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    Overview of Striking off a Section 8 Company

    A Section 8 company is a type of non-profit organization under the Companies Act of India, aimed at promoting charitable objectives, such as education, social welfare, or environmental causes. Striking off a Section 8 company refers to the legal process of removing the company from the official register of companies, which essentially dissolves the company. This process is typically undertaken when the company has ceased to operate or has been inactive for a prolonged period.

    Key Features of Striking off a Section 8 Company

    1. No Transfer of Assets: Upon liquidation or strike-off, the assets of a Section 8 company do not go to its shareholders but are instead merged with another company.
    2. Inactive Companies: A Section 8 company can be struck off if it has not conducted any business for two consecutive financial years or if it has not started operations within a year of incorporation.
    3. Legal Procedure: The company must follow a formal process involving shareholder approval and submission of various documents to the Registrar of Companies (ROC).
    4. No Formal Investigation: Once struck off, there is no further investigation into the company’s operations or the conduct of its directors, provided the company has no outstanding issues with creditors.

    Benefits of Striking off a Section 8 Company

    1. Simplified Closure Process: If the company is inactive and has no creditors, striking it off is a quick way to close the company, taking about three months after the application is submitted.
    2. Cost-Effective: The cost of applying for striking off a Section 8 company is minimal compared to other methods of closure.
    3. No Future Compliance: Once the company is struck off, it no longer needs to file annual returns or maintain records with the ROC.
    4. Protection from Liability: The directors are not at risk of being accused of unfair trading or misconduct once the company is struck off, unless it is revived and faces liquidation.

    Types of Striking off a Section 8 Company

    1. Strike Off by ROC (Registrar of Companies):
      • The ROC may issue a notice to the company and its directors (Form STK-1) if it is found inactive or if the company has not filed necessary documents for a certain period.
      • The company is given 30 days to provide any required documents to avoid strike off.
    2. Strike Off by the Company:
      • The company may submit an electronic application (STK-2) to the commercial register after adopting a special resolution approved by at least 75% of the shareholders.

    Documents Required for Striking off a Section 8 Company

    1. Certified True Copy of Special Resolution: A copy of the special resolution passed by the shareholders, including the explanatory statement.
    2. Memorandum and Articles of Association: The foundational documents of the company.
    3. Board Resolution: A certified copy of the board resolution approving the strike-off or conversion of the company.
    4. Auditor’s Compliance Certificate: A certificate from a CA/CS/CWA confirming compliance with legal requirements.
    5. Statement of Assets and Liabilities: A financial statement verified by the company’s auditor, showing the company’s assets and liabilities.
    6. Registered Valuer’s Report: A report on the market value of the company’s assets.
    7. Financial Statements and Directors’ Reports: The financial documents for the last two fiscal years or the single year if the company has been operational for only one year.
    8. Power of Attorney from Creditors: If there are any creditors, a power of attorney from each creditor is required.
    9. Declaration by Directors: A declaration by the directors stating that all regional director conditions, if applicable, have been met.

    Procedure for Striking off a Section 8 Company

    1. Shareholder and Board Approval: The first step involves convening general meetings to obtain approval from the shareholders and the board of directors for the decision to strike off the company.
    2. Pass Special Resolution: A special resolution must be passed in a general meeting. Once approved, the process of closure begins.
    3. File Documents with ROC: Within 30 days of passing the special resolution, file MGT-14 with the ROC along with any required documents, Digital Signature Certificates (DSC), and applicable fees.
    4. Application to Regional Director: Complete Form INC-18 and submit it to the Regional Director, along with the required documentation and conversion fees.

    Knowledge Base

    Striking off a Section 8 company is typically done when the company is no longer active, has failed to meet its objectives, or has been inactive for a prolonged period.

    No, a Section 8 company cannot be converted into a one-person company. The two types of companies have different purposes and structures under the law.

    The process can take about three months after the application is submitted, provided all conditions are met and there are no objections.

    If the company has any outstanding creditors, they must be given a three-month notice before the application for strike off is submitted.

    The cost of applying for strike off is minimal, but there are fees for filing the necessary forms with the ROC and any legal or professional fees incurred during the process.

    Yes, a company can be revived after being struck off, but it will need to go through a legal process to restore its name to the register. This may include filing necessary documents and explaining why it was struck off.

    Once struck off, the company is no longer a legal entity, meaning it cannot conduct business, sue or be sued, or hold assets. However, it must meet all legal and compliance obligations up until the point of dissolution.

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