Easy Exit Scheme,2010

STRIKING OFF OF THE DEFUNCT COMPANIES AND EASY EXIT SCHEME

Q. Which company can make an application under Section 560 of the Companies Act, 1956 for striking off the name of the company from the Register?

A. Companies which have not done any business during the last two financial years or more before the date of submission of application can submit the application under Section 560 of the Companies Act, 1956.

Q. What are the conditions to be fulfilled for striking off the name?

A. The following conditions shall be fulfilled to become entitled to get the name removed from the Register:

(a) The Assets side of the Balance Sheet shall contain only the fictitious assets such as miscellaneous expenditure, loss, pre-operative expenses, preliminary expenses.
(b) The Liability side of the Balance Sheet shall contain only the share capital. If it contains any loan/creditors, no objection letter from all the concerned persons shall be produced.
(c) All the returns and statutory documents should have been filed with the Registrar of Companies (including balance sheet and profit and loss account upto six months before the date of submission of application).
(d) No prosecution cases against the company should be pending
(e) No major complaints should have been received against the company

Q. What are the documents required along with the application?

A. The application should be made to the Registrar of Companies along with the following documents:

(a) List of Directors as per the latest annual return
(b) Affidavit in a non-judicial stamp paper of appropriate value for each director signed by all directors and duly notarized
(c) Indemnity bond of a non-judicial stamp paper of appropriate value by each director separately and witnessed by two witnesses with their name, father’s name, address and occuption
(d) Certified copy of the board resolution for action under Section 560
(e) Certified copy of the balance sheet, profit and loss account, director’s report, auditor’s report and other annexures as filed with the Registrar (including one balance sheet which should not be earlier than six months as on the date of submission of application)
(f) Waiver letter for loans/current liabilities/share application money, if any
(g) No due Certificate from the statutory auditor certifying that the company does not owe any money to government authorities viz central/state governments/sales tax, central excise, income tax and other financial institutions/banks etc..
(h) Evidence for having filed all overdue documents including balance sheet, annual return, Charge satisfaction form in Form No.17&13
(i) Details for not carrying on commercial activity

Q. What action shall be taken by the Registrar of Companies Act?

A. On being satisfied, the Registrar shall strike off the name of the company from the Register and publish the same in the Official Gazette.

Easy Exit Scheme, 2010

It has been observed that certain companies have been registered under the Companies Act, 1956, but due to various reasons some of them are inoperative since incorporation or commenced business but became inoperative later on and are not filing their due documents timely with the Registrar of Companies. These companies may be defunct and are desirous of getting their names strike off from the Register of Companies.

In order to give an opportunity to the defunct companies, for getting their names strike off from the Register of Companies, the Ministry has decided to introduce a Scheme namely, “Easy Exit Scheme, 2010” under Section 560 of the Companies Act, 1956. The details of the Scheme are as under:-

(i) The Scheme shall come into force on the 30th May, 2010 and shall remain in force up to 31st August, 2010.

(ii) Definitions - In this Scheme, unless the context otherwise requires, -

(a) “company” means a company registered under the Companies Act, 1956;

(b) “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;

(c) “defunct company” means a company registered under the Companies Act, 1956 which is not carrying over any business activity or operation on or after the 1st April, 2008 and includes a company which has not raised its paid up capital as provided in sub sections (3) and (4) of section 3 of the Companies Act, 1956;

(d) “Non-Banking Financial Company” means a company as defined under clause (f) of section 45-I of the Reserve Bank of India Act, 1934;

(e) “Scheme” means the “Easy Exit Scheme, 2010”, being specified through this Circular;

(f) “vanishing company” means a company, registered under the Companies Act, 1956 and listed with Stock Exchange which, has failed to file its returns with Registrar of Companies and Stock Exchange for a consecutive period of two years, and is not maintaining its registered office at the address notified with the Registrar of Companies or Stock Exchange and none of its Directors are traceable.

(iii) Applicability: -

(a) Any “defunct company” which has active status on Ministry of Corporate Affairs portal may apply under EES, 2010 in accordance with the provisions of this Scheme for getting its name strike off from the Register of Companies;

(b) Any defunct company which is a Government Company shall submit ‘No Objection Certificate’ issued by the concerned Administrative Ministry or Department or State Government along with the application under this Scheme;

(c) The purpose of the Scheme is to allow eligible companies to avail of this opportunity to exit from the Register of Companies after fulfilling the requirements laid down herewith and the decision of the Registrar of Companies in respect of striking off the name of company shall be final.

(iv) Scheme not applicable to certain companies: - The Scheme does not cover the following companies namely:-

(a) listed companies;

(b) companies registered under section 25 of the Companies Act, 1956;

(c) vanishing companies;

(d) 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;

(e) 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;

(f) companies against which prosecution for a non compoundable offence is pending in court;

(g) companies accepted public deposits which are either outstanding or the company is in default in repayment of the same;

(h) company having secured loan ;

(i) company having management dispute;

(j) 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;

(k) 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.

(v) Procedure for making an application:-

(a) Any defunct company desirous of getting its name strike off the Register under Section 560 of the Companies Act, 1956 shall make an application in the Form EES, 2010, annexed;

(b) The Form EES, 2010, should be filed electronically on the Ministry of Corporate Affairs portal namely www.mca.gov.in and there shall be no fee payable for filing of the same;

(c) In case, the application in Form EES, 2010, 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;

(d) In all cases, the Form EES, 2010, 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;

(e) The company shall disclose pending litigations if any, involving the company while applying under this Scheme;

(f) The Form shall be accompanied by an affidavit annexed at Annexure- A of Form EES, 2010, 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 and has not carried on any business after the 1st April, 2008, as the case may be;

(g) The Form EES, 2010 shall further be accompanied by an Indemnity Bond, duly notarized, as annexed at Annexure B of Form EES, 2010, 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;

(h) The Company shall also file a Statement of Account annexed at Annexure C, prepared as on date not prior to more than one month preceding the date of filing of application in Form EES, 2010, duly certified by a statutory auditor or Chartered Accountant in whole time practice, as the case may be.

(vi) Simplified procedure for Registrar of Companies for removal of name of defunct companies:-

(a) 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 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;

(b) The Registrar of companies shall put the name of applicant(s) and date of making the application(s) under Easy Exit Scheme, 2010, 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;

(c) 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 Scheme commences, shall send intimation of such companies availing EES, 2010, during that period to the concerned Regulator(s) and also an intimation in respect of all companies availing EES, 2010, during that period to the office of the Income Tax Department giving thirty days time for their objection, if any;

(d) The Registrar of Companies immediately after passing of time given in sub-paras (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 notice under sub-section (5) of section 560 of the Companies Act, 1956 for publication in the Official Gazette and the applicant company under this Scheme shall stand dissolved from the date of publication of the notice in the Official Gazette.

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 maintains/does not maintain any bank account as on date (mention details of Bank Account(s) if maintained).

6. I affirm that the Company ___________________ (mention name of the company) have assets and liabilities amounting to Rs.______________ (as per annexed Statement of Accounts).

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 EES 2010.

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: ________________

(Deponent)

Date: __________________

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 assets and liabilities amounting to Rs.______________.

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 Account

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.

Membership No/Certificate of Practice Number with seal.

RESTORATION OF COMPANY WHOSE NAME HAS BEEN STRUCK OFF AS A DEFUNCT COMPANY:

 If a Company or any Member or Creditor thereof, applies to the Court, to order the name of the Company to be restored to the Register, the Court may make an order for restoration under Section 560(6), if it is satisfied that:

• The Company is solvent.

• On the date of striking off, the Company was carrying on business.

• It is in the interest of justice that the order of restoration should be made.

• Period of 20 years has not expired.

• The Applicant is an “aggrieved” person.

The effect of an Order under this Section is that the Company is to be deemed to have continued in existence “as if its name had not been struck off.” The object is to put both the Company and the parties in the same position, as they would have occupied if the dissolution of the Company had not taken place. The restoration produces “as you were” position.

Filing of certified copy of the Order of the Court.

A certified copy of the Order of the court should be delivered to the Registrar of Companies for registration with Form-21. Upon such registration, the company shall be deemed to have continued in existence as if the name had not been struck off.

Note: **The power of court in this regard shall stand transferred to National Company Law Tribunal as per Companies second Amendment Act, 2002. (Recently, Supreme Court upheld the legality of National Company Law Tribunal).

For Non-Operational Companies

• Both the aforesaid schemes read together offers an opportunity to those non-operational companies which intends to come outof the structure of corporate entity. After filing of the pending documents at a reduced cost, the Companies can file for Easy Exit under this scheme and can avail dual benefit of reduced cost as well as reduced time lines in one go.

Easy Exit Scheme, 2010

With a view of provide an easy exit to the Companies which are desirous of getting the name struck off from the records of the ROC or are defunct companies i.e. such companies which are inoperative since incorporation or have commenced business but are inoperative later on and not filing their due documents timely with the Registrar of Companies, the Ministry has come out with an Easy Exit Scheme, 2010 vide its General Circular No. 2 /2010 dated May 26, 2010.

The scheme offers the following highlights:

• Applicable on Defunct Companies which have active status or Defunct Government companies which can submit ‘No Objection Certificate’ from relevant Ministry
• Not applicable on companies specified in the circular attached
• Procedure to be followed for granting ‘Exit’ to the Company

• The scheme opens on 30-05-2010 and closes on 31-08-2010.

Hi,

Can somene pls help me with the list of dormant companies falling within the jurisdiction of ROC, Mumbai..?

Thanks

Regards,

Jyotin

Jyotin-only RoC mumbai can give.

Yogeshji- Appne ta pura Gandhmardan parvat de diya Jaya ko. :)

Jaya- Easy Exit Scheme is the gateway of the MCA in which option has been given to the non-operating companies to strike off their name without appointing liquidator etc. This is the simplification of the voluntary winding up procedure 

Thanks Santosh.

Could you also guide me as to how can i get the list of dormant companies falling within the jurisdiction of ROC, Mumbai from ROC...?

Regards,

Jyotin