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CS Executive · Company Law and Practice · Dormant Company

Mehta Pvt Ltd, which did no business for the last two financial years and never applied for dormant status, has extinguished all liabilities. Its members pass a special resolution to seek removal of its name under section 248(2). Which statement is correct?

The company may itself apply to the Registrar after extinguishing liabilities, backed by a special resolution or 75% consent by paid-up capital, and the Registrar then issues public notice. A prior Registrar notice is unnecessary, and directors' and members' liabilities continue after dissolution.

  1. AThe company may apply to the Registrar, who must then cause a public notice to be issued in the prescribed mannerCorrect
  2. BRemoval is possible only if the Registrar first sends a notice under section 248(1)
  3. CThe application is invalid because a company cannot apply on the ground of not carrying on business
  4. DDirectors are freed from all liability once the name is removed

Explanation

Section 248(2) lets a company, after extinguishing all liabilities, apply by special resolution or 75% consent in paid-up capital on any of the grounds in sub-section (1), and the Registrar then issues public notice. The Registrar's own notice is not a precondition. Under 248(7), liability of directors and members continues as if the company had not been dissolved, so the last option is wrong.

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