MCA notifies Amendment to Removal of Names of Companies Rules

May 16, 2023
Ministry Corporate Affairs Government India

By Rupin Chopra and Apalka Bareja

Introduction

On May 10, 2023, the Ministry of Corporate Affairs (“MCA”) vide its Notification No. GSR 354(E), issued the Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023 to further amend the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. The amendment came into force from the date of the notification i.e. May 10.

Background

The Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 provides the procedure for removing the name of a company from the register of companies. These Rules were first introduced in 2016 and they have been revised by the MCA from time to time.

Section 248 of the Companies Act of 2013 empowers the Registrar to remove name of company from the Register of Companies in view of circumstances listed under the provision.

Recently, on April 17, 2023, the MCA had issued the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2023 that has made significant changes vide the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2023, with regard to the application process for removing a company’s name from the Register of Companies.

Further, on May 10, 2023, the notification regarding Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2023 issued by MCA introduces provisos that shall be inserted under Rule 4 (1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

Rule 4 (1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, talks about the application for Removal of name of company wherein an application for removal of name of a company under Section 248 (2) shall be made to the Registrar in Form No. STK-2 along with fee of ten thousand rupees.

The Amendment

Three provisos have been inserted in Rule 4 (1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

These provisos impose statutory requirements on companies while filing an application for removal of company name from Register of Companies as under:

  1. The company shall not submit the removal application unless they have filed the overdue financial statements and overdue annual returns till the end of the financial year in which the company is barred to carry its business operations.
  2. In case a company intends to file the removal application after the registrar commences its power to remove the name of the company from register of companies and have reasonable cause to believe that a company failed to commence its business within one year of its incorporation, a company is not carrying on any business for a period of two immediately preceding financial years or subscribers to the memorandum have not paid their subscription, it shall file all pending financial statements and annual returns before filing the application.
  3. In case the registrar strikes off the company’s name from the register of companies and publish the notice in the official gazette regarding the same, the company shall not be permitted to file the application under Rule 4 (1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

Tithi Aggarwal, Intern at S.S. Rana & Co. has assisted in the research of this Article.

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