years before sending Notice and has not made any application within 2 years for obtaining status of a dormant company. 

2.

Procedure for striking-off the name :

·         If the Registrar has a reasonable cause to believe that a company is not carrying on any business, he shall send to the company, a Notice inquiring whether the company is carrying on business ?

·         If the registrar does not get reply within 1 month, he will send another letter and wait for another 1 month.

·         If he still does not get an answer or or gets a reply from the company  that it is not carrying on any business, a Notice regarding striking-off will be published in the Official Gazette.

·         If the Registrar has reasonable cause to believe that above 3 conditions get fulfilled, it my send a Notice inquiring whether the company is carrying on any business ?

·         If the registrar does not get reply within 1 month or gets a reply from the company  that it is not carrying on any business, he will directly strike-off the name of company.

·         Hence, in the new clause, the Registrar will not send 2^nd Notice.

3.

Suo moto application by a company to strike off it’s name :

No provision.

·         A company may suo moto file an application to the registrar for removing it’s name on grounds stated in point 1 above provided, it extinguishes all of it’s liabilities and passes a special resolution (in terms of paid-up capital).

·         However, such an application shall not be made if, within  3 months, the company :

1.      has changed its name or Registered office from one state to another.

2.      is being wound up.

3.      Application has been made to the Tribunal for compromise or Arrangement and the matter is still pending.

4.      has carried on any business activity.

5.      has disposed off its property for gain.

·         If it is found that the suo moto application to strike-off its name is fraudulent i.e made with an intention to deceive the creditors, the persons in charge of the management will be severally liable to any person who incurred damage and will be punishable with fraud.

4.

Restoration of company’s name

·         If a company or member or creditor feels aggrieved by the strike-off, they can make an application to the Tribunal before the expiry of 20 years from the date of publication of Notice in the Official Gazette.

·         The tribunal, if satisfied, will restore the name of the company in its register.

·         The procedure to restore the name of the company has not been changed but now even a worker can make an application to the tribunal.

·         Besides this, a new sub-clause has been added to provide that “any person” aggrieved by the order of Registrar may file an appeal to the Tribunal within 3 years from the date of order.

·         The tribunal, if satisfied, will restore the name of the company in its register.