Struck Off Companies explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A counterparty that no longer legally exists is still on the books of someone. This disclosure asks whose books, for how much, and on what relationship.
The requirement
Where the company has any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956, it shall disclose the name, the nature of transactions, the balance outstanding, and the relationship — across five prescribed categories:
- Investment in securities
- Receivables
- Payables
- Shares held by struck off company
- Other outstanding balances (to be specified)
The company shall use the prescribed format in grouping the nature of its transactions with each struck off company, and shall utilise and specify as part of "other outstanding balances" any other transactions that do not fit into the prescribed categories.
Identifying struck off companies
The name is that of a company struck off by the respective Registrar of Companies, such information being available vide public notice (Form No. STK-7) under section 248 of the Act on the website of the Ministry of Corporate Affairs — struck off at any time during the reporting period, or in an earlier reporting period if any balance in respect of the transactions is outstanding at the period end.
Gross, not net. The balance outstanding is the gross carrying amount, without netting the provision for doubtful debts or impairment loss allowance. A receivable from a struck off company is a natural candidate for full provision — and without this rule, providing against it in full would remove it from the table.
Nil balances still disclosed. If any transaction with a struck off company has happened during a financial year and been settled, reversed or squared off during the same financial year such that the balance outstanding is NIL as at the end of the reporting period, the company is required to disclose those transactions as well, in the same prescribed format.
Together, the two rules mean neither a provision nor a year-end settlement makes dealings with struck off companies disappear from the accounts.
The relationship column for struck off companies
The company shall disclose the relationship with the struck off company evaluated as per the definition of "related party" under section 2(76) of the Act. And on timing: for the purpose of this disclosure, such relationship between the company and the struck off company should exist as at the respective balance sheet date.
The relationship test therefore differs from the transaction test — transactions are captured across the year, but the relationship is assessed at the balance sheet date.
The restoration exception
The details should not be included for those companies whose names were struck off during the financial year but an order had been passed by any adjudicating authority (for example, NCLT) restoring the company's name before approval of the financial statements.
Restoration puts the counterparty back into legal existence, and if it happens before approval, the reason for the disclosure has gone before the accounts are issued.
The illustrative format for struck off companies
| Name of the struck off company | Nature of transactions | Balance outstanding — current period | Relationship — current period | Balance outstanding — previous period | Relationship — previous period |
|---|---|---|---|---|---|
| Investment in securities / Receivables / Payables / Shares held by struck off company / Other outstanding balances |
Common mistakes
- Netting the balance against the provision made on it.
- Omitting transactions squared off before the year end.
- Disclosing a company whose name was restored before approval.
- Assessing the relationship at the transaction date rather than the balance sheet date.