F.No.
17/78/2001-C.L.V
Government of
India
Ministry of Finance and
Company Affairs
Department of Company
Affairs
**********
Shastri Bhavan, New
Delhi.
Dated the 29th March,
2003
Sub: Simplification of
Procedure for Removal of Name of Defunct Companies.
*****************
The matter regarding striking off of the names of the defunct companies
has been engaging the attention of the Department for quite sometime. In the
past also, the Department had considered and announced simplification in the
operation of the provisions of Section 560 in such a way that the Registrar of
Companies (ROCs) can weed out the defunct and dormant companies. This enabled
the ROCs to strike off the names of defunct companies exercising, suo moto, the
powers vested in them and on application made by directors confirming that the
company has no assets and liabilities and they have no intention to carry on the
business and undertaking that they would be personally liable for claims arising
in future.
2.
The Department has now decided to introduce a Simplified Exit Scheme
(SES), simplifying the procedures to be adopted by companies as well as ROCs in
striking off the name of defunct companies, with in-built safeguards to ensure
that unscrupulous promoters/directors/managers do not escape their
liabilities.
3.
There should be an incentive for the companies to exit, and a penalty for
continuing to remain on the register without complying with the provisions of
the Act. It is, therefore, proposed that companies which actually exit may not
be prosecuted. If there are any pending prosecutions for non-filing of Annual
Return and Balance Sheet, can be
withdrawn. However, if there are other offences, prosecutions can only be
withdrawn with the prior permission of the Department. On the other hand, such
companies that continue to remain registered without complying with the
provisions of the Act will be prosecuted vigorously.
4.
Details about format of application; affidavit and indemnity bond etc. has been given in
the General Circular No: 13/2003 dated 25.3.2003 issued by this Department.
(Copy enclosed)
5.
The Registrar of Companies on receipt of application shall publish in the
prescribed proforma in one local and in one national daily, the list of
companies that have applied, and are under consideration, for being struck off
u/s 560 of the Companies Act, 1956.
6.
ROCs shall send this list of companies to the Department to enable it to
put the list on the web sites of the Department/ICAI/ICSI; and also to Indian
Banks Association (IBA) for circulation amongst their
constituents/members.
7.
Thirty days after publication as aforesaid and 45 days after dispatch of
the proforma to IBA, if no objections are received, and if the case is otherwise
in order, the Registrar of Companies will strike off the name of the companies
from the Register and get them duly published in the Official Gazette.
8.
The scheme will be in operation upto 31.12.2003 from the date of issue of
circular.
9. Copies of this Press Note
and General Circular NO: 13/2003 of this Department have been placed at the Web
page of the Department of Company Affairs at the Internet Address http://www.dca.nic.in/
( R. Vasudevan
)
Director Inspection and
Investigation