Companies who run out of their business or want to close their company who has been out of business for more than a year can close the company under Fast Track Exit Scheme. It helps in faster disposal by involving lengthy liquidation or any high court intervention. The power lies in the hands of Registrar of Companies to strike of the company’s name from ROC under suo-motto basis.
There is a possibility that for the companies which are not in operation and or completing their annual compliances under Companies Act 2013, can receive notice from Registrar of Companies, under which the ROC of the company falls, for not filing their compliance yearly. In such situations, Directors of the company have to appear in the court and explain the reason for not filing the documents regularly along with the Registrar of companies. After which, the company is abiding to complete all their annual filings and other compliances thus presenting proves of such filings to the court. On not obeying the directions of the court, directors might suffer huge penalties, imprisonment, etc.
A Company whose returns have not been filed with Registrar of Companies and Stock Exchange for a consecutive period of two years, and their registered office is not at the address intimated to the Registrar of Companies or Stock Exchange, and none of its Directors is traceable is known as a vanishing company.
The fees required to close the company under FTES is INR 5000/-
A board meeting is called to pass Board resolution for strike-off and to authorize any director to apply to the board meeting a general meeting is held, and a special resolution is passed.
An application is submitted for the removal of the name of the company under sub-section (2) of section 248, which is attached in Form STK-2 along with the fee of INR 5000 along with the necessary attachments :
The authorised director will sign E-Form STK-2 to. 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. which shall be signed manually by a director authorized by the Board of Directors of the Company and shall be attached with the application form at the time of its filing electronically
E-Form STK-2 to be certified either by Company Secretary or Chartered Accountant or Cost Accountant, as the case may be.
Any pending litigations involving the Company needs to be disclosed. If the pending prosecutions consist only for non-filing of Annual Returns and Balance Sheet, such application may only be accepted if the applicant has already filed the compounding application. However, steps for the final strike of the name of the company will be taken only after the disposal of compounding application by the competent authority.
The Registrar of Companies after receiving the application shall examine the same, and if satisfied, they shall give notice to the company under section 560(3) of the Companies Act, 1956 by email to its e-mail address. Intimated in the Form, giving thirty days, which states that unless or until the cause is shown to the contrary, its name be struck off from the Register and the company shall be dissolved
The Registrar of companies has to put the name of applicants and date of making the applications under fast track exit mode, daily, on the MCA portal, giving thirty days for objecting, by the stakeholders to the concerned Registrar. It is mandatory to bring into notice to the RBI, SEBI, etc. in case there is a Non-Banking Financial Company and Collective Investment Management Company.
The registrar after being satisfied that the case is in order, can strike the company’s name off the Register and therefore send notice under sub-section (5) of section 560 of the Companies Act, 1956 for publication through Official Gazette and the company is terminated from doing any business from the date of publication of the notice.
The Registrar, if necessary, can obtain necessary undertakings from the managing director or any other person in charge of the management of the company to prove that sufficient provisions have been made for the realisation of all amount due to the company and the payment or discharge of its liabilities and obligations by the company.
An application for restoration, Under section 560(6) is made by the aggrieved company member or its creditor. A company which is shut down under FTE can be restored on the Register by a Court order within 20 years of it striking off.
There are following liabilities to the director post-striking off the name by ROC