How to revive a company as per new NCLT amendment rules

Introduction :

High percentage of non-compliance of the Companies Act and Rules, the Ministry of Corporate Affairs (MCA) with Registrar of Companies (ROC) had issued show cause notices to various companies. After that various companies received notice regarding removal of name of a company from the register of companies as per sub section (1) of section 248 of Companies Act, 2013 and rules 3 of the Companies Rules, 2016.

Provisions under Companies Act:

STRIKE OFF by Registrar of Companies (ROC) as per Section 248(1) of the Companies Act, 2013:

ROC suo-moto can issue notice in the following manner:

Power of removal of name of company by ROC

As per section 248(1) read sub rule (1) of Rule 3 of these rules, the ROC may remove the name of a company from the register of companies in terms of sub-section (1) of section 248 of the Act.

Section 248(1) of the Act provides that, "where the ROC 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,

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.

Contentions in Notice :

In the notice, the ROC has ordered the defaulter companies to submit reply with explanation regarding why a penal action could be initiated against company for non-filling of balance sheet and annual report.

In the notice the ROC has mentioned that if defaulter company fail to do so the concerned ROC will take legal action and initiate legal proceedings against the company.

National Company Law Tribunal (NCLT) Amended Rules, 2017 as follows :

In the National Company Law Tribunal Rules, 2016, after rule 87, the following rule shall be inserted, namely:-

 “87A. Appeal or application under sub-section (1) and sub-section (3) of section 252.-

(1) An appeal under sub-section (1) or an application under sub-section (3) of section 252, may be filed before the Tribunal in Form No. NCLT  9, with such modifications as may be necessary.

(2) A copy of the appeal or application, shall be served on the Registrar and on such other persons as the Tribunal may direct, not less than fourteen days before the date fixed for hearing of the appeal or application, as the case may be.

(3) Upon hearing the appeal or the application or any adjourned hearing thereof, the Tribunal may pass appropriate order, as it deems fit.

(4) Where the Tribunal makes an order restoring the name of a company in the register of companies, the order shall direct that-

(a) the appellant or applicant shall deliver a certified copy to the Registrar of Companies within thirty days from the date of the order;

(b) on such delivery, the Registrar of Companies do, in his official name and seal, publish the order in the Official Gazette;

(c) the appellant or applicant do pay to the Registrar of Companies his costs of, and occasioned by, the appeal or application, unless the Tribunal directs otherwise; and

(d) the company shall file pending financial statements and annual returns with the Registrar and comply with the requirements of the Companies Act, 2013 and rules made thereunder within such time as may be directed by the Tribunal.

(5) An application filed by the Registrar of Companies for restoration of name of a company in the register of companies under second proviso to sub-section (1) of section 252 shall be in Form No. NCLT 9 and upon hearing the application or any adjourned hearing thereof, the Tribunal may pass an appropriate order, as it deems fit.”.

How to Revive a Company?

Procedure step by step-

1. Draft an Appeal in Formal NCLT-9 related to Section 252 of Companies Act.

Link: http://www.mca.gov.in/Ministry/pdf/Rules_22072016_1.pdf

2. Declaration through Directors that all the pending compliances like annual filling etc. shall be completed within stipulated time as per the directions of NCLT.

3. Serve an advance copy of the appeal to the concerned ROC through post or hand dasti as well.

4. Submit the original appeal to NCLT along with service affidavit.

5. Argue matter according to merits related to company has carried out business activities from the beginning, company has its creditors/shareholders or any other person at large is prejudiced if the name of the company removed from the register of Companies, maintained by the Registrar of Companies.

6. After the order file the order of the NCLT through e-form INC 28 and after that concerned ROC shall publish the order in Official Gazette.

7. ROC shall remove the status from 'Striked Off' to 'Active' and your company shall revive.

After that complete your all the compliances along with annual filling as per directions of the NCLT.