Critical consequences of Striking Off of a Company
                     Critical Consequences of Striking Off of a Company
Introduction
• Striking off of a company means that the company has been removed from the official register 
of businesses by the relevant regulatory authority, generally for failing to meet specific legal and 
financial obligations.
• A striking off of a company can have a substantial impact because it can no longer do business or 
participate in legal agreements. Furthermore, the government may confiscate or sell the 
corporation’s assets or property to pay off creditors.
• The Companies Act, 2013 (Act) specifies numerous methods for dissolving a business, such as 
striking off, winding up, merger, and so on.
Impact on Shareholders
• Striking off of a company by the RoC indicates that it has been disregarded and is no longer listed on the 
official register of corporations. The company’s shareholders may suffer as a result of this.
• The shares’ value will drop sharply, if not completely, in value. The corporation will no longer be owned by its 
shareholders, and they won’t be able to sell their shares or get dividend payments. For shareholders, 
especially those who own a big number of shares or have made sizable financial investments in the company, 
this could mean a significant financial loss.
Impact on Creditors
A creditor is a person or organization to 
whom the company owes money. Striking 
off means that the creditor can no longer 
In addition, if a company is struck off 
claim the money it owed from the 
while it still owes money to creditors, the 
company because it no longer exists. This 
creditors may not be able to recoup their 
can be especially devastating for small 
losses through liquidation or receivership.
businesses or individuals who are relying 
on the payment to keep their own 
operations running.
Options for 
creditors to 
• One option is to pursue legal action against the company’s 
recover their directors for wrongful trading or misfeasance. This can be a 
complex and time-consuming process, and there is no 
losses in case guarantee that the creditors will be able to recover their losses in this way.
of striking off 
• Another option is to make a claim through the 
of a company government’s insolvency service. This is a process where creditors can claim money they are owed from a 
government fund that is set up to compensate them in the 
event of a company’s insolvency. However, the fund may 
not have enough money to cover all of the creditors’ losses, 
and the process can take a long time.
Striking off of a company can have a significant and lasting impact 
on stakeholders of the company such as –
Impact on 
Other Creditors are one group of stakeholders who can be greatly affected by the striking off of the company. They are individuals or 
organizations that are owed money by the company. 
Stakeholders
Shareholders are another group of stakeholders who can be impacted by the 
striking off. They may lose the value of their investment in the company, as 
well as any dividends or other returns they were expecting. Shareholders 
may also be unable to sell their shares or claim any money back from the 
company.
Customers and suppliers can also be impacted by a striking off of the 
company. Customers may not be able to claim refunds or compensation for 
goods or services they have purchased from the company. 
Options for other stakeholders to recover 
their losses in case of striking off of a 
company – 
• Creditors can make a claim through the government’s insolvency service, or pursue legal action against the 
company’s directors for wrongful trading or misfeasance. Employees may be able to make claims through the 
government’s Employment Insurance scheme. 
• Shareholders may be able to claim compensation through the government’s shareholder protection scheme. 
However, these options may not be able to fully compensate the stakeholders for their losses, and the 
process can take a long time.
• It is essential for stakeholders to be aware of the risks of engaging with a company, and to take steps to 
protect themselves in the event that the company is struck off. 
Impact on Employees
• Upon striking off a company, its employees may lose access to benefits like retirement 
plans, health insurance, and other perks that were provided by the company. This can cause 
additional financial stress and uncertainty for employees, especially if they have 
dependents who rely on these benefits.
• Employees may also experience emotional distress and uncertainty as a result of losing 
their jobs. This can include feelings of insecurity, anxiety, and depression.
• They may also struggle to find new employment, especially if the company has a poor 
reputation or if there is a downturn in the job market.
Options for • Employees may be able to make claims through the 
government’s Employment Insurance scheme. They 
employees may also be able to pursue legal action against the 
company’s directors for wrongful dismissal or other 
to recover employment-related issues. However, these options may not be able to fully compensate employees for 
their losses their losses, and the process can take a long time.
• Striking off a company can bring emotional turmoil 
in case of and uncertainty for employees. It is crucial for 
employees to be aware of the risks of working for a 
striking off of company, and to take steps to protect themselves in the event that the company is struck off. 
a company 
Conclusion 
In comparison to other methods of 
The RoC can screen out non-operating business dissolution, the process for 
firms that were formed to siphon off removing a company’s name from the 
funds thanks to the strike off provisions. In Register kept by the RoC on an application 
the recent last few years, it has by the firm itself involves far less time and 
accomplished this. By submitting an money. The liabilities of the members, 
application to the RoC, these regulations directors and managers outlined above do 
also give management the ability to close not end with the dissolution of the 
entities that are no longer necessary. company under this section. Even after 
their collapse, they still owe debts.
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