Fast Track Exit Mode
The procedure of wining up by way of Members winding up or creditors winding up is a lengthy procedure and requires lot of time. However in the case of companies with no assets and liabilities where no operations are initiated or whether at least for preceding period of one year there are no operations, such company is called a defunct company and can make an application for strike off of the name under section 560 by making an application under Fast Track Exit Scheme.
Applicable to Defunct Company to mean a company, which has nil asset and liability and
- has not commenced any business activity or operation since incorporation; or
- is not carrying over any business activity or operation for last one year before making application under FTE.
The fast track exit mode is not being extended to the following companies namely:-
- 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
- companies accepted public deposits which are either outstanding or the company is in default in repayment of the same.
- company having secured loan
- company having management dispute;
- 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.
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 FTE, annexed electronically accompanied by filing fee of C 5,000/-;
- In all cases, the 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;
- In case, the applicant name is not available in the database of directors maintained by the Ministry, the application shall be accompanied by certificate from a Chartered Accountant in whole time practice or Company Secretary in whole time practice or Cost Accountant in whole time practice along with their membership number, certifying that the applicants are present directors of the company.
- The company shall disclose pending litigations if any, involving the company while applying under FTE;
- If the pending prosecutions are only for non-filing of Annual Returns under section 159 and Balance Sheet under section 220 of the Companies Act, 1956, such application may be accepted provided the applicants have already filed the compounding application.
- The Form FTE shall be accompanied by an affidavit annexed at Annexure- A, which should be sworn by each of the existing director(s) of the company 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, as the case may be;
- Form FTE shall further be accompanied by an Indemnity Bond, duly notarized, as annexed at Annexure B, 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;
- In case of foreign nationals and NRIs, Indemnity Bond and Affidavit may be notarized as per their respective country’s law.
- 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 FTE, duly certified by a statutory auditor or Chartered Accountant in whole time practice, as the case may be.