The Ministry of Corporate Affairs ("MCA") has issued a notification dated April 17, 2023, thereby introducing the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 20231 ("Amendment Rules, 2023"). The main aim of the Amendment Rules, 2023 is to provide clarity on the authority responsible for matters relating to removal of names of companies from the register of companies as prescribed under section 248 of the Companies Act, 2013 ("Act") and the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 ("Rules").
With effect from May 1, 2023, all applications under section 248(2) of the Act for removal of company name shall be made to the Registrar, Centre for Processing Accelerated Corporate Exit ("C-PACE") and not to the Registrar of Companies ("RoC").
Earlier in March 2023, MCA issued a notification dated March 17, 20232, announcing the establishment of the C-PACE at the Indian Institute of Corporate Affairs in Gurgaon. The concept of C-PACE was introduced in Union Budget 2022-23 to re-engineer the process of corporate exit and to facilitate and speed up the voluntary winding-up of these companies by reducing the time from about roughly 2 (two) years to less than 6 (six) months.
Key details of the Amendment Rules, 2023 are as stated below:
- An application for removal of name of company will now be made to the Registrar, C-PACE in Form STK-2, along with fees of INR 10,000 (Indian Rupees Ten Thousand).
- Earlier the application in form STK-2 was required to be submitted along with a special resolution certified by each director or with the consent of 75% (seventy-five percent) members of the company. This requirement has now been omitted.
- It has been specified that for the purpose of exercising functional jurisdiction, disposal of applications and all related matters, the Registrar of C-PACE shall be the RoC.
- The below Forms have been substituted under the Amendment Rules, 2023 with new version of the Forms:
a. Form STK-2 - Application by company to ROC for removing its name from register of companies;
b. Form STK-6 - Public Notice (to be issued by the Registrar upon receipt of application for name removal); and
c. Form STK-7 - Notice of Striking off and Dissolution (to be issued by the Registrar).
This supportive move by the MCA will ensure that the process of name removal of companies is made more efficient and time effective thereby reducing the burden on RoCs, while simultaneously easing the exit mechanism for corporate bodies which generally gets unnecessarily delayed.
Footnotes
LexCounsel provides this e-update on a complimentary basis solely for informational purposes. It is not intended to constitute, and should not be taken as, legal advice, or a communication intended to solicit or establish any attorney-client relationship between LexCounsel and the reader(s). LexCounsel shall not have any obligations or liabilities towards any acts or omission of any reader(s) consequent to any information contained in this e-newsletter. The readers are advised to consult competent professionals in their own judgment before acting on the basis of any information provided hereby.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.