Section 248: removal of name of company from the register

Introduction

There are four grounds in subsection (1). The first is failure to commence business within one year of incorporation. The second is not carrying on business or operations for two immediately preceding financial years without applying for dormant status under section 455. The third is subscribers not paying their subscription, with no declaration filed within 180 days under section 10A(1). The fourth is no business or operations, as revealed by physical verification under section 12(9). The last two were inserted by the Companies (Amendment) Act, 2019, deemed in force from 2 November 2018.

Under subsection (2), a company may apply after extinguishing all its liabilities, by special resolution or with the consent of seventy-five per cent of members in terms of paid-up share capital. A company regulated under a special Act also needs its regulator's approval. A company registered under section 8 cannot apply under subsection (2). Section 248 came into force on 26 December 2016.

Key takeaways

Know the Registrar's grounds and notice

The Registrar must have reasonable cause to believe that a ground in subsection (1) applies. The Registrar then sends a notice to the company and all its directors, stating the intention to remove the name and inviting representations with relevant documents within thirty days.

The Companies (Amendment) Act, 2015 omitted the former clause (b), on unpaid subscription within 180 days with a declaration under section 11, before section 248 came into force on 26 December 2016. The Companies (Amendment) Act, 2019 inserted clauses (d) and (e), deemed in force from 2 November 2018.

• India Code — consolidated Companies Act, 2013, section 248
• eGazette — Companies (Amendment) Act, 2015 (No. 21 of 2015)
• eGazette — MCA notification S.O. 1440(E), 29 May 2015 (commencement of Act 21 of 2015)
• eGazette — Companies (Amendment) Act, 2019 (No. 22 of 2019)
• eGazette — MCA notification S.O. 4167(E), 26 December 2016 (commencement of sections 248 to 252)

Apply voluntarily

After extinguishing all its liabilities, a company may apply in the prescribed manner. It needs a special resolution, or the consent of seventy-five per cent of members in terms of paid-up share capital. It may rely on any ground in subsection (1). The Registrar then issues a public notice. A company regulated under a special Act must enclose its regulator's approval. Subsection (2) does not apply to a company registered under section 8. Section 249 restricts applications in certain situations.

Publication, strike-off and dissolution

A notice under subsection (1) or (2) is published in the prescribed manner and in the Official Gazette. When the notice period expires, the Registrar may strike off the name unless the company shows cause to the contrary. The Registrar then publishes a notice in the Official Gazette, and on that publication the company stands dissolved.

Before passing the order, the Registrar must be satisfied that sufficient provision has been made to realise amounts due to the company and to pay or discharge its liabilities within a reasonable time. Where necessary, the Registrar obtains undertakings from the managing director, directors or others in charge. The company's assets remain available to meet its liabilities even after the order.

Continuing liability

The liability, if any, of every director, manager or other officer who exercised any power of management, and of every member of the dissolved company, continues and may be enforced as if the company had not been dissolved. Section 248 does not affect the Tribunal's power to wind up a company that has been struck off.

Practical preparation

Confirm that all liabilities are extinguished; pass the special resolution or obtain seventy-five per cent consent by paid-up capital; obtain any regulator's approval; check the restrictions in section 249; respond within thirty days to any Registrar notice; keep records, because liabilities can still be enforced after dissolution.

Practical checklist

Glossary

Strike off

Removal of a company's name from the register of companies under section 248(5).

Dormant company

A status that can be obtained under section 455. Not applying for it is part of the ground in section 248(1)(c).

Frequently asked questions