Revival of a Stricken-Off Company: Complete Guide
Reviving a stricken-off company can be a complex and intricate process. When a company is struck off from the official records, it loses its legal existence, making it challenging to continue its operations. However, with the right knowledge and guidance, reviving a stricken-off company and restoring its active status is possible. This complete guide is designed to provide you with the essential information, step-by-step instructions, and important considerations involved in reviving a stricken-off company.
- Application of Revival: Applying for the Registrar of Company (RoC) to announce the intent to revive the company officially.
- Affidavit: A legal affidavit made by the company confirming compliance with all provisions of the Companies Act and necessary steps taken to regulate its affairs by legal requirements.
- Statement of Accounts: A comprehensive statement of accounts revealing all accounting transactions since the company was stricken off, ensuring transparency in financial dealings.
- Board Resolution: A formal board resolution where the company’s directors express their acceptance of the revival process, demonstrating unified intent.
- Procedure for Company Revival: Following a procedure designed for fairness and transparency in the revival process.
- Application for Revival: Submitting the Application for Revival to the RoC, the first official step in the revival process.
- Publication of Notice: The RoC published a notice about the revival, allowing the general public an opportunity to raise objections.
- Objection Raised: Review any objections raised, assess their validity, and determine whether the revival proceedings should continue.
- Revival of the Company: If no objections are raised or if objections are deemed invalid, the RoC reinstates the name of the company in the register, officially reviving the company.
- Eligibility to Apply for Company Revival: The specific rules and regulations that govern who can file for a revival of a company based on being an aggrieved person, wrongful striking off, or a director/member/aggrieved party.
- After Revival: Once the company is revived, it regains its legal entity status and must take necessary steps to regulate its affairs.
- Company Fresh Start Scheme (CFSS): The Ministry of Corporate Affairs’ scheme encourages companies to revive by providing legal immunity and reducing penalties.
- Non-Applicability of CFSS: Certain conditions exclude a company from benefiting from the CFSS, such as voluntary dissolution, dormant company status application, amalgamation, etc.
- Grounds for Company Revival: The specific grounds that need to be satisfied for the National Company Law Tribunal (NCLT) to entertain an application for the revival of a stricken-off company, including possession of the immovable property, proper bank statements, renewed licenses, and more.
Documents Required for Company Revival
Before beginning to revive a stricken-off company, several documents are essential to prepare and present.
1) Application of Revival
The first step requires applying to the Registrar of Company (RoC). This document officially announces the intent to revive the company and is essential in kickstarting the process.
A legal affidavit is necessary, made by the company, confirming that it has complied with all the provisions of the Companies Act and has taken necessary steps to regulate its affairs by legal requirements. This serves as a reassurance of legal compliance with the RoC.
3) Statement of Accounts
A comprehensive statement of accounts should be attached to the application. This document reveals all accounting transactions that have taken place since the date the company was stricken off. Transparency in financial dealings is vital for a successful revival process.
4) Board Resolution
A board resolution is necessary where the company’s board of directors formally accepts the revival process. This is a crucial demonstration of unified intent within the company to proceed with the revival.
Procedure for Company Revival
The process for reviving a company follows a set procedure designed to ensure fairness and transparency.
- Application for Revival: The Application for Revival should be submitted to the RoC. This formal request to reinstate the company is the first official step in the revival process.
- Publication of Notice: Once the application is submitted and approved, the RoC will publish a notice about the revival of the company. This public announcement allows the general public to raise objections to the revival application.
- Objection Raised: If any objection is raised regarding the company’s revival, the RoC reviews the cause of the objection. The revival proceedings may be halted if the objection is deemed valid and reasonable. Otherwise, the process continues.
- Revival of the Company: If no objections are raised, or if the objections raised are not valid, the RoC reinstates the company’s name in the register. This marks the official revival of the company.
Who Can Apply for Company Revival?
Specific rules govern who can file for a revival of a company. These regulations ensure the right parties initiate the revival process.
- Aggrieved Person: Any aggrieved person by the company can file for a revival of the company within three years of the company being struck off. This provides a chance for stakeholders who have suffered due to the company’s strike-off to initiate its revival.
- Wrongful Striking Off: Suppose the company’s name was inadvertently stricken off by the RoC or due to wrongful information provided by the directors or members. In that case, an application for revival can be submitted within a period of 3 years.
- Director, Member or Aggrieved Party: The director, member, or any of the aggrieved parties of the company can file for the revival within 20 years from the date of the company being struck off. This provides a long window for those associated with the company to seek its revival.
- Voluntary Dissolution: In the case of voluntary dissolution, the validity period for applying revival is 20 years. In case of dissolution made by the RoC, the validity period is for three years.
What Happens After the Company’s Revival?
Once a company is revived, it regains the status of a legal entity. This grants the company the right to operate in a new business environment. After regaining legal status, the company must take all necessary steps to regulate its affairs.
The Ministry of Corporate Affairs encourages companies to revive by introducing the Company Fresh Start Scheme 2020 (CFSS). This scheme provides legal immunity and reduces penalties, encouraging companies to rejoin the business world.
Non-Applicability of CFSS
Certain conditions exclude a company from being able to benefit from the CFSS. These include:
- Voluntary dissolution
- Application for dormant company status
- Vanishing company
- Amalgamation under the scheme of arrangement and compromise
- Increase in authorized capital
Grounds for Company Revival
The National Company Law Tribunal (NCLT) will entertain an application to revive a stricken-off company only if certain grounds are satisfied. These include:
- The company possesses an immovable property.
- The company is equipped with all bank statements from the date of the strike-off.
- The provident fund account maintained by the company is in order.
- The company’s licenses, like FSSAI, EXCISE, etc., are renewed.
- Any other document demanded by the tribunal is provided.
Reviving a stricken-off company requires careful attention to legal requirements, procedural formalities, and timely action. It is crucial to understand the specific regulations and guidelines of the relevant jurisdiction to ensure a successful revival. By following the comprehensive guide provided here, you can confidently navigate the revival process and increase your chances of bringing the stricken-off company back to life. Remember to seek professional advice, consult the appropriate authorities, and adhere to all legal obligations throughout the revival journey. With determination and proper execution, you can revive a stricken-off company and embark on a new chapter of growth and success.
How long does it take to revive a stricken-off company?
The exact timeline can vary depending on the complexity of the case and the jurisdiction in question. Generally, completing all necessary processes and receiving approval can take several months.
What are the penalties if the company fails to comply with the revival conditions?
If a company fails to comply with the conditions of its revival, it can face a range of penalties. These can include fines, further legal action, and potentially being stricken off again.
Can a company operate while the revival process is ongoing?
A: No, a company is not permitted to operate while it’s being revived. It can only resume operations once the revival process is complete and officially reinstated by the RoC.
What happens if an objection to the revival is upheld?
A: If an objection to the revival is upheld, the revival process may be halted. The company must address the concerns raised in the objection before proceeding with the revival process.
Can the decision to strike off a company be challenged?
A: The decision to strike off a company can be challenged in court. However, this is typically a complex and time-consuming process and is generally only undertaken if there is a strong belief that the strike-off was unjust or incorrect