Company Restoration Under Section 252
A Comprehensive Guide to Companies Act 2013
📋 Table of Contents
1. Introduction
Company restoration under Section 252 of the Companies Act 2013 is a critical legal process that allows struck-off companies to regain their active status. This comprehensive guide explores the intricacies of company restoration, providing detailed insights into the legal framework, procedures, and requirements.
When a company fails to comply with statutory requirements or remains dormant, the Registrar of Companies (ROC) may strike it off from the register. This often happens due to non-filing of annual returns through the MCA V3 portal or other compliance lapses. However, the law provides a mechanism for legitimate businesses to restore their status and resume operations legally.
2. Understanding Section 252
Section 252 of the Companies Act 2013 deals with the “Restoration of company struck off” from the register of companies. This section empowers the National Company Law Tribunal (NCLT) to restore companies that have been removed from the official records.
Legal Framework
The restoration process is governed by several key provisions:
- Section 252 of the Companies Act 2013
- Companies (Incorporation) Rules 2014
- NCLT Rules and procedures
- Relevant MCA circulars and notifications
Authority for Restoration
The National Company Law Tribunal (NCLT) is the sole authority empowered to restore struck-off companies. The tribunal examines each case on its merits and ensures that the restoration serves the interests of justice and stakeholders.
3. Eligibility Criteria
Not all struck-off companies are eligible for restoration. The following criteria must be satisfied:
| Criteria | Description | Remarks |
|---|---|---|
| Company Status | Must be struck off under Section 248 | Voluntary or ROC initiated strike-off |
| Time Limit | Application within 20 years of strike-off | Statutory limitation period |
| Genuine Business | Must demonstrate legitimate business purpose | NCLT discretionary assessment |
| Stakeholder Interest | Restoration must serve stakeholders | Creditors, employees, shareholders |
4. Procedure for Restoration
The restoration process involves multiple steps and requires careful attention to legal requirements:
Step 1: Filing Application
File Form CP-3 with the appropriate NCLT bench along with required documents and fees. The application must be comprehensive and include all relevant details about the company’s history and reasons for seeking restoration.
Step 2: Publication of Notice
Publish a notice in a newspaper (English and regional language) informing stakeholders about the restoration application. This ensures transparency and allows interested parties to raise objections if any.
Step 3: NCLT Examination
The NCLT examines the application, considers objections (if any), and may conduct hearings. The tribunal assesses whether restoration is in the interest of justice and stakeholders.
Step 4: Order and Compliance
Upon satisfaction, NCLT issues a restoration order with specific conditions. The applicant must comply with all conditions within the stipulated timeframe.
Step 5: ROC Filing
File the NCLT order with the ROC along with pending annual returns and financial statements. This step officially restores the company to the register.
5. Required Documents
The restoration application requires comprehensive documentation:
- Form CP-3 duly filled and signed
- Board resolution authorizing the application
- Affidavit stating reasons for restoration
- Copy of striking off order/gazette notification
- Memorandum and Articles of Association
- Last filed annual returns and financial statements
- Bank statements and financial records
- Evidence of business activities (if any)
- NOC from creditors/stakeholders (if applicable)
- Newspaper publication proof
6. Fees Structure
The restoration process involves multiple fee components:
| Fee Type | Amount (Approx.) | Payable To |
|---|---|---|
| NCLT Application Fee | ₹10,000 – ₹25,000 | NCLT Registry |
| Professional Fees | ₹50,000 – ₹2,00,000 | Lawyers/Consultants |
| Publication Charges | ₹5,000 – ₹15,000 | Newspapers |
| ROC Additional Fees | ₹10,000 – ₹50,000 | MCA |
| Miscellaneous | ₹5,000 – ₹20,000 | Various |
Note: Fees may vary based on company size, complexity of case, and specific NCLT bench requirements. Always verify current fee structure from official sources.
7. Timeline and Processing
The restoration process timeline varies depending on several factors:
Typical Timeline
- Application Preparation: 2-4 weeks
- NCLT Filing and Admission: 2-3 weeks
- Publication and Notice Period: 4-6 weeks
- NCLT Hearing and Order: 3-6 months
- ROC Compliance: 2-4 weeks
Total Expected Duration: 6-12 months (may extend based on complexity and objections)
8. Consequences of Non-Restoration
Failure to restore a struck-off company can lead to several adverse consequences:
Legal Implications
- Loss of legal entity status
- Inability to enter into contracts
- Assets may vest in the Central Government
- Directors may face disqualification
- Tax complications and penalties
Business Impact
- Loss of brand name and goodwill
- Termination of licenses and registrations
- Banking and financial restrictions
- Litigation complications
- Stakeholder confidence erosion
9. Best Practices
To ensure successful restoration and avoid future compliance issues:
During Restoration Process
- Engage experienced legal counsel
- Prepare comprehensive documentation
- Maintain transparency with stakeholders
- Address all NCLT conditions promptly
- Keep detailed records of all proceedings
Post-Restoration Compliance
- File all pending returns and statements
- Regularize all statutory compliances including professional tax obligations
- Update company records and databases
- Inform banks, creditors, and business partners
- Implement robust compliance systems
Best Practice: Consider engaging a compliance professional to ensure ongoing adherence to statutory requirements and prevent future strike-off situations. For specialized registrations like LMPC registration, proper documentation and compliance are crucial for maintaining active status.
10. Conclusion
Company restoration under Section 252 provides a valuable opportunity for struck-off companies to regain their legal status and resume business operations. However, the process is complex and requires careful navigation of legal requirements, documentation, and compliance obligations.
Success in restoration depends on thorough preparation, professional expertise, and genuine business justification. Companies seeking restoration should act promptly, maintain transparency, and ensure full compliance with NCLT conditions and statutory requirements.
For businesses facing strike-off situations, prevention remains better than cure. Implementing robust compliance systems, regular monitoring of statutory obligations, and proactive management of corporate affairs can help avoid the need for restoration proceedings altogether. For comprehensive compliance guidance and resources, visit ComplianceGyan.in.
For the latest updates on company restoration procedures and requirements, visit the official MCA website and consult with qualified legal professionals.
Disclaimer
This article is for informational purposes only and should not be construed as legal advice. The information provided is based on the Companies Act 2013 and related rules as understood at the time of writing. Laws and regulations are subject to change, and specific situations may require different approaches.
Readers are strongly advised to consult with qualified legal professionals, Company Secretaries, or chartered accountants before taking any action based on the information provided in this article. The author and ComplianceGyan.in disclaim any liability for actions taken based solely on the content of this article.
While every effort has been made to ensure accuracy, the author makes no warranties regarding the completeness, reliability, or timeliness of the information presented. Always verify information with official sources and seek professional guidance for specific legal matters.