REVIVAL & WINDING UP OF COMPANIES
WHAT REVIVAL OF COMPANY MEANS?
If a company, LLP, or any other business entity is struck off from the Register of Companies or Registrar of Firms, it can be revived by submitting an application for revival along with the prescribed fee and required documents. The application for revival should be made within 20 years from the date of strike off. The Registrar may grant the application for revival if it is satisfied that the company or LLP was carrying on business or in operation at the time of strike off and the revival is in the public interest.
In accordance with the provisions of the Companies Act, 2013, “struck off” means temporary closure of Companies that is an alternative to winding up of the Company where the Company has the option to get the Company revived for a period of twenty years from the date of struck off.
WHICH COMPANIES CAN STRUCK OFF?
Under the Companies Act, 2013, a company can be struck off from the Register of Companies by the Registrar of Companies (RoC) for various reasons, including:
- Failure to commence business within one year of incorporation.
- Failure to carry on business for two consecutive financial years.
- The 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.
- If the company has been declared as a defunct company under section 248(5).
- Non-filing of annual returns or financial statements for a continuous period of three years.
If the Registrar has a reasonable cause to believe that a company is not carrying on business or operation, the Registrar may send a notice to the company and request an explanation within 30 days. If the Registrar is not satisfied with the explanation or if the company fails to respond, the Registrar may initiate the process for striking off the company.
WHO CAN APPEAL FOR REVIVAL OF COMPANY?
Under the Companies Act, 2013, an appeal for revival of a company that has been struck off from the Register of Companies can be made by any aggrieved person, including:
> directors of the company
> shareholders of the company
> Creditors of the company
> Employees of the company
> Liquidators or administrators of the company
> Any other person who has a financial interest in the company
The appeal for revival must be made to the Registrar of Companies (RoC) within 20 years from the date of the strike off order. The appeal must be made in the prescribed form and manner and accompanied by the necessary documents and prescribed fees.
The Registrar has the power to grant the appeal for revival if it is satisfied that the company or LLP was carrying on business or in operation at the time of strike off and the revival is in the public interest. If the appeal is granted, the Registrar will restore the company or LLP to the Register of Companies or Registrar of Firms, as the case may be.
WHAT WINDING UP OF COMPANY MEANS?
Winding up of a company refers to the process of bringing the life of a company to an end by selling off its assets, paying off its debts, and distributing the remaining assets among its shareholders or creditors. There are two types of winding up, voluntary winding up and compulsory winding up.
VOLUNTARY WINDING UP
Voluntary winding up of a company can be initiated by the members of the company by passing a resolution in a general meeting. The process of voluntary winding up is supervised by the company's liquidator or administrator, who is appointed by the members. The liquidator or administrator is responsible for selling off the company's assets, paying off its debts, and distributing any remaining assets among the members.
COMPULSORY WINDING UP
Compulsory winding up of a company can be initiated by an order of the National Company Law Tribunal (NCLT) on the grounds of, among other things, inability to pay debts, trade disputes, or failure to commence business. The process of compulsory winding up is also supervised by a liquidator or administrator appointed by the NCLT. The liquidator or administrator is responsible for selling off the company's assets, paying off its debts, and distributing any remaining assets among the creditors.