closing a limited company | closing a ltd company - Venture Care

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How to Close a limited Company in India with
Fast Track Mode Venture care
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This a part of bringing good governance in the
country, Government of India is now on the way to
enforce strict compliance of law on all the
companies and it may impose huge additional fees
and penalties which may even lead to imprisonment
to officer in default which includes Directors.
The Recently implemented Companies Act, 2013 has
brought about a number of stringent provisions
for its implementation in a legible manner. There
are some situations in which directors of a
company may have one of the several options to
Close it down or apply for a status of a Dormant
Company. Those include ? Directors of the
company not able to run the business in a
profitable manner. ? Business conditions are not
favorable and the company does not have many
funds to sustain. ? The company has suffered huge
loss due to accident or natural calamity or any
other reason which is neither recoverable nor
sustainable. ? Government support is very
nominal to sustain in the industry. Though
directors may have some other options such as go
for the revival of the company, restructuring,
infusion of funds, however, if such other
options are not feasible or not available or not
sufficient for revival, the last option available
to the company is to CLOSE IT DOWN or Apply for a
status of a Dormant Company. The Practical View
of closing down or obtaining Dormant Status is
given below CLOSING A LTD COMPANY Under which
enactment, Company may be closed? Section 560
of Companies Act, 1956 and General Circular
36/2011 (The procedure collectively called as
Fast Track Exit Mode) As section under Companies
Act, 2013 which prescribes the procedure to close
a company is described is not yet notified,
therefore, the old procedure under 1956 Act is in
force. ELIGIBILITY FOR APPLYING FOR FTE MODE? ?
Defunct Company Company which has ? Nil assets
and liabilities ? Not commenced any business or
activity since incorporation or Not carrying on
any business operation since last one
year ? Defaulting Company A company which
does not file the annual returns and/or
annual financials for any financial
year(s) PROCEDURE TO BE ADOPTED ? Close all
bank accounts, Cancel all Registrations with the
govt. authorities ? Hold a Board Meeting and get
closure of company approved ? Get Notarized
Affidavits from all directors (in Annexure
A), Indemnity from all Directors (in Annexure
B) and Statement of Accounts showing Assets and
Liabilities
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NIL Certified by Chartered (in Annexure C)In
Affidavit, every Director shall mention reason
for closure of company or not carrying on
business ? Fill form FTE along with scanned
copies of the above-signed documents and ID
and Address proofs of all Directors, Affix
Digital Signature of any of the Directors and
certify by any of professional. ? Upload form
with MCA site and after getting the form approved
by relevant ROC, the name of the company is
uploaded on the website of MCA for 30 days. ? If
no objection is received from any person, ROC
orders striking off the name of the company from
its FEES FOR FILING OF FORM FTE Rs.
5000/- OBTAINING THE STATUS OF DORMANT
COMPANY This is another feasible option
for Companies which do not have any
significant transactions presently and are not
carrying on any business, however, it cannot be
closed due to the holding of assets to or have
hopes for future expansion. New Companies Act
enacted in 2013, under section 455, it has
bought a concept of Dormant Company A ?
Where a company is formed and registered under
this Act for a future project or ? To hold an
asset or intellectual property and ? has no
significant accounting transaction OR B AN
INACTIVE COMPANY ? which has not been carrying
on any business or operation or ? has not made
any significant accounting transaction during the
last two financial years or ? has not filed
financial statements and annual returns during
the last two financial years Significant
accounting transaction means any transaction
other than ? payment of fees by a company to
the Registrar ? payments made by it to fulfill
the requirements of this Act or any other law ?
allotment of shares to fulfill the requirements
of this Act and ? payments for maintenance of
its office and records. may make an
application to the Registrar in such manner
as may be prescribed for obtaining the
status of a dormant company. WHY SHOULD A COMPANY
OBTAIN A STATUS OF A DORMANT COMPANY?
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1. Reduction in compliance costs After
obtaining Dormant Status, only one form i.e.
MSC 3 indicating financial position of the
company duly audited by Chartered Accountant in
practice need to be filed along with form fees as
may be prescribed with ROC within 30 days of the
end of financial year. Due to this, the
compliances and forms to be filed by the company
are reduced to a large extent, which gives
relaxation in government fees and professional
fees. Also, Dormant Company is not considered for
the purpose of counting number of Companies for
Statutory Audit. However, this does not give any
relief in filing in the case of any change in
shares, directors etc. The company needs to file
the return or intimation as a normal company. 2.
Exemptions ? No need to hold a board meeting
in each quarter, it can hold a board meeting in
each half with at least 90 days gap. ?
Provisions of rotation of auditor do not apply. ?
No need to have Cash Flow Statement PROCEDURE ?
Hold Board Meeting to call Extraordinary General
Meeting ? Obtain Certificate from Chartered
Accountant ? Obtain Approval of Members by way
of special resolution ? Obtain Auditors
Certificate ? Statement of Affairs duly
certified by a Chartered Accountant or Auditor(s)
of the company ? Latest Financial Statement and
Annual Return of the Company, in case the same
are filed with Registrar ? Certificate regarding
no dispute in the management or ownership ?
Consent of lender, if any loan is outstanding ?
File form MGT 14 for special resolution ? File
Form MCS-1 with the registrar ? Form MCS 1 in
STP form, therefore it is auto approved. ARE
THERE ANY CONDITIONS FOR APPLYING FOR DORMANT
STATUS? ? No inspection, inquiry, or
investigation or prosecution pending in any court
against the company ? No public deposits or
interest thereon outstanding for payment ? No
outstanding loan, secured or unsecured. If
there are unsecured loans then the consent
of the lender should be obtained and enclosed
along with the form ? No dispute or difference
amongst the management or promoters of the
company ? No outstanding tax dues either to
central or state government or local
authorities ? No defaulted in payment of its
workmens dues ? Not a listed company If you
have any query please comment in the comment box
below or Contact us. We would love to help you.
Closing a Ltd Company
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