Sections 249 and 250 of the Companies Act, 2013: Restrictions on Strike Off and Effect of Dissolution
Sections 249 and 250 form part of the statutory framework governing removal of a company's name from the register. Section 249 restricts when a company may make its own application under Section 248(2), while Section 250 states the legal effect after a company is dissolved under Section 248.
Section 250 - effect of dissolution
Current filing framework and official resources
Section 249 - Restrictions on making application under Section 248 in certain situations
Meaning: Section 249 prevents a company from using the voluntary strike-off route under Section 248(2) where specified events occurred during the preceding three months. The restriction is intended to ensure that voluntary removal is not used while material corporate changes, disposals, restructuring proceedings, or winding-up processes are underway.
Section 249(1)
An application under Section 248(2) on behalf of a company shall not be made if, at any time in the previous three months, the company:
(a) has changed its name or shifted its registered office from one State to another;
(b) has made a disposal for value of property or rights held by it immediately before it ceased trading or otherwise carrying on business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on business;
(c) has engaged in any activity other than activity necessary or expedient for making an application under Section 248, deciding whether to do so, concluding the affairs of the company, or complying with a statutory requirement;
(d) has made an application to the Tribunal for sanctioning a compromise or arrangement and the matter has not been finally concluded; or
(e) is being wound up under Chapter XX of the Companies Act, 2013 or under the Insolvency and Bankruptcy Code, 2016.
Section 249(2)
If a company files an application under Section 248(2) in violation of Section 249(1), the company is punishable with a fine which may extend to Rs. 1,00,000.
Section 249(3)
An application filed under Section 248(2) must be withdrawn by the company or rejected by the Registrar as soon as a condition specified in Section 249(1) is brought to the Registrar's notice.
Legislative note: Clause (e) was substituted by the Insolvency and Bankruptcy Code, 2016 with effect from 15 November 2016, so that the restriction expressly covers a company being wound up under Chapter XX of the Companies Act or under the Insolvency and Bankruptcy Code, 2016.
Section 250 - Effect of company notified as dissolved
Meaning: Section 250 specifies what follows once a company stands dissolved under Section 248. From the date stated in the notice issued under Section 248(5), the company ceases to operate as a company and its certificate of incorporation is deemed cancelled.
There is an important statutory exception: notwithstanding dissolution, the company continues for the limited purpose of realising amounts due to it and paying or discharging its liabilities or obligations. Dissolution therefore does not, by itself, erase the need to deal with outstanding receivables, liabilities, or obligations in accordance with law.
Voluntary strike off: current filing framework
A voluntary application for removal of a company's name is governed by Section 248(2) read with the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. The prescribed filing is Form STK-2. The Ministry of Corporate Affairs' current STK-2 instruction kit states that the webform is used for an application to the Centre for Processing Accelerated Corporate Exit (C-PACE), and that the company must extinguish all liabilities before applying. The statutory member approval requirement under Section 248(2) should also be satisfied.
Before filing, the company should check both the eligibility conditions under Section 248 and the three-month restrictions in Section 249. A filing made while a Section 249 restriction exists may have to be withdrawn or may be rejected, in addition to the statutory fine exposure under Section 249(2).
Related Companies Act provisions
For the surrounding statutory scheme, see Section 248 - removal of name from register and Sections 251 and 252 - fraudulent application and appeal/restoration.