What is Fast Track Exit (FTE) Mode?
Ministry has issued Guidelines for "Fast Track Exit (FTE) Mode" to give opportunity to the defunct companies to get their names struck off from the register under Section 560 of the Companies Act, 1956 in time bound manner.
What is the date of implementation of these Guidelines?
The Guidelines will be implemented with effect from 3rd July, 2011.
What are the main criteria for making an application under FTE?
There are two main criteria:-
a. The company applying under FTE should not have any asset and liability.
b. The company should not have commenced any business activity or operation since incorporation or at least one year must has been passed since last business activity or operation.
Can a dormant company apply under FTE?
Yes, any company, which has been identified as dormant by the Ministry of Corporate Affairs, can apply under FTE. Such companies need not to file Form 61 for normalizing.
Can a company identified as defaulting company apply under FTE?
Any company, which has not filed its statutory documents i.e. Balance Sheet and Annual Return for any of the financial year 2006-07, 2007-08, 2008-09 and 2009-10, has been identified as defaulting company. Directors of such companies are debarred from filing any document till they make the default good. Such defaulting companies can apply under FTE.
Which are the companies to whom FTE is not applicable?
The guidelines does not inter-alia cover the listed companies, companies that have been de-listed due to non-compliance of listing agreement or any other statutory Laws, section 25 companies, vanishing companies, companies under inspection/investigation, companies against which prosecution for a non-compoundable offence is pending in court, companies having outstanding public deposits or secured loan or dues towards banks and financial institutions or any other Government Departments etc. or having management dispute or company in respect of which filing of documents have been stayed by court or CLB or Central Government or any other competent authority.
What is the procedure for making application for striking off the name under FTE?
The Company desirous to get its name struck off from the Register shall file an application in the prescribed Form FTE online with the Registrar. The form shall be accompanied with an affidavit, an indemnity bond, statement of account duly certified by a Chartered Accountant in practice or auditor of the company and copy of board resolution showing authorization for filing the form.
Is there any fee for filing Form FTE?
Yes, applicant is required to file an application in the prescribed Form FTE along with prescribed fee of Rs. 5,000/-
Who can sign Form FTE? Whether digital signature of authorised signatory of the company is a mandatory requirement for filing the Form FTE?
a. In case there are active signatories of the company existing in the MCA21 system, then the Form shall have to be mandatorily digitally signed by the authorised signatory of the company.
b. In case no active signatories are existing in the MCA 21 system, then a physical copy of the Form duly filled in, shall have to be signed manually by a director authorised by the Board of Directors of the company and shall be attached with the Form. Such form will be uploaded by the practicing professional (i.e. CA/CS/CWA), who has certified the form.
In such case, the application shall be accompanied by certificate from a CA/CS/CWA in whole time practice alongwith their membership number, certifying that the applicants are present directors of the company. In such cases, the applicants shall not be asked to file Form 32 and Form DIN.
In all cases, certification by a practicing professional (i.e. CA/CS/CWA) is mandatory.
What will happen, if there is pending prosecution against the company and its directors?
If the pending prosecutions are only for non-filing of Annual Returns under section 159 and Balance Sheet under section 220 of the Act, 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 will be taken only after disposal of compounding application by the competent authority.
How the foreign nationals will get their Indemnity Bond and Affidavit notarized?
Foreign nationals and NRIs may get their Indemnity Bond and Affidavit notarized as per their respective country’s law.
In case any stakeholder has any objections to the Striking off the name of any company from the Register, what shall be done in such case?
List of applications filed under FTE will be available on the portal. In case any stakeholder has any objections to the Striking off the name of any company, he/she may raise such objection by email/letter with the concerned ROC Office within 30 days from the date of filing Form FTE by the company.
Compiled By: Kumar A. Ranjan
Tags Corporate Law