What is the Meaning of Struck Off Companies?
The term struck-off, on the other hand, implies that the Registrar of Companies (ROC) has removed the name of a company from the register of companies for certain reasons. For example, this could happen due to non-compliance with certain laws or regulations. Once the register removes the company’s name, the company’s legal existence is lost. As a result, struck-off companies cannot continue their operations until they restore their name in the register. The striking of a company’s name can happen either voluntarily; furthermore, it can occur due to a compulsory strike-off by the ROC.
Voluntary Striking Off:
To clarify, in this case, the company decides to shut down its operations and liquidate the company. Additionally, the company shall file an application with the ROC for dissolution and the consequent striking off of the name of the company.
Compulsory Striking Off:
For instance, if the company fails to comply with the requirements of the law or any rules or regulations made henceforth, the ROC may strike off the name of the company from the register considering the intensity of the contravention. In such cases, the company has no option but to comply with legal formalities to restore its name.
Disclosure Requirements for Struck-Off Companies
While we understood the struck-off meaning, it is equally important to understand the associated disclosure requirements. Furthermore, as per the requirements of the Ministry of Corporate Affairs (MCA), companies need to disclose their transactions with struck-off companies. This disclosure requirement is effective beginning from FY 2021-22. In detail, they shall disclose their relationships with the company as part of additional regulatory information.
The following are the disclosures required:
- Name of the company being struck off
- Nature of transactions. This can include:
- Receivables
- Investment in securities
- Payables
- Shares held by the struck-off company
- Any outstanding balance
3. Balance outstanding
4. Relationship with the company
Steps to Identify Struck-Off Company on MCA
Steps to Identify Struck-Off Company on MCATo identify struck-off companies from the register firstly, you can visit the Ministry of Corporate Affairs website. Follow the below steps to identify:
- Visit the MCA portal
- Navigate as follows: MCA Services >> Master Data >> View Company / LLP Master Data
- Add a company name or CIN number and enter the captcha
- Check the status of the company.
How Firmway Identifies Struck-Off Companies?
Finding the companies on the MCA website can be cumbersome and time-consuming, especially if you transact with multiple companies. The solution, therefore, is to identify such companies with Firmway!
Firmway allows for bulk searches using the list of struck-off companies; consequently this helps in determining if it hasn’t been struck off. Following are the steps to identify companies using Firmway:
- Download the template, Input & upload the party list with the Name or PAN
- Automate Matching the Name with the list shared by MCA
- Highlight the risk associated in the percentage
- Automate scrutinize the data highlighted with the MCA list for 100% verification
Firmway has a data repository storing 1-year data. Its software checks and share the probability % and helps you identify how many companies are there in the list of struck-off companies. Ease your search with Firmway and ensure accurate disclosures!
Frequently Asked Questions
What is a struck-off company?
A struck-off company is a company whose name has been removed from the Register of Companies maintained by the Registrar of Companies (ROC).
Under Section 248 of the Companies Act, 2013, this can happen when a company:
– Remains inactive for the prescribed period.
– Fails to commence business within the required timeframe.
– Voluntarily applies for its name to be removed.
What details must companies report about struck-off companies?
Where a company has any transactions with companies struck off under Section 248 of the Companies Act, 2013, or Section 560 of the Companies Act, 1956, it shall disclose the following details:
1. Name of the struck-off company.
2. Nature of transactions with the struck-off company, including investments in securities, receivables, payables, shares held by the struck-off company, and other outstanding balances (to be specified).
3. Outstanding balance.
4. Relationship with the struck-off company, if any.
What is the difference between "Under Process of Striking Off" and "Struck Off"?
Can a struck-off company be restored?
How can I check if a company is struck off?
You can check a company’s status through the Ministry of Corporate Affairs (MCA) website by following these steps:
1. Visit the MCA website.
2. Log in or register.
3. Navigate to MCA Services → Master Data → View Company or LLP Master Data.
4. Enter the company’s Corporate Identity Number (CIN) or search using its legal name, if supported by the portal.
5. Check the Company Status field. If it shows “Strike Off,” the company is recorded as struck off in the MCA records.
Need to check multiple companies? Manually verifying each company can be time-consuming. Firmway helps businesses identify potentially struck-off companies in bulk using details such as PAN, GSTIN, or CIN, with expert review of exception cases.
What are the risks of dealing with a struck-off company?
Dealing with a struck-off company can be risky because the entity loses its legal status and generally cannot legally enter into contracts, sue, or defend itself in court. It can also disrupt purchases, delay business transactions, and create compliance issues. Checking a company’s status before working with it helps businesses avoid these risks.
