Registered Valuers & Removal of Company
Section 247 .Valuation by Registered Valuers
247(1).
Whenever a company needs to determine the value of any property, shares, securities, goodwill, or any other assets or liabilities, a valuation is required.
This valuation must be carried out by a qualified valuer.
The valuer must also be registered under the rules governing valuation professionals.
This valuer should have the prescribed qualifications and experience, be a member of a recognized organization, and be appointed by the Audit Committee.
If there is no Audit committee , then such appointment will be made by the Board of Directors of the company.
247(2).
The valuer appointed must act with fairness, independence, and diligence.
They are required to make an impartial, true, and fair valuation of the assets, follow all prescribed rules, and exercise due care while performing their duties.
A valuer must not carry out valuation of any asset in which they have a direct or indirect personal interest.
This restriction applies for three years before their appointment and three years after the valuation is completed.
247(3).
If a valuer violates any provision of this section or its related rules, they are liable to a penalty of ₹50,000.
If the valuer breaks the rules with an intent to defraud the company or its members, stricter penalties apply.
The valuer can be punished with imprisonment of up to one year.
They may also face a fine between ₹1 lakh and ₹5 lakh.
247(4).
If the valuer is convicted, they must refund the fee they received from the company.
They must also compensate the company or any affected person for any loss caused by their incorrect or misleading valuation report.
Section 248. Power of Registrar to remove the name of a company from the register of companies.
248(1).
The Registrar of Companies (ROC) has the power to remove the name of a company from the Register if he has reasonable cause to believe that:
The company has not started its business within one year of its incorporation.
The company has not carried on any business or operations for the last two financial years and has not applied for dormant status under Section 455.
The subscribers to the memorandum have not paid their subscription within 180 days of incorporation (as required under Section 10A).
The company is not carrying on business or operations, as found through physical verification of its registered office under Section 12(9).
When the ROC plans to strike off a company’s name, he must first send a notice to the company and its directors.
The notice informs them of his intention to remove the company’s name from the register.
The company and its directors must reply within 30 days.
They can also submit any supporting documents along with their reply.
248(2).
Apart from the Registrar’s power, a company itself may apply for removal of its name from the Register if it has cleared all its liabilities.
This can be done through a special resolution or with the consent of 75% of shareholders (by paid-up share capital).
The application must be made on any of the grounds mentioned in 248(1).
After receiving the application, the ROC will publish a public notice in the prescribed manner.
For companies governed by a special Act (like insurance or banking companies), approval of the concerned regulatory authority must be attached with the application.
248(3).
However, this self-application provision does not apply to companies registered under Section 8. (Not for Profit Companie)
248(4).
Any notice issued by the Registrar under 248(1)/248(2) must be published publicly in the prescribed manner and in the Official Gazette.
248(5).
If the company does not respond within the notice period or fails to give a valid explanation, the ROC can proceed further.
The ROC may then strike off the company’s name from the register.
A notice of dissolution will be published in the Official Gazette.
Once the notice is published, the company is officially dissolved.
248(6).
Before striking off the company’s name, the ROC must check that the company has properly provided for all its dues and liabilities.
The ROC may ask the company’s management to give undertakings confirming this.
Even after the company is struck off, any remaining assets of the company can still be used to settle outstanding debts or obligations.
248(7).
Even after the company is dissolved, the liability of directors, managers, officers, and members does not end.
They can still be held responsible for their actions or obligations.
Their liabilities may be enforced as though the company had not been dissolved.
248(8).
Finally, this section does not take away the Tribunal’s power to wind up a company whose name has already been struck off.
Section 249. Restrictions on making an application under section 248 in certain situations
249(1).
This section sets out conditions under which a company cannot apply for the removal of its name from the Register of Companies under Section 248(2).
It ensures that companies do not misuse the voluntary strike-off process to escape responsibilities or ongoing legal matters.
A company cannot make an application for removal of its name if, at any time in the previous three months, it has:
(a). Changed its name or shifted its registered office from one state to another.
(b). Disposed of any property or rights for value immediately before ceasing business, except where such disposal was part of normal trading activities.
(c). Engaged in any activity other than what is strictly necessary for making the strike-off application, deciding on it, winding up its affairs, or complying with statutory requirements.
(d). Applied to the Tribunal for approval of a compromise or arrangement, and that matter is still pending or not yet finalized.
(e). Is already being wound up under Chapter XX of the Companies Act or under the Insolvency and Bankruptcy Code, 2016.
249(2).
If a company violates these restrictions and still files an application under Section 248(2), it shall be punishable with a fine up to ₹1,00,000.
249(3).
If such an application is found to have been made in violation of these rules, it must either be withdrawn by the company itself or rejected by the Registrar immediately after the restricted conditions come to light.
Section 250. Effect of the company notified as dissolved
Once the notice of dissolution is published by the Registrar, the following effects take place from that date:
The company ceases to exist as a legal entity and stops all its operations and it can no longer carry on business or exercise any corporate powers.
The Certificate of Incorporation issued to the company is considered cancelled, so the company’s legal identity officially ends.
However, this dissolution does not completely erase the company’s existence for limited purposes.
The company may still continue to exist only for settling its affairs.
The affairs could include:
To recover or realise any money owed to it.
To pay or discharge any of its remaining liabilities or obligations.
Section 251. Fraudulent application for removal of name
251(1).
If the company applied for dissolution with fraudulent intent (to avoid liabilities, cheat creditors, or deceive anyone), strict consequences follow.
The consequences include:
(a).
The people managing the company such as directors or key officers will be jointly and severally liable for any loss caused.
This means each one of them can be held responsible for the entire loss.
(b).
They will also face punishment for fraud under Section 447, which includes imprisonment and heavy fines for fraudulent acts.
251(2).
Besides imposing liability and punishment, further action can also be taken.
The Registrar of Companies may recommend prosecution of the individuals responsible for filing the fraudulent application.
This means those individuals could face criminal proceedings for their actions.
Section 252. Appeal to Tribunal.
252(1).
If the Registrar of Companies (ROC) removes or dissolves a company under Section 248, affected persons can challenge this.
An aggrieved person may include a shareholder, director, creditor, or anyone impacted by the action.
Such a person can file an appeal before the NCLT.
The appeal must be filed within three years from the date of the ROC’s order.
Before passing any order, the Tribunal must give all concerned parties a fair chance to be heard.
This includes the Registrar, the company, and any other affected persons.
No decision can be made without allowing these parties to present their views or objections.
If the Registrar later finds that the company’s name was wrongly removed either by mistake or because the company gave false or incorrect information then he can take action.
The Registrar can apply to the Tribunal to have the company’s name restored.
This application must be made within three years from the date the company was dissolved.
252(2).
Once the Tribunal passes an order for restoration, the company must file a copy of the order with the Registrar within 30 days.
Upon receiving the order, the Registrar will restore the company’s name in the register and issue a fresh Certificate of Incorporation, making it active again.
252(3).
If the company itself or any member, creditor, or workman is affected by the company being struck off, they can challenge it.
They may file an application before the Tribunal.
This application can be made within 20 years from the date the dissolution notice was published in the Official Gazette.
The Tribunal will examine whether the company was actually carrying on business or still operating when its name was struck off.
The Tribunal can also restore the company if it believes doing so is just and fair, even if the company was not fully active.
If satisfied on either ground, the Tribunal may order the restoration of the company’s name to the register.
The Tribunal may also issue additional directions to restore the company and all parties involved to the same position as if the company had never been struck off.
