The Ministry of Corporate Affairs (MCA) has implemented stricter rules regarding the Company Strike Off or removal of company names from the Register of Companies (RoC)
New Rules Restrict Company Closure Without Financial Statements
The Ministry of Corporate Affairs (MCA) has recently made it compulsory for companies to submit all overdue financial statements and annual returns before applying for name removal
This new rule is in addition to other recent provisions that have made it more difficult for companies to close without filing financial statements.
The MCA has said that the new rules are part of its efforts to improve corporate governance in India.
The government hopes that the new rules will make it more difficult for companies to engage in fraudulent or unethical practices.
MCA imposes new conditions for Company Strike Off
According to a notification from the MCA, a company cannot initiate the company strike off process unless it has submitted its overdue financial statements (as per section 137 of the Companies Act) and annual returns (as per section 92) until the end of the financial year in which it ceased its operations.
Even if a company intends to apply for name removal after receiving a notice from the RoC to initiate the removal process, it is still required to submit all pending financial statements and do annual return filing.
The new rules make it more difficult for companies to have their names struck off the register.
This is a positive step as it will help to reduce the number of dormant companies on the register.
Dormant companies can pose a risk to creditors and other stakeholders, as they may not be able to be traced if they are needed to settle debts or liabilities.
Moreover, If you want any other guidance relating to the Company Strike Off Rules gets stricter in India, please feel free to talk to our business advisors at 8881-069-069.
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