Closing a Company

The FTE scheme was launched to speed up the process of the disposal and removal of the companies from the registered list. Companies can voluntarily submit an application to remove their names from the register without going through the hurdles of lengthy legal proceedings. This way, the FTE provides a platform for companies that are no longer functional to be struck off from the register.

Eligibility Criteria

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

• A Company has failed to commence its business within one year of its incorporation; or
• A Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455 of the companies act, 2013

Non-Eligibility Criteria

Following Companies cannot apply under fast track exit mode:

• Listed Companies;
• De-listed Companies due to non- compliance of Listing Agreement or any other statutory Laws;
• Not for Profit Companies i.e., Section 25/Section 8 Companies;
• Vanishing companies;
• Companies where investigation/ inspection ordered and yet to be taken up or pending;
• Companies where notice u/s 234 of the Companies Act, 1956 or Section 206 or 207 has been issued by ROC and reply is pending or report under section 208 not yet submitted or is pending;
• Companies where prosecution for an offence is pending in court;
• Companies whose application for compounding is pending before the competent authority for compounding the offences committed by the company or any of its officers in default;
• Companies accepted deposits which are outstanding or default in repayment;
• Company having outstanding loan secured or unsecured;
• Company having management dispute;
• 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;
• 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;
• If at any time in the previous 3 months, the company has –
  
  1. Has changed its name or shifted its registered office from one State to another;
  2. Has made a disposal for value of property or rights held by it, immediately
  3. Before cessed of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business;
  4. Has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement;
  5. Has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
  6. Is being wound up under Chapter XX of this act or under the Insolvency and Bankruptcy code, 2016.

Brief Procedure of Closure of Company

• Hold Board Meeting
• Hold General Meeting (Special Resolution) or Consent
• An application is required to be made in Form STK-2 to remove the name of the Company along with requisite documents.
• On receiving the application by the company for striking off the company name, the ROC shall issue a public notice in the manner prescribed under the Act.
• In case of no objections from the public, and successful verification of documents by the ROC, the ROC will strike off the name of the Company from the Registrar of Companies.