All posts by Sanjoli Singh

Restoration Of Name Of A Struck Off Company Under Companies Act, 2013

Over 1.62 lakh companies have not been carrying out business activities for long have been deregistered and a series of action against such shell companies have been taken, said the Minister of Finance, Mr. Arun Jaitely.

Registrar of Companies (ROC), by the virtue of power conferred under Section 248, can strike off defunct and shell companies. There are companies which have not been doing their annual filings of their financials for couple of years or more.Such companies (which have not done their statutory filings) are therefore deemed (by RoC) not to be carrying on their business.

These actions of government have caused a massive upheaval to the companies which were carrying on the bonafide business (but have not done their statutory filings). Though the ROC must have served notices as mandated under Section 248 on the registered email ids of the Companies before striking them off, but in many cases, there were complaints of not receiving any notice.

However, to such aggrieved companies, the remedy lies in Section 252 of the Companies Act, 2013, which provides for restoration of name of the company.

 

CHARGING SECTION

As per Section 252 of Companies Act, 2013

  • Restoration of name of a Company struck off under section 248 can be done by following ways:
    • Filing an Appeal: Any person aggrieved from the order of the Registrar (ROC) to strike-off the name of a company, can file an appeal within a period of 3 years from the date of order of the Registrar.
    • Application to Tribunal: If a company or any member or creditor or workman has been aggrieved by the company’s name struck off under section 248, it can apply to the Tribunal to restore the company’s name,within a period of 20 years from the date of publication of striking off notice in the official Gazette.
  • The Tribunal,after submission of the application, shall give a reasonable opportunity of being heard to ROC,company and all the parties concerned and thereafter, pass an order that it deems fit.

 

READY REFERENCE

  • Application/Appeal to the Tribunal (NCLT) having jurisdiction over the Registered office of the company
  • There are in all 11 NCLT benches covering all the major locations in India. To know your jurisdiction, please check this link NCLT Benches
  • Copy of appeal or application shall be served on ROC and other parties about restoration atleast 14 days before the date of hearing
  • There should be just causes for restoration of the company like it was carrying on the business and was in operation.

 

MERE FILING OF APPEAL BEFORE NCLT MAY NOT BE ENOUGH

Merely filing of application for restoration of name doesn’t guarantee that the appeal will be allowed by NCLT.

Below mentioned are rare, yet significant orders,where NCLT has taken penal action against the applicants.

  • In the matter of M/S Rainbow Real Estate Pvt. Ltd. V/S Registrar of Companies, NCLT (Principal bench as on 02 June’ 2017) dismissed  application filed by the applicant and imposed a penalty of Rs 20,000 on the ground of  vexatious cause and unnecessarily dragging ROC before the Tribunal. In this case, the applicant had neither filed the income tax return nor any statutory filing was done by the company.
  • In the matter of M/S International Security Printers Pvt. Ltd. V/S Registrar of Companies (NCLT Delhi bench), the applicant came across the fact that it was struck off.It was successfully demonstrated by the Applicant that the Company was doing bonafide business. NCLT allowed the appeal and ordered for restoration. In this case, though the application was not rejected but NCLT granted liberty to ROC to levy penalty on the company.

 

EFFECT UPON RESTORATION

  • After restoration, all the statutory returns of the company shall be filed along with the applicable additional fee
  • According to the Section 252(3) The Tribunal may, by the order , give such other directions and make such provision as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off from the Register of Companies.

 

DETAILED PROCEDURE TO APPLY TO TRIBUNAL AS PER NATIONAL COMPANY LAW TRIBUNAL (AMENDMENT) RULES NOTIFIED BY MCA ON JULY 05, 2017 

  1. Appeal / Application
    • An appeal under section 252(1) and Section 252(3) shall be filed before the Tribunal along with other information as per NCLT Rules, 2016.
    • An application filed by the Registrar of Companies if he’s of the opinion that the name of the company has been struck off on the basis of incorrect or inadvertent information, for restoration of name of a company in the register of companies.
  1. Attachments with NCLT 9 shall be:
    • Copy of MOA and AOA of the Company;
    • List of Directors of the Company;
    • CTC of the order of Registrar for strike off;
    • Available signed Balance Sheets of the Company;
    • CTC of Board Resolution passed by the company for making petition to NCLT to make
    • appeal against the order of Registrar;
    • Affidavit verifying petition;
    • Copy of bank draft evidencing payment of application fee;
    • Memorandum of appearance.

 

  1. Service of Appeal / Application

A copy of the appeal or application shall be served by the company to the Registrar and on such other persons as the Tribunal may direct, not less than fourteen days before the date fixed for hearing of the appeal or application.

 

  1. Passing of Order

Upon hearing the appeal or the application or any adjourned hearing thereof, the Tribunal may pass appropriate order, as it deems fit.

 

  1. Where the Tribunal makes an order restoring the name of a company in the register of companies, the order shall direct that-
    • The appellant or applicant shall deliver a certified copy to the Registrar of Companies within thirty days from the date of the order;
    • On such delivery, the Registrar of Companies do, in his official name and seal, publish the order in the Official Gazette;
    • The appellant or applicant do pay to the Registrar of Companies his costs of, and occasioned by, the appeal or application, unless the Tribunal directs otherwise; and
    • The company shall file pending financial statements and annual returns with the Registrar and comply with the requirements of the Companies Act, 2013 and rules made there under within such time as may be directed by the Tribunal.

 

 

Voluntary Revision of the Financial Statement under Companies Act, 2013: 7 Major Takeaways

CHARGING SECTION

As per Section 131 of the Companies Act, if it appears to the directors of a company that—

(a) the financial statement of the company; or
(b) the report of the Board,

  • do not comply with the provisions of section 129 (Financial Statement) or section 134 (Board’s Report)
  • they may prepare revised financial statement or a revised report in respect of any of the three preceding financial years

 

SEVEN MAJOR TAKEAWAYS

  • Approval of the Tribunal(NCLT) is required.
  • Petition to the NCLT is to be advertised in Newspaper.
  • The Tribunal may issue notice to Central Government (RD) and Income Tax Authority for their respective representations, if any(Chemtex Materials Private Limited dated 4/07/2017 NCLT Ahmadabad).
  • The Tribunal shall issue notice and may hear the auditor of the original financial statement.
  • In case the majority ofdirectors has been changed before the decision is taken to apply under section 131, the company shall disclose the fact in the application.
  • Such revised financial statement or report shall not be prepared or filed more than once in a financial year.
  • Detailed reasons for revision of such financial statement or report shall also be disclosed in the Board’s report in the relevant financial year in which such revision is being made.

 

PROCEDURE FOR REVISION OF FINANCIAL STATEMENT IN ACCORDANCE WITH THE NCLT RULES 2016

  1. Hold board meeting and pass the following resolutions
  • To consider In- Principal approval for revision of financial statement or Board Report of the Company
  • To authorize Company Secretary in practice or other professional to enter appearance before NCLT

 

  1. An application shall be filed in Form No. NCLT-1within fourteen daysof the decision taken by the Board. (Rule 77 of NCLT RULES)
  • In case the majority of directors has been changed before the decision is taken to apply under section 131, the company shall disclose the fact in the application.

 

  1. The Application shall also set forth the following particulars, namely:-
  • Where such accounts are audited the name and contact details of the auditor or any former auditor who audited such account
  • Grounds for seeking revision of the financial statement or board’s report

 

  1. The company shall atleast 14 days before the hearing advertise the application in accordance with Rule 35

 

  1. The Tribunal shall issue notice and may hear the auditor of the original financial statement, if present auditor is different and after considering the application and hearing the auditor and any other person as the Tribunal may deem fit, may pass appropriate order in the matter.

 

  1. A certified copy of the order of the Tribunal shall be filed with the Registrar of Companies within thirty days of the date of receipt of the certified copy in INC – 28(Rule 77(6) of NCLT Rules, 2016).

 

  1. A general meeting to be called and notice of such general meeting along with reasons for change in financial statements may be published in newspaper in English and in vernacular language (Rule 77(7) of NCLT Rules, 2016).

 

  1. In general meeting, the revised financial statements, statement of directors and the statement of auditors to be put up for consideration before a decision is taken on adoption of the revised financial statements (Rule 77(8) of NCLT Rules, 2016).