Fast Track Exit Scheme for Closing of Defunct Company

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.

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.

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.

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

• Companies which are not operating or not carrying on any business since last one year from the date of application or,
• Companies which are not operating or not carrying on any business since incorporation and,
• Company having Nil assets & liability.

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

Following Case Fast Track Exit mode is best Choices for company closer:

• If you want to close your Private Limited Company, is should be at-least a year old and the creditors of the company should be willing to let you close the company. Then, you can close your company through Fast track scheme.
• A Private Limited Company, which said to have perpetual succession sometimes faces crucial situation such as low profit, loss, labour problem, no market for the product etc. In such conditions you can avail the Fast Track Scheme, introduced by the Ministry of Corporate Affairs.
• A Fast Track scheme is the easy route for the Directors to close their company without much legal complications and time consuming.
• Instead of going for Winding-up of Company, which you need to appoint or Court would appoint an Official Liquidator and the process, would go on for months. In order to avoid all these lengthy legal formalities, you can use the option of Fast Track Exit Scheme to close your Private Limited Company.

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

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

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.

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.

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.

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.

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

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.

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.

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 Description 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:-

• Copy of Pan / Passport as stated above plus present and permanent residential address proof if passport is not available or update.
• How many years the Company is not operating with reasons
• Confirmation about no dues with Income Tax / Sales Tax / Central Excise / Bank / Financial Institution / Govt or Local authority

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.

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.

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.

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.

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.

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

• to pay and settle all lawful claims arising in future after the striking off the name of the Company.
• to indemnify any person for any losses that may arise pursuant to striking off the name of the Company.
• to settle all lawful claims and liabilities which have not come to notice even after striking off the name of the Company.

No. There is requirement of having NIL Balance Sheet.