When a company fails to submit its financial statements to the Ministry of Corporate Affairs (MCA), it risks being struck off the register. One of the immediate consequences of this is the freezing of the company’s bank account. This article delves into the process of lifting the freeze on a bank account due to company strike off under the Companies Act, 2013.
Bankers monitor the status of their corporate customers on the MCA database regularly. If a company’s status is listed as ‘struck off’, the bank proceeds to freeze its account to prevent misuse of funds and safeguard the interests of creditors and stakeholders. This action is taken under Section 248 of the Companies Act.
Verification of Strike-Off Status: Visit the official MCA website and check the status of the company in the ‘Master Data’ section.
Restoration through NCLT: To regain control of the bank account, directors must apply to the National Company Law Tribunal (NCLT) under Section 252 of the Companies Act.
Have the company’s accounts audited and prepare financial statements.
1.File an application with the NCLT, including necessary fees and supporting documents such as:
2.Memorandum of Association (MOA) and Articles of Association (AOA).
3.Certificate of incorporation.
4.List of directors.
5.Registrar’s order for strike-off.
6.Latest Income Tax Return.
7.Signed balance sheets for the past 3 years.
8.Bank statement.
9.List of shareholders.
10.Affidavits and memorandums as required.
When petitioning for the restoration of a company’s name, a robust justification is essential. This should encompass evidence of recent business activity, such as records of purchases or sales, income tax and GST returns, active contracts, available cheques, and the current number of employees on the company’s payroll. If recent business activity is lacking, it becomes imperative to explain the circumstances to the NCLT comprehensively. This explanation should also outline the company’s future business plans, detailing any existing contracts or orders, and demonstrating how it intends to embark on new projects, remain compliant with legal filings, and strategize for growth in the future.
Restoring a company’s name after it has been struck off by the Registrar of Companies (ROC) incurs penalties that vary depending on the case. Directors are typically required to arrange for these penalties using personal funds. Banks will lift the freeze on the company’s account only after its status becomes ‘ACTIVE’ post-filing of the NCLT order with the MCA/ROC. Additional fees under the Companies Act are levied at ₹100 per day for delayed filing of Form AOC 4 and Form MGT 7 / MGT 7 A. It is crucial to act swiftly to restore the company, as delays can result in accumulating penalties, escalating financial burdens significantly.
The process of restoring a company’s name after strike-off can vary in duration. Generally, it takes around 6 months, considering the time required to obtain a hearing at the NCLT, which typically involves 3 to 4 hearings. Upon being convinced of the company’s operational status at the time of strike-off or its future prospects, the NCLT may order the restoration of the company’s name.
In some instances, when the National Company Law Tribunal (NCLT) orders the restoration of a company, it may include a directive to donate to specified funds, often towards the Prime Minister’s Relief Fund or other similar government-established relief funds. These donations serve as punitive measures for non-compliance and contribute towards social welfare initiatives. The exact fund or the amount to be donated is determined by the NCLT and specified in the order.
Following the NCLT order, the company must file a certified copy with the Registrar within 30 days using Form INC-28. The Registrar will reinstate the company’s name in the register, and the company status on the MCA website will change from ‘Strike off’ to ‘Active’. Subsequently, the company can file forms related to its financial statements and pay any additional fees as applicable. To unfreeze the bank account, the NCLT order and updated Master Data from the MCA website indicating the company’s status as ‘Active’ must be submitted to the bank, following which the bank will lift the freeze on the account.
