India

MCA Orders Strike-Off of Company for Failing to File Declaration of Commencement of Business Under Section 10A [Read Order]

Posted on by Minakshi




MCA Cracks Down: Company Struck Off for Non-Compliance with Commencement of Business Rules

MCA Cracks Down: Company Struck Off for Non-Compliance with Commencement of Business Rules

In a move highlighting the Ministry of Corporate Affairs’ (MCA) increased scrutiny of regulatory compliance, a company has been struck off the register for failing to adhere to Section 10A of the Companies Act, 2013. This section mandates the filing of a declaration regarding the commencement of business.

What is Section 10A and Why is it Important?

Section 10A of the Companies Act, 2013, is crucial for ensuring that newly incorporated companies genuinely intend to conduct business. It requires companies with share capital to file a declaration with the Registrar of Companies (RoC) within 180 days of incorporation. This declaration confirms that every subscriber to the memorandum has paid the value of shares agreed to be taken by them.

The purpose is to curb the proliferation of shell companies and ensure financial accountability right from the start. Failing to comply indicates a lack of commitment to conducting legitimate business operations.

Company Struck Off Under Section 248(1)(a)

The MCA invoked Section 248(1)(a) of the Companies Act, 2013, leading to the removal of the defaulting company from the register. This section allows the RoC to strike off the name of a company if it has failed to commence business within one year of incorporation or is not carrying on any business or operation for a period of two immediately preceding financial years and has not made an application within such period for obtaining the status of a dormant company under section 455.

Consequences of Being Struck Off

Being struck off the register has significant consequences for a company and its directors. These include:

  • Loss of Legal Status: The company ceases to exist as a legal entity.
  • Directors’ Disqualification: Directors may face disqualification from holding similar positions in other companies.
  • Financial Implications: Assets of the company may be subject to liquidation and distribution as per the law.

The MCA’s action serves as a strong reminder to companies to diligently comply with all statutory requirements, particularly those related to the commencement of business. Non-compliance can lead to severe repercussions, ultimately impacting the company’s existence and the reputations of its promoters and directors.

Summary:

  • MCA struck off a company for failing to file the declaration of commencement of business under Section 10A of the Companies Act, 2013.
  • Section 248(1)(a) was invoked, allowing the RoC to remove the company from the register.
  • This action highlights the importance of regulatory compliance and the consequences of non-compliance.
Key Takeaways:

  • Compliance with Section 10A is crucial for new companies to demonstrate genuine intent to conduct business.
  • Failure to file the declaration of commencement of business can lead to striking off under Section 248(1)(a).
  • Directors of non-compliant companies may face disqualification.
  • The MCA is actively monitoring and enforcing compliance with the Companies Act, 2013.
  • Companies should prioritize adherence to all statutory requirements to avoid severe penalties.