Effective Green Energy Ltd. was incorporated on 22nd May, 2020. Due to the restrictions imposed to combat COVID-19 pandemic and consequent slowdown in the economy, the company could not start any business. The Registrar
CS Executive · Setting up of Business Entities and Closure · PYQS · June 2023
Effective Green Energy Ltd. was incorporated on 22nd May, 2020. Due to the restrictions imposed to combat COVID-19 pandemic and consequent slowdown in the economy, the company could not start any business. The Registrar of Companies (RoC) removed the name of the company from the Register of Companies without giving a prior notice to the company. Referring to the provisions of the Companies Act, 2013, examine whether the action of the RoC is tenable?
Answer & Explanation:
Removal of name of the company by the Registrar of Companies Subject to the provisions of Section 248(1) of the Companies Act, 2013 read with Rule 3 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, in the following cases, the Registrar can suo moto remove the name of the company from the Register: a company has failed to commence its business within one year of its incorporation or; 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 of the Companies Act, 2013; or the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this affect has not filed within 180 days of its incorporation under section 10A(i); or the company is not carrying on any business or operations as revealed after the physical verification carried out under section 12(9) of the Act. Before removal of the name of the company from the Register, the RoC is required to send a notice in Form STK 1 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. Such a notice should contain the reasons for which the name of the company is to be removed from the Register of Companies. Such a notice should be sent to all the directors of the company at the addresses available on record, by registered post with acknowledgement due or by speed post. On receipt of such a notice, the company and all the directors of the company are required to send their representations along with copies of the relevant documents, if any, explaining the reasons as to why the name of the company should not be removed from the Register of Companies. Such representations should be given within a period of thirty days from the date of the notice. In the given case, RoC has removed the name of Effective Green Energy Ltd. from the Register of Companies without giving prior notice to the Company. Therefore, the action of the RoC is not tenable.
Topics: Company Law
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