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Fast Track Exit mode for Defunct Companies under section 560 of the Companies Act 1956

A number of Companies registered under the Companies Act 1956 are inoperative since incorporation or commenced business but became inoperative or defunct later on due various reasons.

Thus, the Registrar of Companies, under section 560 of the Companies Act 1956, may strike off the name of such Companies from the Register of Companies subject to satisfaction of certain conditions.

Hence, Fast Track Exit scheme was introduced in 2011 in order to expedite the aforementioned process.

Defunct Company defined:

a. A Company which has NIL Assets and Liabilities and has not commenced any business since incorporation, or

b. A Company which has NIL Assets and Liabilities and has not been carrying on any business activity for last One year before application under Fast Track Exit scheme.

Eligibility for applying under Fast Track Exit scheme:

a. A Defunct Company having active or dormant status, or

b. A Defunct Company, being a Government Company, wherein No Objection Certificate (NOC) has been issued by the concerned Ministry/Department.

Companies not eligible for applying under Fast Track Exit scheme:

a. Listed Companies.

b. Companies under Non-compliance of the respective Listing agreement or Statutes.

c. Section 25 Companies w.r.t. Companies Act 1956.

d. Vanishing Companies.

e. Companies under inspection, investigation or prosecution.

f. Companies wherein Public deposits are outstanding or where they are in default w.r.t. the same.

g. Companies having secured loans.

h. Companies having management disputes.

i. Companies wherein filing documents have been stayed by the respective Court/authority.

j. Companies with dues outstanding w.r.t. Revenue authorities/Central/State Governments.

Process of getting the name struck off from the Register of Companies:

a. File duly annexed Form FTE (Fast Track Exit) electronically along with a fees of INR 5,000/-.

b. Form FTE has to be duly certified by a Chartered Accountant or a Company Secretary or a Cost Accountant in whole time Practice.

c. Company needs to disclose pending prosecutions/litigations, if any, while filing Form FTE.

d. If pending prosecutions relate only to filing of Annual Returns under section 159 and Balance Sheet under section 220 of the Companies Act 1956 then application in Form FTE can be accepted provided a Compounding application has been filed w.r.t. the aforementioned prosecution.

e. Annexure-A (format at the end of this write up), duly sworn in by each of the existing Directors of the Company and duly Notarised to the effect that Company has not carried on any Business since incorporation or carried on Business till a particular date (to be specified) and then discontinued the same, should be attached with Form FTE.

f. Annexure-B (format after format of Annexure-A), Indemnity Bond, duly Notarised, to be given by every Director to the effect that any losses, claims or liabilities shall be met by every Director jointly and severally even after the name of the Company has been struck off from the Register of Companies.

g. Annexure-C (format after format of Annexure-B), Statement of Accounts as on date but not older than One month from the date of the application in Form FTE. Statement of Accounts should be duly certified by Statutory Auditor or a Chartered Accountant in whole time Practice.

The Registrar of Companies, on receipt of the application in Form FTE and on finding the same in order, shall under section 560(3) of the Companies Act 1956 give notice on the Email address intimated by the Company in Form FTE, giving time of 30 days, stating that unless cause is shown to the contrary, its name be struck off from the Register and the Company shall be dissolved.

ANNEXURE-A

AFFIDAVIT (to be given individually by every director) 

1. I/, Director of ___________________________________ , (hereinafter called “the Company”), incorporated on ___/___/_____ under the Companies Act, 1956 having its Registered Office at __________________and having  CIN No __________________  do solemnly affirm and state as under: 

2.  I/ _______________, S/o/ D/o Shri/ Smt___________, holder of DIN /Income Tax PAN /Passport number: ________________(copy of Income Tax PAN /Passport  duly attested by a Gazetted Officer or a whole time practicing professional (Chartered Accountant/ Company Secretary/Cost Accountant) or a Company Secretary in full time employment of the company is enclosed) am Director of the company stated above since_______________(mention date of appointment). 

3. My present residential address is _____________________ (Copy of documentary evidence duly attested by a Gazetted Officer or a whole time practicing professional (Chartered Accountant/ Company Secretary/Cost Accountant) or a Company Secretary in full time employment of the company is enclosed. Alternatively, an affidavit sworn before Magistrate may be enclosed) 

4. My permanent address is ____________________________ (Copy of documentary evidence duly attested by a Gazetted Officer or a whole time practicing professional (Chartered Accountant/ Company Secretary/Cost Accountant) or a Company Secretary in full time employment of the company is enclosed. Alternatively, an affidavit sworn before Magistrate may be enclosed) 

5. The company does not maintain any bank account as on date.  

6.  I affirm that the Company ___________________ (mention name of the company) do not have any assets and liabilities as on date. 

7.  The Company has been inoperative from the date of its incorporation / The company commenced business/operations/commercial activity after incorporation but has been inoperative for the past _________________ year(s) due to following reasons*._______________ (Give the reasons here)  

8.  As on date, the Company does not have any dues towards Income Tax / Sales Tax / Central Excise/ Banks and Financial Institutions; any other Central or State Government Departments/Authorities or any Local Authorities. 

9. Strike out whichever is not applicable:- 

(i)  There is no litigation pending against or involving the company. 

(ii)  There are litigations pending against the company, details of which are mentioned under serial number 9 of Form FTE. 

10. In case of any loss(es) to any person or any valid claim and liability  arising from any person after the striking off the name of the Company________(mention name) from the Register of Companies, I, the director of the company, undertake to indemnify any person for such losses, valid claim and liability and the indemnity bond to this effect is being submitted separately with the  application Form.    I solemnly state that the contents of this affidavit are true to the best of my knowledge and belief and that it conceals nothing and that no part of it is false. 

Signature:   ____________________                                                               

(Deponent)

Verification:-                                                                                                                     

I verify that the contents of this affidavit are true to the best of my knowledge and belief. 

Place :_________________    

_______________________                                                                                                                            

Signature:  ________________          Date: 

(Deponent)

ANNEXURE-B

INDEMNITY BOND 

(to be given individually or collectively by every director )

To

The Registrar of Companies, 

1. I/ We, the director (s) of ___________________________________ (mention name of the company), incorporated on ___/___/_____ under the Companies Act, 1956, having its Registered Office at _______________ _________________________do hereby declare that:  

2. I/ We ________________, S/o D/o Shri/Smt_______________ am/are Director (s) of this company.  

3. That I/We have made an affidavit dated the _________, duly sworn before First Class Judicial Magistrate or Executive Magistrate or Oath Commissioner or Notary, affirming that the Company ___________________Private/ Limited have nil assets and liabilities as on date.  

4. Further, the Company has been inoperative from the date of its incorporation. / The company commenced business/operations/commercial activity after incorporation but has been inoperative for the past _________________ year(s)*. And the company is not intending to do any business or commercial activity. Thus the Company is defunct and I request the Registrar of Companies, _______________ to strike off the name of the Company from the Register of Companies under Section 560 of the Companies Act, 1956. 

 * Strike out whichever is not applicable. 

5.  I /We do hereby undertake and indemnify in writing:  

(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 our notice up to this stage, even after the name of the Company has been struck off in terms of Section 560 of the Companies Act, 1956.

Place:                              

(Name, Father’s name, Address & Signature)  

Date:                                            

(To be given by every director)                          

WITNESSES:

1. Signature: 

Name: 

Father’s name: 

Address: 

Occupation: 

2. Signature:  

Name: 

Father’s name: 

Address:

Occupation:    

ANNEXURE-C

Statement of Accounts

Name of the Company:                                                         

CIN No.  

Statement of Account as on date: : 

Particulars : (Brief break up in respect of each item needs to be given).

Amount (Rs.)

I. Sources of Funds 

(1) Capital 

(2) Reserves & Surplus (including balance in Profit and Loss Account)  

(3) Loan Funds:  

Secured loans from Financial Institutions  

Secured loans from Banks  

Secured loans from Govt.  

Others Secured loans   

Debentures  

Unsecured Loans   

Deposits & interest thereon  

Total Loan Funds  Total of  (1) to (3)  

II. Application of Funds

(1) Fixed Assets  

(2) Investments  

(3) (i) Current Assets, loans and Advances  

Less: (ii) Current Liabilities & provisions  

Creditors  

Unpaid Dividend  

Payables  

Others  

Total Current Liabilities & provisions  

Net Current assets ( i –ii)  

(4) Miscellaneous expenditure to the extent not written off or adjusted  

(5) Profit & Loss Account (Debit balance) 

Total of 1 to 5    

Date :

Place: 

Name and  Signature of  (Managing Director)*

Name and Signature (Secretary)*

Name and Signature  of (Directors)  

* Applicable only if there is MD/Secretary 

Duly certified by Statutory Auditor or Chartered Accountant in whole time practice


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Category Corporate Law, Other Articles by - Sahil Jolly 



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