Fast Track Exit mode for Defunct Companies under section 560 of 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 Company which has NIL Assets and Liabilities and has not commenced any business since incorporation, or
→ 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 Defunct Company having active or dormant status, or
→ 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:
→ Companies under Non-compliance of the respective Listing agreement or Statutes.
→ Section 25 Companies w.r.t. Companies Act 1956.
→ Vanishing Companies.
→ Companies under inspection, investigation or prosecution.
→ Companies wherein Public deposits are outstanding or where they are in default w.r.t. the same.
→ Companies having secured loans.
→ Companies having management disputes.
→ Companies wherein filing documents have been stayed by the respective Court/authority.
→ Companies with dues outstanding w.r.t. Revenue authorities/Central/State Governments.
Process of getting the name struck off from the Register of Companies:
→ File duly annexed Form FTE (Fast Track Exit) electronically along with a fees of INR 5,000/-.
→ Form FTE has to be duly certified by a Chartered Accountant or a Company Secretary or a Cost Accountant in whole time Practice.
→ Company needs to disclose pending prosecutions/litigations, if any, while filing Form FTE.
→ 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.
→ 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.
→ 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.
→ 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.
(Author Details- CA Sahil Jolly – Jolly & Co. Chartered Accountants, Contact: +91-9999830077, Email : firstname.lastname@example.org)
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