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Step-by-step procedure for voluntary strike off

Compliance requirements under Companies Act, 2013

Understanding Board Resolution for Company Strike Off

A Board Resolution for Striking Off the Company is a formal corporate document that records the decision of the Board of Directors to voluntarily remove the company’s name from the Register of Companies maintained by the Registrar of Companies (ROC). This resolution forms the foundation of the company closure process under Section 248 of the Companies Act, 2013.

When a company has not commenced business operations within one year of incorporation, or has ceased to carry on business for two consecutive financial years, it may apply for voluntary strike off. This procedure provides a simpler and more cost-effective alternative to formal winding up proceedings, making it the preferred choice for dormant or non-operational companies seeking closure.

What is a Board Resolution for Striking Off?

A board resolution for striking off is a formal decision passed at a duly convened board meeting, authorising the company to apply for removal of its name from the ROC register. The resolution records the directors’ consent to initiate the strike off process and designates specific individuals to execute the necessary documentation including Form STK-2, affidavits, and indemnity bonds.

The resolution serves multiple purposes: it provides legal backing for the strike off application, identifies the authorised signatory for all related filings, and documents the board’s unanimous decision to close the company. Without a properly drafted and executed board resolution, the ROC will not accept the strike off application.

When is Board Resolution for Strike Off Required?

The board resolution becomes necessary when promoters or directors decide to voluntarily close a company that meets the eligibility criteria for strike off. The following situations typically warrant passing this resolution:

Companies that have never commenced business operations since incorporation and have no intention to start. Businesses that have ceased operations and remained inactive for two or more consecutive financial years. Companies where promoters wish to close the entity rather than maintain ongoing compliance requirements. Dormant companies with no assets, liabilities, or pending legal proceedings that owners wish to formally dissolve.

Eligibility Criteria for Voluntary Strike Off

Before passing the board resolution, companies must verify they meet all eligibility requirements under Section 248 of the Companies Act, 2013:

Business Activity Status

The company must have either never commenced business after incorporation or must have ceased business operations for at least two consecutive financial years immediately preceding the application date.

No Pending Liabilities

All liabilities including statutory dues (income tax, GST, professional tax), employee dues, creditor payments, and bank loans must be cleared or adequately provided for before applying for strike off.

No Pending Legal Proceedings

The company should not be involved in any pending legal proceedings either as plaintiff or defendant. Any ongoing litigation must be concluded before the strike off application can be processed.

Asset Disposal

All assets of the company must be disposed of or transferred appropriately. The company should have nil or minimal assets at the time of application, with proper accounting of any disposals made.

Key Elements of Board Resolution for Strike Off

A properly drafted board resolution for striking off must include several essential elements to ensure acceptance by the ROC and compliance with statutory requirements:

Element	Description
Company Details	Full company name, CIN, and registered office address
Meeting Details	Date, time, and venue of board meeting
Resolution Text	Formal approval to apply for strike off under Section 248
Director Authorization	Name and DIN of director authorised to file Form STK-2
Signatory Details	Name, designation, and DIN of person signing the certified copy
Certification	Statement certifying it as true copy with date and place

Download Board Resolution Format

To simplify the drafting process, you can use an online tool to generate a professionally formatted board resolution for striking off. The format ensures all statutory requirements are met and can be customised with your company’s specific details.

Access the board resolution generator here:

https://www.patronaccounting.com/tools/download-format/board-resolution-for-striking-off-the-company

Procedure for Passing Board Resolution

Step 1: Convene Board Meeting

Issue proper notice to all directors as per the Companies Act requirements. The notice should clearly mention the agenda item regarding strike off application. Ensure quorum requirements are met for the meeting to be valid.

Step 2: Present Strike Off Proposal

Place the proposal for voluntary strike off before the board with all relevant details including company’s current status, reasons for closure, confirmation of cleared liabilities, and draft resolution text for consideration.

Step 3: Pass Resolution

After deliberation, pass the resolution with requisite majority. The resolution should authorise the strike off application, designate the director responsible for filing Form STK-2, and authorise execution of affidavits and indemnity bonds.

Step 4: Record in Minutes

Record the resolution in the minutes book within 30 days of the meeting. Prepare certified true copies of the resolution for attachment with Form STK-2 and other regulatory filings.

Documents Required Along with Board Resolution

The board resolution must be accompanied by several other documents when filing Form STK-2:

Special resolution passed by shareholders approving the strike off.

Affidavit from directors confirming eligibility criteria are met.

Indemnity bond from directors indemnifying against future claims.

Statement of accounts not older than 30 days from application date.

NOC from regulatory authorities (if applicable).

Copy of latest audited financial statements.

Proof of clearing all statutory dues.

Conclusion

The board resolution for striking off a company is a critical document that initiates the voluntary closure process under Section 248 of the Companies Act, 2013. A properly drafted resolution ensures smooth processing of the strike off application and demonstrates the board’s formal approval for removing the company from the ROC register.

Companies considering closure should ensure all eligibility criteria are met before passing the resolution. Clearing statutory dues, settling liabilities, and disposing of assets are prerequisites that must be completed. Using a standard format for the resolution helps avoid procedural errors and ensures all required elements are included for ROC acceptance.

Frequently Asked Questions

1. Is board resolution mandatory for company strike off?

Yes, board resolution is mandatory for voluntary strike off under Section 248. It must be passed at a duly convened board meeting and attached to Form STK-2 along with other required documents.

2. Do all directors need to sign the board resolution?

No, only one authorised director needs to sign the certified true copy of the resolution. However, the resolution must be passed with requisite quorum at the board meeting.

3. Should the board resolution be on company letterhead?

Yes, using official company letterhead adds authenticity. The letterhead should include company name, CIN, registered office address, and contact details.

4. Is special resolution also required along with board resolution?

Yes, both board resolution and special resolution from shareholders (requiring 75% majority) are required for the strike off application. Both documents must be attached to Form STK-2.

5. What is Form STK-2?

Form STK-2 is the application form filed with ROC for voluntary strike off of a company’s name from the register. It requires board resolution, special resolution, affidavits, and indemnity bond as attachments.

6. How long does the strike off process take?

The voluntary strike off process typically takes 3-6 months from filing Form STK-2. The ROC publishes a notice inviting objections for 30 days before processing the application.

7. Can a struck off company be restored?

Yes, a struck off company can be restored within 20 years by filing an application with the National Company Law Tribunal (NCLT). The applicant must show just cause for restoration.

8. What happens to directors after company is struck off?

Directors remain liable for any liabilities that existed before strike off. They can continue to serve as directors in other companies, but their association with the struck off company reflects in MCA records.

9. Is professional certification required for board resolution?

The board resolution itself doesn’t require professional certification. However, Form STK-2 may need certification by a practising CS, CA, or CMA depending on company’s paid-up capital and turnover.

10. Can a company with pending litigation apply for strike off?

No, companies involved in pending legal proceedings cannot apply for voluntary strike off. All litigation must be concluded before the application can be filed.

11. What is the difference between strike off and winding up?

Strike off is a simpler, faster process for dormant companies with no assets or liabilities. Winding up is a formal process involving liquidation of assets and settlement of liabilities, suitable for companies with ongoing operations.

12. Are there any fees for filing Form STK-2?

Yes, government fees apply for filing Form STK-2 with the ROC. The fee amount depends on the authorised capital of the company and is payable online through the MCA portal.