Consult Insolvency
Consult Insolvency
If a company fails to commence its business within one year of its incorporation.
Subscriber to MOA has not paid the subscription amount within 180 days and no declaration filed to this effect.
When a company voluntarily wants to close, it can after clearing all its liabilities, by obtaining the consent of at least 75% or more shareholders in terms of paid-up capital.
When a company is not able to carry any business for a period of two years as per rule and has sought to call itself a dormant company.
There are two modes of striking off the companies-
Suo Moto by the Registrar of Companies ( Section 248(1))
If a company has failed to commence its business within one year of its incorporation, or
The subscribers to the memorandum have not paid the subscription which they had undertaken to pay within a period of one hundred and eighty (180) days from the date of incorporation of a company and a declaration under section 11(1) to this effect has not been filed within one hundred eighty (180) days of its incorporation;
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 of 455.
By way of application by the company (Section 248 (2))
Without prejudice to the provision of sub-section (1), a company may, after extinguishing all its liabilities, by a special resolution or consent of seventy five percent member in term of paid up share capital, file an application in the prescribed manner to Registrar for remove the name of the company from register of companies on all or any of the ground specified in sub-section (1) and the registrar shall on receipt of such application , cause a public notice to be issued in the prescribed manner.
Call Board Meeting to pass Board resolution for the purpose of strike off and to authorize any director to file an application.
After passing of Board resolution, if there is any liability in the company, the company will set off all liabilities.
Call the general meeting and pass a special resolution.
File MGT-14 within 30 days of passing a special resolution.
An application for removal of the name of the company under sub-section (2) of section 248 shall be made in Form STK-2 along with the fee of INR 5000 along with the necessary attachment. E-Form STK-2 shall be signed by authorized director. Where the Director Concerned does not have a Digital Signature certificate, a physical copy of the form duly filled in shall be signed manually by the Director duly authorized in that behalf and shall be attached with the Form STK-2 while uploading the Form.
E-Form STK-2 shall be certified by Company secretary in whole time practice or Chartered Accountant in whole time practice or Cost Accountant in whole time practice.
With an aim to complete insolvency petition even faster, in 90 days, for small companies, companies with minimal transactions / operations, the Insolvency and Bankruptcy Board of India has notified the sections 55 to 58 of the Insolvency and Bankruptcy Code 2016 and the draft of Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 with effect from 14 June 2017.
It is believed that these regulations help in faster and easier completion of bankruptcy proceedings.
NCLT appoints an interim Insolvency Professional (IP) within 14 days of acceptance of application. Interim IP holds office for 30 days only. Interim Insolvency Professional takes control of the debtor’s assets and company’s operations, collect financial information of the debtor from corporate debtor /information utilities.
The fast track process applies to the following categories of corporate debtors:
A small company, as defined under clause (85) of section 2 of the Companies Act, 2013;
A Startup (other than the partnership firm), as defined in the notification dated 23 May 2017, of the Ministry of Commerce and Industry
An unlisted company with total assets, as reported in the financial statement of the immediately preceding financial year, not exceeding Rs.1 crore.
The Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 also provides that if committee thinks that fast track process cannot be completed within 90 days then it may instruct the resolution professional to make an application to the Adjudicating Authority. However, the Adjudicating Authority may, if satisfied, extend the period of 90 days by a further period up to 45 days for completion of the process.
Further, Interim Resolution Professional (IRP) shall file a report certifying constitution of committee to Adjudicating Authority before expiry of 21 days from the date of his appointment. Based on records, if interim resolution professional is of opinion that fast track process is not applicable to corporate debtor, he shall file an application to Adjudicating Authority along with the report to pass an order converting the fast track process to corporate insolvency resolution process.
If Adjudicating Authority passes on order of such conversion, the process shall be carried on in accordance with Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
Process for Fast Track Insolvency under Insolvency and Bankruptcy Code, 2016 is as follows:
Application for Fast Track Insolvency Process by Corporate Person.
Action taken by Adjudicating Authority (AA) on receipt of application.
Declaration of moratorium period.
Appointment of Interim Resolution Professional.
Public Announcement on appointment of Interim Resolution Professional.
Immediately within 3 days of his appointment in FORM A, in newspaper, website of corporate debtor, on website as designated by board, if any, Inviting claims from creditors within 10 days of appointment of IRP.
The public announcement shall not form part of fast track process costs. To be done by “Applicant”, this will be rectified to the extent by reimbursement.
Verification Of Determination Of Claims
Verify each and every claim within 7 days from the last date of receipt of the claim and maintain list of the name of creditors, amount of claim, the amount of their claims admitted and the security interest, if any, in respect of such claims, and update.
Constitution of Committee of Creditors (COC).
Committee will be constituted by IRP. All decisions will be taken by vote of at least 75% of voting share Committee of financial creditor shall exclude related parties of corporate debtor. In absence of financial creditor or being related party of corporate debtor, the committee shall be set up in accordance with this Regulation. Committee shall have power to call information from resolution professional. Every member of committee shall have voting rights in proportion of the debt due to such creditor or debt represented by such representative, as the case may be, to the total debt filings IRP to file report certifying the constitution of the committee to the Adjudicating Authority within 21 days of his appointment.
IRP to conduct meeting of COC within 7 days of Constitution. Issuance of Notice of the Meeting of Committee of Creditors.
Notice to be served 7 days prior before conduction of meeting by way of hand delivery/post/ electronic means. The notice of the meeting shall contain an agenda of the meeting with the following-
A list of the matters to be discussed at the meeting;
A list of the issues to be voted upon at the meeting; and
Copies of all documents relevant to the matters to be discussed and the issues to be voted upon at the meeting.
Holding meeting of Creditors of Committee.
Quorum of meeting: at least thirty-three per cent of the voting rights are present either in person or by video conferencing or other audio and visual mean.The resolution professional shall take due and reasonable care. The resolution professional shall make necessary arrangements to ensure uninterrupted and clear video or audio and visual connection. The resolution professional shall act as the Chairperson of the meeting of the committee. Minutes of the meetings to be circulated within 48 hours.
Conduct Of The Fast Track Process
Appointment of Registered Valuer within 7 days of his appointment.
The applicant (AA, in absence of applicant) shall fix the expenses to be incurred on or by the interim resolution professional.
Cost to be borne by “Applicant”, this will be rectified to the extent by reimbursement. The amount of expenses ratified by the committee shall be treated as fast track process costs. The committee shall fix the expenses to be incurred on or by the resolution professional and the expenses shall constitute fast track process costs.
Resolution Plan
The registered valuer appointed shall submit to the IRP or the RP, as the case may be, an estimate of the liquidation value. The resolution professional shall provide the liquidation value to the committee in electronic form. The IRP or RP, as the case may be, shall submit an information memorandum in electronic form to each member of the committee, after receiving an undertaking to the effect that such member or resolution applicant shall maintain confidentiality of the information and shall not use such information to cause an undue gain or undue loss to itself or any other person and comply with the requirements.
Mandatory contents of the resolution plan-
A resolution plan shall identify specific sources of funds that will be used to pay the
Liquidation value due to operational creditors and provide for such payment in priority to any financial creditor which shall in any event be made before the expiry of thirty days after the approval of a resolution plan by the Adjudicating Authority.
Liquidation value due to dissenting financial creditors and provide that such payment is made before any recoveries are made by the financial creditors who voted in favour of the resolution plan.
A resolution plan shall provide:
The term of the plan and its implementation schedule;
The management and control of the business of the corporate debtor during its term; and
Adequate means for supervising its implementation.
Submission & Approval of Resolution Plan
Resolution Plan to be submitted, 30 days before expiry of time period framed under Sec 56(i.e. 90 days). Resolution plan will be subject to approval by COC, after approval by COC , it will submitted to adjudicating authority.
The resolution professional shall, on receiving an instruction from the committee under this Regulation, make an application to the Adjudicating Authority for such extension.