Closing a ltd company | Guide on Fast Track Exit Scheme - All You Need to Know

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How to close a limited company Procedure for
winding up a limited company THE MOST
IMPORTANT BENEFITS OF FAST TRACK EXIT SCHEME ARE
appointment of to the defunct ion 560 of
the , 2013 and the
On this guide, we are going to touch the
following topics- ? Introduction for Fast
Track Exit Scheme ? Who shall opt for Fast
Track Exit Scheme ? Consequences of not
opting for FAST TRACK EXIT SCHEME ? Which
company is ineligible for filing under Fast Track
Exit Scheme ? Which Company is eligible for
filing under Fast Track Exit Scheme ?
Procedure to be FOLLOWED FOR FAST TRACK EXIT
SCHEME closing a ltd company INTRODUCTION OF FAST
TRACK EXIT SCHEME It is a fast process
to close a company without adopting a
len for company closure by passing a special
resolution, applying to high court, liquidator
and so on which may take not less than six months
and also it is process which is not affordable to
small companies and sick companies. issued
Guidelines for Fast Track Exit Mode to
give the opportunity companies to get their
names struck off from the register under
sect Companies Act, 1956. As no separate
procedure is given by newly introduced
Companies Act circular issued in the year 2011
under Companies Act, 1956 is still in forc of the
company.
gthy procedure
a very expensive The Ministry has
e for the closure
THE MOST IMPORTANT BENEFITS OF FAST TRACK EXIT
SCHEME ARE AS BELOW
complying with out paying huge umentation.
ot generating any revenue nor on to close
company with an be closed without huge doc
rative Companies which are n filing, have got
a new opti ees. process in which company c
1. The inope its annual additional f 2. It is
a short
3. It is a time-saving WHO SHALL OPT FOR FAST
TRACK EXIT SCHEME The small companies which
are ? Inoperative ? Not complying with
any annual or other filings with ? Operating
in loss and lost hope of making profit ? The
company does not have any object or
continue Shall apply to Registrar of Companies
for the closure of CONSEQUENCES OF NOT OPTING FOR
FAST TRACK
Registrar of Co
Registrar of Companies
? The company does not have any object or
continue with it
Shall apply to Registrar of Companies for the
closure of the company.
CONSEQUENCES OF NOT OPTING FOR FAST TRACK EXIT
SCHEME
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The above type of companies (given in the last
slide) which does not choose Fast Track
Exit Scheme, could suffer following
consequences There is a very strong possibility
that, for the companies which are inoperative and
not carrying on any mandatory annual compliances
under Companies Act, 2013, could receive notice
from Registrar of Companies, under which
jurisdiction the Registered office of the company
falls, for not complying with annual filing. In
such a situation, Directors of the company shall
have to appear before the court and explain the
reason for non-filing of documents with
Registrar of companies.After that, the company
will have to complete their annual filing and
other compliances and present a proof of such
filing to the court. On non-complying with
the directions of the court, directors may
have to suffer huge penalties, imprisonment,
etc. PROCEDURE TO BE FOLLOWED FOR FAST TRACK EXIT
SCHEME The Company shall file an application in
prescribed form FTE online with the Registrar of
with fees of Rs. 5000/- ATTACHMENTS ? In
affidavit which should be sworn by each of the
existing director(s) of the company before a
First Class Judicial Magistrate or Executive
Magistrate or Oath Commissioner or Notary, to the
effect that the company has not carried on any
business since incorporation or that the company
did some business for a period up to a date
(which should be specified) and then discontinued
its operations, as the case may be ? Indemnity
Bond, duly notarized to be given by every
director individually or collectively, to the
effect that any losses, claim and liabilities on
the company, will be met in full by every
director individually or collectively, even after
the name of the company is struck off the
Register of Companies ? Statement of Account
duly certified by CA in practice or auditor of
the company. ? Board resolution showing
authorization for filing the form. ? In case,
the application in Form FTE, is not being
digitally signed by any of the director or
Manager or Secretary, a physical copy of the Form
duly filled in, shall be signed manually by a
director authorized by the Board of Directors of
the company and shall be attached with the
application Form at the time of its filing
electronically ? In case, the applicant name is
not available in the database of directors
maintained by the Ministry, the application
shall be accompanied by certificate from a
Chartered Accountant in whole time practice or
Company Secretary in whole time practice or Cost
Accountant in whole time practice along
with their membership number, certifying that
the applicants are the present directors of the
company. In such cases, the applicants shall not
be asked to file Form-32 and Form DIN-3. ? The
company shall disclose pending litigations if
any, involving the company while applying under
FTE. ? If the pending prosecutions are only
for non-filing of Annual Returns and
Balance Sheet such application may be accepted
provided the applicants have already filed the
compounding application. However, steps for final
strike of the name of the company
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will be taken only after disposal of
compounding application by the competent
authority. WHICH COMPANY IS INELIGIBLE FOR FILING
UNDER FTE SCHEME ? Listed companies ?
Companies that have been de-listed due to
non-compliance of Listing Agreement or any other
statutory Laws, ? Companies registered under
section 25 of the Companies Act, 1956 or section
8 of Companies Act, 2013 ? Vanishing
companies ? Companies where inspection or
investigation is pending or any proceedings
are pending in the court ? Companies against
which prosecution for a non-compoundable offense
is pending in court ? Companies accepted public
deposits which are either outstanding or the
company is in default in repayment of the same ?
Company having secured loan ? Company
having management dispute ? Company in
respect of which filing of documents have
been stayed by court or Company Law Board
(CLB) or Central Government or any other
competent authority ? The company having dues
towards income tax or sales tax or central excise
or banks and financial institutions or any other
Central Government or State Government
Departments or Authorities or any local
authorities. WHICH COMPANY IS ELIGIBLE TO APPLY
UNDER FAST TRACK EXIT SCHEME 1. Company having
NIL assets and liabilities 2. Company
inoperative since the date of Incorporation or 1
Year or more 3. The company has closed down its
bank account. PROCEDURE TO BE ADOPTED BY
REGISTRAR OF COMPANIES IN THIS MATTER ? The
Registrar of Companies, on receipt of the
application, shall examine the same and if found
in order, shall give a notice to the
company under section 560(3) of the
Companies Act, 1956 by email to its e-mail
address intimated in the Form, giving thirty
days time, stating that unless cause is shown to
the contrary, its name be struck off from the
Register and the company will be dissolved ?
The Registrar of companies shall put the name of
applicant(s) and date of making the
application(s) under fast track exit
mode, on daily basis, on the MCA
portal http//www.mca.gov.in/, giving thirty
days time for raising an objection, if any, by
the stakeholders to the concerned Registrar ?
In case of company(s) like Non-Banking Financial
Company(s), Collective Investment Management
Company(s) which are regulated by other
Regulator(s) namely RBI, SEBI, the Registrar of
Companies, at the end of every week, shall send
intimation of such companies availing fast track
exit mode during that period to the concerned
Regulator(s) and also an intimation in respect of
all companies availing fast track exit mode
during that period to the office of the Income
Tax Department giving thirty days time for their
objection, if any
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EXPLANATION ? Non-Banking Financial
Company means a company as defined in clause (f)
of section 45-I of the Reserve Bank of India Act,
1934 ? Collective Investment Management
Company means the company as defined in
clause (h) of sub-regulation of 2 of Securities
and Exchange Board of India (Collective
Investment Companies) Regulations, 1999 ? The
Registrar of Companies immediately after passing
of time given in sub-part (a) to (c) of this Para
and on being satisfied that the case is otherwise
in order, shall strike its name off the Register
and shall send a notice under sub-section (5) of
section 560 of the Companies Act, 1956 for
publication in the Official Gazette and the
applicant company shall stand dissolved from the
date of publication of the notice in the
Official Gazette If you have any question or
query please comment in the comment in the
comment box below or contact us. We would love to
help you. closing a ltd company
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