Faq's on fast track exit mode

1. What is Fast Track Exit mode?

Fast Track Exit mode is introduced by Ministry of Corporate Affairs for giving opportunity to non-operating companies for getting their names struck off from the records of Ministry of Corporate Affairs. Fast Track Exit mode is an easy mode of closing non-operating companies at cheaper cost with lesser formalities under section 560.

2. What is defunct Company?

Defunct Company means a Company registered under the Companies Act, 1956 (hereinafter referred to as “the Act”) which is not carrying over any business activity or operation:

• Since incorporation or is not carrying over any business activity or operation for last one year before making application,
• having Nil assets & liability,
• Which has ‘active’ status or identified as the ‘dormant’ Company by the Ministry.

3. What is Vanishing Company?

Vanishing Company means a Company which fulfills following conditions:-

• A Company registered under the Act,
• Listed on Stock Exchange,
• Has failed to file its returns with Registrar of Companies (hereinafter referred to as “ROC”) and stock exchange for consecutive period of 2 years,
• Is not maintaining its registered office at the address notified with ROC or Stock Exchange,
• None of its directors are traceable.

4. Which Companies can apply under fast track exit mode?

Following Companies can apply under fast track exit mode for striking off its name from register of Registrar of Companies:-

a. Companies which are not operating or not carrying on any business since last one year from the date of application or,

b. Companies which are not operating or not carrying on any business since incorporation and,

c. Company having Nil assets & liability.

However, all companies which want to apply shall have ‘active’ or ‘dormant’ status on MCA portal.

5. Which Companies cannot apply under fast track exit mode?

Following Companies cannot apply under fast track exit mode:-

1. Listed Companies
2. De-listed Companies due to non- compliance of Listing Agreement or any other statutory Laws
3. Section 25 Companies
4. Vanishing companies
5. Companies where investigation / inspection ordered and yet to be taken up or pending
6. Companies where order u/s 234 has been issued by ROC and reply is pending
7. Companies where prosecution for a non-compoundable offence is pending in court
8. Companies accepted deposits which are outstanding or default in repayment
9. Company having secured loan
10. Company having management dispute
11. Company for which filing of docs have been stayed by court or CLB or CG or any other competent authority
12. Company having dues of Income tax / sales tax / central excise / banks / financial institutions / CG / SG / other local authorities
13. Companies not having active / dormant status on MCA portal

6. Which form is required to be filed with ROC for making application under fast track exit mode?

Form FTE is required to be filed with ROC for making application under fast track exit mode.

7. Which documents are required to be attached to the e-form FTE?

Following documents are required to be attached to e-form FTE:-

• Statement of Accounts (duly signed by one MD / Director / Secretary and Certified by Auditor of the Company or any other Chartered Accountant)
• Copy of Board Resolution authorizing directors to file application
• Indemnity Bond duly notarizes and signed by all directors
• Affidavit duly notarizes and signed by all directors (separately)
• Physical Copy of e-form FTE duly signed by Director / MD / Manager / Secretary if no DSC is available
• Attested copy of PAN / Passport (in case DIN is not available)
• NOC from Govt (if applicable)
• Any other optional attachment

8. What is the process for filing application under fast track exit mode?

Following is the process for filing application under fast track mode:-

• A Company eligible to apply for striking off its name needs to apply to Registrar of Companies in Form FTE
• The Form FTE, should be filed electronically on the Ministry of Corporate Affairs portal namely www.mca.gov.in and by making payment of Rs. 5000/-;
• In case, the digital signature of any of the director or Manager or Secretary is not available for affixing to Form FTE, a physical copy of the Form duly filled in, shall be signed manually by a director authorised by the Board of Directors of the Company and shall be attached with the application Form at the time of its filing electronically;
• Form FTE, shall be certified by a Chartered Accountant in whole time practice or Company Secretary in whole time practice or Cost Accountant in whole time practice;
• Any pending litigations involving the Company should be disclosed while applying under this Fast track exit mode;
• Attachment documents as stated in question no. 7
• Upload Form FTE with MCA.

9. What process ROC will initiate after filing application under fast track exit mode?

ROC will initiate following process after filing application under fast track:-

• The Registrar of Companies 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 e-mail on 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 www.mca.gov.in, giving thirty days time for raising 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, after the Fast track exit mode commences, 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;
• The Registrar of Companies immediately after passing of time given in above sub-paras and on being satisfied that the case is otherwise in order, shall strike its name off the Register and shall send notice under Section 560 (5) of the Companies Act, 1956 for publication in the Official Gazette and the applicant Company under this Fast track exit mode shall stand dissolved from the date of publication of the notice in the Official Gazette.

10. Is there any stamp duty required to be paid on any documents?

Stamp Duty is required to be paid on Affidavit and Indemnity Bond as per respective State Stamp Act. As per Bombay Stamp Act, (Maharashtra) affidavit should be on non-judicial stamp paper of Rs. 100/- and Indemnity Bond on non-judicial stamp paper of Rs. 200/- or franking of equivalent value for both.

11. Is there any Attestation / Notary required on Affidavit and Indemnity Bond?

An affidavit 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. An Indemnity bond shall be duly notarized.

12. How many directors etc. are required to sign various documents required to be filed with Registrar of Companies?

Signatures of Managing Director / Director / Secretary etc. is required as follows:-

13. Is Director Identification Number (DIN) mandatory for filing application with ROC?

DIN is not mandatory for Managing Director or Director of the Company making application under fast track mode. Details of Managing Director or Director can be filled up for inserting Permanent Account Number (PAN) or Passport Number instead of DIN.

14. Is DSC of Director is mandatory for filing online application with ROC? Or can a Company file application with ROC without having DIN and DSC of any of its directors?

DSC of Director is not mandatory for filing online application i.e. e-form FTE with ROC. If DSC is not available take the print out of e-form FTE and obtain manual signature of director authorized to sign it as per Board Resolution and attach the same to e-form FTE.

15. Which information is required to fill up the application (Form FTE) and other documents required to be attached to it?

Following information is required to fill up the application (e-from FTE):

1. Information for Affidavit / Indemnity Bond:-

• Date of Board Meeting for passing resolution for closure under the Fast track exit mode
• Name of the Company
• CIN
• Registered Office Address
• Email ID
• Date of Incorporation
• Status of the Company i.e listed / delisted / Regd with SEBI / NBFC / Venture Capital Company
• Copy of DIN application or DIN number else PAN copy or Passport copy. (Information about Director / MD / Manager / Secretary (DIN is not compulsory- options- PAN / Passport)
• Copy of Memorandum of Association for Main object of the Company
• Brief Descripttion of main business last carried out by the Company
• Any litigations pending against or involving Company (Brief details)
• Details of Assets and Liabilities (Statement of Accounts not older than 1 month of filing Application)

2. Information for Affidavit / Indemnity Bond:-

a. Copy of Pan / Passport as stated above plus present and permanent residential address proof if passport is not available or update.

b. How many years the Company is not operating with reasons

c. Confirmation about no dues with Income Tax / Sales Tax / Central Excise / Bank / Financial Institution / Govt or Local authority

16. Can a Company against which litigation(s) are pending can go for the fast track exit mode?

Fast track exit mode does not mention anywhere that a Company against which litigation is pending cannot apply for striking off the name of the Company from the Register maintained by the ROC. Hence, a Company against which litigation is pending can apply under fast track mode. Further, details of pending litigations are required to be filled up in e-form FTE which has a reference in affidavit format too.

17. Can a Company pending income tax / sales tax / central excise / other Govt dues go for the Fast track exit mode?

No. A Company which has not paid income tax / sales tax / central excise / other Govt dues cannot make application under fast track exit mode. Format of affidavit mentioned in the form FTE and e form FTE requires confirmation from directors that there are no dues as mentioned above are pending.

18. Whether NOC from Income Tax / Sales Tax / Central Excise / Other Govt authorities required for filing application with ROC?

No. NOC is not required from Income Tax / Sales Tax / Central Excise / other Govt authorities. But all directors need to confirm that there are no dues pending against Company with any such authorities. And MCA will send letter confirming that Income Tax has no objection for striking off the name of the said Company.

19. Is email address appearing in Master Data needs to be updated before filing application under Fast Track Exit Mode?

There is no need to update Master Data with current email address. The email address mentioned in e-from FTE will not be pre-filled by MCA. It can be typed by the applicant.

20. In case status of the Company is non-active on MCA portal, can it make active and apply under fast track exit mode?

If the ROC has sent notices to the Company under Section 560 (1) or 560 (2) or 560 (3) of the Act, then such Company needs to make an application to the Registrar of Companies, in writing, that it proposes to strike off the name of the Company by following the procedure under Fast Track Exit mode and submit the documents requisite under fast track exit mode. Further procedure will be initiated by the Registrar in this regard.

21. What are the liabilities of directors after striking off the name of the Company by ROC?

Following are the liabilities of directors after striking off the name of the Company by ROC:-

(a) to pay and settle all lawful claims arising in future after the striking off the name of the Company.

(b) to indemnify any person for any losses that may arise pursuant to striking off the name of the Company.

(c) to settle all lawful claims and liabilities which have not come to notice even after striking off the name of the Company.

22. Whether Companies having some current assets or bank balance can apply under Fast track exit mode?

No. There is requirement of having NIL Balance Sheet.

23. What is the effective date of closure of Company?

ROC will send notice (containing list of companies struck off) under section 560 (5) of the Act for publication in the Official Gazette. The Applicant Company under fast track exit mode shall stand dissolved from the date of publication of the notice in Official Gazette.

24. How old can be the Statement of Accounts which is required to be attached to application?

Statement of Accounts to be attached to e-form shall not be older than 30 days preceding the date of application in e-Form FTE.

25. What if the RBI / SEBI / IT / other GOVT department raises objection for Striking off the name of the Company?

The applicant Company can reply to the objections raised by RBI, Income Tax Department or any other department. There is no time period specified by ROC for giving reply by the applicant Company. If RBI, Income Tax or the relevant Department is satisfied with the reply given by the applicant Company, ROC will allow the striking off name of such Company. However, the Company needs to note that if the validity of the Fast track exit mode is expired before resolving all the queries, then the procedure fast track may not be undertaken by the ROC.

26. Is there remedy to the Company if any of the stakeholders raises objection for Striking off the name of the Company?

If any of the stakeholders raises objection, the applicant Company can reply to that. There is no time period for giving of reply by the applicant Company. However, the applicant Company needs to note that if the validity of the Fast track exit mode is expired before resolving all the queries, then the procedure under fast track exit mode may not be undertaken by the ROC.