Fast Track Exit u/s 560 of Companies Act, 1956

Background:

The Companies which are not carrying on business activities or operations for more than a year they can opt for Fast Track Exit mode from the records of the Registrar of Companies.

Fast Track Exit mode for defunct companies u/s 560 of  Companies Act, 1956

General circular No 36/2011 dated 7th June 2011 issued by Ministry of Corporate affairs.

Which Companies can be closed under FTE ? :

 For Fast Track Exit mode (FTE), it is stated as under:

1. Any company will be called as “defunct company” for the purpose of these guidelines, which has nil asset and liability and

a. has not commenced any business activity or operation since incorporation; (or)

b. is not carrying over any business activity or operation for last one year before making application under FTE.

2.  Any defunct company which has active status or identified as dormant by the Ministry of Corporate Affairs, may apply for getting its name strike off from the Register of Companies

Facility not available to following companies:

• Listed companies;

• Companies that have been de-listed due to non-compliance of Listing Agreement or any other statutory Law,

• Companies registered under section 25 of the Companies Act, 1956;

• Vanishing companies;

• Companies where inspection or investigation is ordered and being carried out or yet to be taken up or where completed prosecutions arising out of such inspection or investigation are pending in the court;

• Companies where order under section 234 of the Companies Act, 1956 has been issued by the Registrar and reply thereto is pending or where prosecution if any, is pending in the court;

• Companies against which prosecution for a non compoundable offence 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;

• 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.

Information Required

• Details of Managing Director, Directors, Manager and Secretary of the company
• DIN numbers of all the directors*
• DSC of any one director**
• PAN copy of all the Directors/Passport copy for foreign Directors
• Address proof of all the Directors (Passport/ DL / Election ID card / Recent 6 months bank statement with first sheet) please note proof should not be more than 2 months old
• COI, MOA & AOA
• Pending litigations , if any, involving the company***
• Listing status, If listed , copy of order of delisting from concerned Stock Exchange
• If company is Collective Investment Management Company/ Plantation Company/Venture Capital company
• SEBI registration no , if any.
• If company is NBFC , RBI registration no .

 * In case, the applicant name is not available in the database of maintained by the Ministry, the application shall be accompanied by certificate from a CA/CS/CWA along with 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 3.*

** 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 authorised by the Board of Directors of the company and shall be attached with the application Form at the time of its filing electronically.**

*** If the pending prosecutions are only for non-filing of Annual Returns under section 159 and Balance Sheet under section 220 of the Companies Act, 1956, 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.

Documents required

1) Affidavit annexed at Annexure- A,  

- (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.)

2) Indemnity Bond duly notarized annexed at Annexure – B

- (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;)

In case of foreign nationals and NRIs, Indemnity Bond and Affidavit may be notarized as per their respective country’s law

3) Statement of Accounts,

-  (prepared as on date not prior to more than one month preceding the date of filing of application in Form FTE, duly certified by a statutory auditor or Chartered Accountant in whole time practice, as the case may be. )

4) Certified copy of Board resolution showing authorisation given for filing application under this mode

5) Confirmation by Directors as explained above .

After Filing of the Form with Registrar of Companies:

1.The ROC on receipt of the application shall examine the same and if found in order, shall give notice to the Company by E-Mail giving 30 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.

2. The Registrar of companies shall put the name of Company and date of making the application under fast track exit mode on the MCA portal giving thirty days time for raising objection, if any, by the stakeholders to the concerned Registrar.

3. The Registrar of Companies after passing of the 30 days if no objection is received shall publish in the official gazette that from this date Company is dissolved.

4. Within 20 years from the date of striking off the Name of the Company any stakeholder of the Company can request the Registrar for recording the Name of the Company again the Records of the Registrar.

Note:

1. Statement of Account and Board Resolution should not be later than 30 days from the date of filing of FTE Form with the Registrar.

2.The whole FTE process should be completed with 30 days from the date of signing of Board Resolution and Statement of Accounts.