Inactive companies removed by government


In the last few years, Government is believed to have cancelled the registration of around 3 lac companies which were claimed to be inactive.

It will be appreciated if any expert can advise:

1. under which provision of law/rule were these companies removed.

2. whether the striking off of the companies is in any way related to the action of demonetization which the government did . 

thanks.

 
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Practicing Company Secretary

Section 248 of Companies Act, 2013 deals with Power of Registrar to remove name of company from register of companies.

Section 248 provides that in case the Registrar has reasonable cause to believe that –
(a) a company has failed to commence its business within one year of its incorporation or;
(b) a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455 or he shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice.
(c) the subscribers to the memorandum have not paid the subscripttion which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under subsection (1) of section 10A; or
(d) the company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.

Therefore, to be eligible for removal of name from register of Companies by the Registrar, a company is required to have following two features :
(a) a company has failed to commence its business within one year of its incorporation; or
(b) a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455.

 

Following categories of companies shall not be removed from the register of companies under Rule 3 & 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.


(a) listed companies;
(b) companies delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;
(c) vanishing companies;
(d) companies where inspection or investigation is ordered and being carried out or actions still pending or were completed but prosecutions are still pending in the Court;
(e) companies where notices under section 234 of the Companies Act, 1956 or section 206 or section 207 of the Act been issued by the Registrar or Inspector and reply thereto is pending or report under section 208 has not been submitted or follow up of instructions on report is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the Court;
(f) companies against which any prosecution for an offence is pending in any court;
(g) companies whose application for compounding is pending before the competent authority for offences committed by the company or any of its officers in default;
(h) companies which have accepted public deposits which are either outstanding or default in repayment;

(i) companies having charges which are pending for satisfaction; and
(j) companies registered under section 25 of the Companies Act, 1956 or section 8 of the Act.

 
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thanks for the clarification on the powers under the Companies Act.

Would just like to understand how this action which seems to be an independent decision, is linked with demonetrization?

thanks

 
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