FAQs on Provisions and penalties for ‘struck
                     FAQs on Provisions and Penalties 
For ‘Struck Off ‘ Companies
Introduction
 The Ministry of Corporate Affairs (MCA) took strict action in 2017 by 
“Striking Off” more than 2 lakh firms as part of the ongoing effort to 
cleanse the financial sector. 
 More than 3 lakh Director Identification Numbers (DINs) were mistakenly 
deactivated due to this operation. 
 The FAQs here are all about the Provisions and penalties for ‘struck off ‘ 
companies and the reasons for the company’s dissolution.
What are the Reasons for a Company’s Dissolution?  
 The reasons for the company’s dissolution are listed below-:
• If a company fails to file its compliances on time, it will be fined and 
the directors will be barred from founding another company. In this 
way, it is preferable to wind up an inactive business to avoid future 
fines or liability.
• The Companies Act establishes a legal entity known as a private 
limited company. 
• As a result, a business must maintain frequent compliance 
throughout its life cycle. If a company fails to do so then the 
company can wind up or strike off.
• In comparison to maintaining compliances for a dormant firm, it is 
actually to re-establish a company when the time comes.
What are the Modes of “Striking off” a Company?
Strike off a company by 
Tribunal Strike off Voluntary Strike off
What is the Procedure to Strike Off a Company?
1 2 3 4 5
Pass a Declare the ROC must Appoint a The 
resolution at Company’s receive the Liquidator to liquidator 
a special solvency for auditor’s complete the will compile 
resolution for settling report as process. The a winding-up 
a voluntary overdue well as a company report and 
decision or obligations. declaration needs to convene a 
general of solvency, start a general 
meeting for and the winding up meeting of 
the AOA registered process as the 
events and a valuer’s soon as the Company to 
creditors’ report (in the resolution lay out final 
meeting. case of a date is winding-up 
valuation of passed. accounts.
the 
Company’s 
assets).
What are the Penalties for ‘Struck Off ‘ Companies 
Under Section 166 of the Companies Act,2013?
• Due to the majority of businesses having been de-registered due to 
filing delays with documents like IT returns, the penalty is usually 
referred to as a “Late Fine.”
• Repeat offenders who disobey the rules face additional penalties.
• According to section 166(7) of the Companies Act 2013, the full-time 
Directors are responsible for upholding ethical practices and are subject 
to punishment if they don’t.
What are the provisions for the Restoration and Revival 
of a Company?
 The provisions for the Restoration and Revival of a company are 
listed below-:
• A de-registered business, its members, creditors, or employees have 20 
years from the date of notification to file an appeal.
• The affected business or its employees may file an application with the 
NCLT within three years of being debarred.
What is the Consequence of Failing to Follow the 
Company Act’s requirements?
 A person who fails to follow the 
requirements of the Companies 
Act or violates the law may be 
sentenced for up to six months 
of imprisonment, or a fine up to 
50,000 rupees, or both.
Can a Firm that has been Dissolved be Reinstated?
 There are a lot of reasons for 
the company’s dissolution and 
only a court order will permit a 
company that has been struck 
off due to voluntary dissolution 
to be reinstated. 
 Any company that is placed 
back on the register is 
considered to have continued 
as if it had never been struck 
off and dissolved.
Can a Struck-Off Company Still Trade?  
 When a company is struck off, the name will be removed from the 
company register and it cannot trade, sell its assets or make payments 
or even it cannot even get involved in any other business activities. 
 The name of the company would be made available for new companies 
to use.
What are the Documents Required to Strike Off the 
Company’s Name?  
 The Company which is likely to be struck off must file an application to 
the registrar of the companies, along with the following documents:
• Indemnity Bond duly notarized by all directors (in Form STK 3).
• A certified statement of liabilities by a Chartered Accountant comprising 
of all assets and liabilities of the companies.
• CTC of Special Resolution duly signed by every director of the company.
Under Which Circumstances Strike Off cannot be 
Done?  
• In case a company has not filed 20A 
(inc. after 2nd Nov 2018)
• One year has not completed since the 
incorporation
• For ongoing company i.e having 
business transactions in the last 1-2 
years
• DIN is deactivated
• Any director is disqualified
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