THE government on Friday introduced a scheme that will facilitate easy exit for unlisted companies willing to wind up their defunct business. A defunct company is one whose business is lying in a dormant state.  The new scheme will give such companies an opportunity to get their names struck off from the Register of Companies(RoC). The scheme, however, does not apply to listed entities, organisations formed not for profit, vanishing companies or firms facing investigation or prosecution.

According to the new scheme, to be open between May 30 and August 31 this year, any defunct company willing to get its name struck off from the RoC can make an electronic application without fee to the ministry’s portal. The application will have to be submitted along with a statement of accounts among others, it said.

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“It will be an incentive for companies that want an easy exit. If they file it between the period, they will not have to go through strenuous procedure, fill forms and will not have to give explanations,” minister for corporate affairs Salman Khurshid said.

As per the existing policy, companies require to give various details and get no-objection certificates from different authorities and regulators for winding up their business. The present process is lengthy and consumes a lot of time before the name of a dormant business gets deleted from the rolls of the RoC.

According to available data, over 10% of the seven lakh registered companies in India are defunct. This means that the scheme opens up a gateway for around 70,000 defunct firms to formally close down their business.

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0 responses to “Easy Exit Scheme 2010 provides easy exit to defunct companies”

  1. DKJ says:

    The Fast Track Exit Scheme allows non-defunct companies an easy exit by having their names struck off the Register of Companies. The Easy Exit Scheme was introduced by the Ministry of Corporate Affairs (MCA) to allow defunct companies an easy exit by having their name struck off the Register of Companies, where they have been inoperative since incorporation or commenced business and subsequently became inoperative. However, there are many other companies registered under the Companies Act 1956 which commenced operation and then became inoperative, have been inoperative since incorporation or were initially operative but later became defunct. To allow such companies to benefit from such a scheme, the ministry introduced its new guidelines under the fast-track scheme. These guidelines were implemented on July 3 2011.

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  2. CA. Bhavesh Savla says:

    Dear Nirav and Deepthi Developers

    The scheme has started once again.Take this opportunity to close down defunct comapnies

  3. Deepthi Developers says:

    I come to know this scheme now, but it seems it is already ended now. Is there any way I can close defunct companies, which was registerd in 2005. What can be total cost for closing this companies, and what is exact procedure for it.

  4. Nirav Balani says:

    I come to know this scheme now, but it seems it is already ended now. Is there any way I can close defunct companies, which was registerd in 2005. What can be total cost for closing this companies, and what is exact procedure for it. Is there any way it can be sold to someone else so that we do not need to pay huge fee on it.

  5. manish bhandare says:

    i want to close my company give me guidelines

  6. Ashok says:

    I think Ministry should be strict to implement this scheme while the ROC is charging huge fee to struck off the company inspite of forwarding of affidavits and bonds. Department needs to accept documents in physical form too becuuse getting DIN and DSC is very cumbersome and expensive for non operative companies.

  7. Bidup says:

    Yes, that is right. Most of these have already duped thousands of people, introduced black money in their books, given accommodation loans, got their income tax assessments made and records destroyed with connivance of IT authorities, never paying any tax and department unable to recover as addresses of companies, directors etc. are bogus. This is a most retrograde step and is detrimental not only to the revenues but even to the security of the nation.

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