Closing private limited company when other Director is not responding

686 votes

Dear Client: There is a striking out provision in Company's Act and you can use the same to strike out the company name in the register. We can assist you take that route. Do let me know if you need assistance. Thanks.

Advocate Dinesh Jotwani LawRato

919 votes

By taking into consideration the facts provided by you, we need to check a lot of parameters before we proceed with any recourse. Firstly, it seems that the company has not held any meeting during the year and if so then we need to ascertain the vacancy of the directors arising consequently. Acting as a director subsequent to vacation of office as a director is a punishable offence. Imprisonment upto 1 year or with a fine upto Rs. 5 lacs (minimum fine of Rs. 1 lac) or with both.

Secondly, the dates for AGM are due. If AGM is not held in time, then there is a huge fine of Rs. 1 lakh and a subsequent fine of Rs. 5000/- for each day of default. Since the other director/ shareholder is not in India, there is bound to be a default.

Thirdly, non filing of financial statements and annual returns in itself is a default and huge penalties have been prescribed. For companies - Rs. 1000/- each day (maximum upto Rs.10 lacs) and for director – imprisonment upto 6 months or with fine upto Rs. 5 lacs (minimum fine of Rs. 1 lac) or with both.

Strike of is not possible in your case, since the conditions for the same are not fulfilled in light of the facts of your case. So far as winding up is concerned, it is the last recourse that should be taken, keeping in mind that the penalties and liabilities would continue even after winding up. Also, there is a lot of time and cost involved in the process of winding up.

Lastly, as per new guidelines issued by the MCA, if your company is in default due to annual filing, then Directors associated with that particular company automatically fall in defaulter category. Apart from that, DIN will not work of those directors who failed to file returns with the ROC. Ministry has blocked the DIN of defaulters.

Kindly provide more facts/information/details so as to ascertain your exact position and for further advice/action on your issues.

Advocate S Shiva LawRato

947 votes

You can do following in these contexts -
1. You can send him a notice asking for his final decision and timeline of the compliance of those decisions.
2. If he do not respond back to your notice then by way of private placement you can reduce his shareholding to minimum level and then can operate the company on your own.
3. You can introduce a new director in the company to work on the affairs of the company along with you. And then both of you can remove him from the post of directorship by calling a board meeting.
4. If the situation are of worst nature then you can directly approach the NCLT for dilution of opposite person shares, his ousters from the company or for the closure of the company as per the new rules available under the law

Advocate Pulkit Prakash LawRato