Overview about Closing of a Foreign Co. Subsidiary

CLOSING OF A FOREIGN COMPANY SUBSIDIARY

Over the past few decades, India has emerged joined of the foremost favourable and preferred option for foreign companies for investments. However, sometimes thanks to commercial or another reasons, foreign company has to close its business operations in India.

Accordingly, an overseas company in India and its subsidiary must remember about the closing process. during this article, we’ll be discussing about the method of closing of subsidiary in India.

PROCESS OF A FOREIGN CLOSURE OF COMPANY IN INDIA

A company is required to file the subsequent forms with the Registrar of Companies for its closure and striking off the name from the registers-

1. E-Form MGT-14
2. E-Form STK-2

PROCEDURE IN CASE OF VOLUNTARY STRIKE-OFF

In case of voluntary closure of subsidiary, following procedure must be followed:

• The company is required to assign or authorize a political candidate or a director to commence a meeting.
• Seven days before the meeting, a notice for the meeting intimating the agenda of the identical must be send to the members.
• The committee meeting must be held and a board resolution should be passed in it regarding closing a company.
• Intimation about the conduct of Annual General Meeting (AGM) or the Extra-Ordinary General Meeting shall be made.
• The general meeting be convened by the Board of Directors and Members of the entity, for passing the Special Resolution.
• In the subsequent step, the corporate is required to file Form MGT-14 by attaching all the desired documents.
• Next, the shape STK-2 must be filed by attaching all the supporting documents prescribed by the statutes.
• Lastly, the Registrar of Companies verifies all the documents attached with the forms filed by the corporate and checks whether all the terms and conditions are fulfilled for closing of company.
• Once all such information and documents are thoroughly checked the ROC commences the method of striking off the corporate from the registers after publishing a public notice as per the provisions of the Insolvency and Bankruptcy Code (IBC), 2016.

DOCUMENTS REQUIRED FOR CLOSING OF FOREIGN SUBSIDIARY COMPANY

While filing the forms for closing of subsidiary in India, the following documents are required:

• Form STK-3, which is the duly notarized bond, made by all the board of directors.
• Indemnity bonds in Form STK-3.
• Affidavit in Form STK-4.
• The certified true copy of the duly signed Special Resolution gone by the administrators.
• A statement regarding the pending litigation and cases (if any) of the corporate in the court of law.
• A statement regarding the liabilities and assets of the corporate. This needs to be certified by a practicing comptroller.
• Copy of the board resolution, authorizing and approving the filing of the forms for closing of their company.
• The company must get a no-objection certificate from the concerned administrative body that governs it.
• Copy of the all the relevant order associated with delisting from the exchange (if any).

TIME TAKEN FOR CLOSING OF SUBSIDIARY IN INDIA

• On receipt of an application for striking off and shutting of company with the Registrar of Company (ROC) through E-Form STK-2, all the documents attached with it are verified thoroughly.
• The ROC then publishes a public notice and sends notice to the corporate and its director. in case there’s no response from them within the given timeline, it strikes-off the corporate name from the registers. the entire process of closure can take up to three to 4 months.
• In case the Registrar receives any objection regarding the closure of company, the full process can get lengthy or in some cases could also be rejected by the ROC.

ELIGIBILITY FOR APPLYING FOR VOLUNTARY WINDING-UP

Under the supply of Section 59(1) of the act, an organization can choose for closing of subsidiary as under-

1. One who intends to liquidate the corporate voluntarily
2. an organization that has not committed any offence or default.

PROCESS OF VOLUNTARY LIQUIDATION

The liquidation process used for voluntary closing of company has the subsequent steps involved-Public Announcement: The liquidator has got to make an announcement publicly within 5 days of his/her appointment. this is often necessary for submitting the claims regarding liquidation within 30 days. Such a notice announcement must be published in one regional or local daily newspaper and one daily English newspaper in the jurisdiction of the place of business of the corporate registration. the identical must be provided in the company’s official website in addition.

The public notice or announcement should contain the subsequent details

• Date of commencement of the liquidation.
• Name and address of the liquidator.
• Contact details and number of the liquidation.
• Last date of submission of any claim by the members or shareholders or the other related person.
• Mode of submitting any such claims.
• Opening of a checking account: one in all the foremost important steps in closing of company is to open a brand-new bank account with a scheduled or authorized bank. The account opened must be named after the corporate or the company person involved word ‘in liquidation” at the top.

This account is employed for receiving or making payments against the settled amount. The liquidating company must use only this account for any more transactions and settlements.

HOW RAJPUT JAIN & ASSOCIATES, HELP

We at Rajput Jain & Associates, help your business with all the procedures and processes. Our team of professional and experts guide business houses and company personals with variety of services like India Entry registration, wholly-owned subsidiary or subsidiary registration and closure process and other services. please visit www.carajput.com. or call us +91-9-555-555-480

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