Strike Off Company without up-to-date Annual Filings

Описание: Strike Off Without Up-to-Date Annual Filings
MCA Circular – 10th May 2023: Strike Off Without Up-to-Date Annual Filings
1. Background & Purpose of the Circular
The Ministry of Corporate Affairs (MCA) issued the circular on 10th May 2023 to clarify the compliance requirements for companies applying for strike-off under Section 248(2) of the Companies Act, 2013.
Prior to this circular, companies applying for strike-off had to ensure all annual returns and financial statements were filed up to date, even for periods where no business activity .This often led to unnecessary compliance burdens, late fees, and delays in the closure process.
2. Key Clarifications Provided in the MCA Circular
The circular provides relief to companies by stating that:
✅ Companies seeking voluntary strike-off need to complete their annual filings only up to the last financial year in which business activities were conducted.
✅ Companies are NOT required to file annual returns (MGT-7) and financial statements (AOC-4) for financial years after they ceased operations.
✅ STK-2 can be filed even if annual returns for inactive years remain pending, as long as filings up to the last business-active year are completed.
3. Legal Provisions & Rules Relevant to Strike-Off
The strike-off of companies is governed by Section 248 of the Companies Act, 2013 and the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.
(i) Section 248(2) – Voluntary Strike-Off
• A company that has not been carrying out any business or operation for two or more consecutive financial years can apply for strike-off using Form STK-2.
• As per the MCA circular, companies applying for strike-off only need to complete their filings until the last year they were in operation.


(ii) Rule 4 of the Companies (Removal of Names of Companies) Rules, 2016 – Application for Strike-Off
• A company applying for strike-off must file Form STK-2, along with:
o Indemnity bond (STK-3)
o Affidavit by directors (STK-4)
o Statement of accounts not older than 30 days
• The MCA circular now removes the requirement to file annual returns for inactive years, reducing the compliance burden.
(iii) Rule 8 of the Companies (Removal of Names of Companies) Rules, 2016 – Restrictions on Strike-Off
A company cannot apply for strike-off if it has:
❌ Ongoing litigation
❌ Unresolved liabilities
❌ Pending prosecution under any law
However, pending annual filings for inactive years will no longer be a restriction for strike-off after the 10th May 2023 circular.
4. Impact of the MCA Circular on Companies Seeking Strike-Off
✅ Eases compliance burden – No need to file MGT-7 & AOC-4 for inactive years.
✅ Avoids penalties for non-filing – Late fees for inactive years are no longer applicable.
✅ Faster closure process
✅ More clarity for inactive companies – Reduces ambiguity in compliance requirements.
5. Practical Steps to Apply for Strike-Off Under New Guidelines
Ensure all annual filings (MGT-7 & AOC-4) are completed up to the last active financial year.
Prepare and file Form STK-2 with supporting documents.
Obtain director affidavits and an indemnity bond.
Submit a statement of accounts (not older than 30 days).
Await approval from the ROC.
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Conclusion
The MCA circular significantly simplifies the strike-off process by allowing companies to close without filing annual returns for inactive years. This is a major relief for companies that have ceased operations but were facing high compliance costs due to pending filings.