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Winding Up Of Private Limited Companies Under Fast Track Scheme


The Fast Track Exit mode is introduced by the Ministry of Corporate Affairs (MCA) vide General Circular No. 36/2011 dated 7th June, 2011 (the Circular) and made effective from 3rd July 2011 as a Fast Track opportunity for Defunct Companies i.e. Companies not carrying any business, to Strike off their names from Register of Companies under Section 560 of the Companies Act, 1956 (the Act) (corresponding to Section 248 of the Companies Act, 2013 which is not yet notified).
 
Conditions:
 
1. The defunct company should have “Nil” Assets & Liabilities 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
2. A Company which has “Active” status or identified as “Dormant” by the MCA
 
Eligible Companies: Companies listed herein below are not eligible under fast track exit scheme
1. Listed Companies
2. De-listed Companies
3. Section 8 Company (corresponding to Section 25 Company under the Companies Act, 1956)
4. Vanishing Companies
5. Companies under Inspection/Investigation pending in any Court
6. Companies where order under Section 234 of the Companies Act, 1956 has been issued and   reply thereto or prosecution, if any, is pending in the court
7. Companies against which prosecution for a non-compoundable offence is pending in court
8. Companies which have accepted public deposits and has made defaults in repayment of the same
9. Companies having secured loans
10. Companies having management disputes
11. Companies whose filing of documents has been stayed by Court or Company Law Board (CLB) or Central Government or any other Competent Authority
 
12. Companies having dues to income tax, sales tax, central excise, banks and financial institutions or Central Government or State Government or any local authorities
 
Procedure:
 
The application shall be made in Form FTE by filing fees of Rs. 5000/-.
 
Documents:
 
1. Affidavit to be given individually by all Directors;
 
2. Indemnity Bond to be given individually by all Directors;
 
3. Statement of Accounts duly certified by Practicing Chartered Accountant or Statutory Auditor of the Company as the case may be;
4. Board Resolution stating to Strike off the name of the Company under FTE Mode;
 
5. Board Resolution for closure of Bank Accounts;
 
6. Confirmation letter duly signed by the concerned Banks Official that the Bank Account of the Company is closed;
 
7. The company shall disclose pending litigations, if any, involving the company while applying under FTE;
 
8. Form FTE shall be certified by Practicing Chartered Accountant / Practicing Company Secretary / Practicing Cost Accountant.
 
Note: In case, the applicants name are not available in database of directors maintained by the MCA, a certificate from Practicing Chartered Accountant / Practicing Company Secretary / Practicing Cost Accountant along with membership number certifying that the applicants are present Directors of the Company. In such cases the applicants will not be required to file Form DIR-12 (earlier Form 32) and Form DIR-3 (earlier Form DIN 3).
 
ROC Formalities:

The Registrar on receipt of application shall examine the same and if application found in order, it shall intimate the Company by issuing a notice under Section 560 (3) of the Act giving 30 days time, stating that unless cause is shown to the contrary, the name of Company be struck off from the register and the lead to dissolution of the Company.
 
The Registrar on being satisfied shall strike off the name of the Company from its Register and send notice under Section 560 (5) of the Act for publication in the Official Gazette and the Company stands dissolved from date of publication of the notice in the Official Gazette.

Note: A Company dissolved under Section 560 of the Act can be restored before expiry of 20 years from the date of publication of notice in the Official Gazette by order of the Court. The application for restoration can be made only by the Company, member or creditor. It must be shown that on the date of dissolution of the Company, the Petitioner was a member or creditor. The procedure for application for restoration should be as per provisions of Section 560 (6) of the Act.

Disclaimer:
 
The article has been prepared considering the relevant provisions of the Companies Act, 2013 and the rules made there under. The contents of the article are personal views of the author and the readers are requested to cross-check the provisions before acting upon the same. The author is not responsible for any damages or penalties caused.

ANNEXURE-A
AFFIDAVIT
(to be given individually by every director)
 
1. I/, Director of ___________________________________,(hereinafter called “ the Company” ), incorporated on ___/___/_____ under the Companies Act, 1956 having its Registered Office at
__________________and having CIN No __________________ do solemnly affirm and state as under:
 
2. I/ _______________, S/o/ D/o Shri/ Smt___________, holder of DIN/Income Tax PAN /Passport number: ________________(copy of Income Tax PAN /Passport duly attested by a Gazetted Officer or a whole time practicing professional (Chartered Accountant/ Company Secretary/Cost Accountant) or a Company Secretary in full time employment of the company is enclosed) am Director of the company stated above since_______________(mention date of appointment).
 
3. My present residential address is _____________________(Copy of documentary evidence duly attested by a Gazetted Officer or a whole time practicing professional (Chartered Accountant/ Company Secretary/Cost Accountant) or a Company Secretary in full time employment of the company is enclosed. Alternatively, an affidavit sworn before Magistrate may be enclosed)
 
4. My permanent address is ____________________________(Copy of documentary evidence duly attested by a Gazetted Officer or a whole time practicing professional (Chartered Accountant/ Company Secretary/Cost Accountant) or a Company Secretary in full time employment of the company is enclosed. Alternatively, an affidavit sworn before Magistrate may be enclosed)
 
5. The company does not maintain any bank account as on date.
 
6. I affirm that the Company ___________________ (mention name of the company) do not have any assets and liabilities as on date.
 
7. The Company has been inoperative from the date of its incorporation / The company commenced business/operations/commercial activity after incorporation but has been inoperative for the past _________________year(s) due to following reasons*._______________(Give the reasons here)
 
8. As on date, the Company does not have any dues towards Income Tax / Sales Tax / Central Excise/ Banks and Financial Institutions; any other Central or State Government Departments/Authorities or any Local Authorities.
 
9. Strike out whichever is not applicable:-
 
(i) There is no litigation pending against or involving the company.
 
(ii) There are litigations pending against the company, details of which are mentioned under serial number 9 of Form FTE.
 
10. In case of any loss(es) to any person or any valid claim and liability arising from any person after the striking off the name of the Company________(mention name) from the Register of Companies, 
I, the director of the company, undertake to indemnify any person for such losses, valid claim and liability and the indemnity bond to this effect is being submitted separately with the application Form.
 
I solemnly state that the contents of this affidavit are true to the best of my knowledge and belief and that it conceals nothing and that no part of it is false.
Signature: ____________________
(Deponent)
Verification:-
I verify that the contents of this affidavit are true to the best of my knowledge and belief.
Place:________________                                                       Signature :________________
(Deponent)
Date: __________________

 
ANNEXURE-B
INDEMNITY BOND
(to be given individually or collectively by every director )
 
To
The Registrar of Companies,

1. I/ We, the director (s) of ___________________________________(mention name of the company), incorporated on ___/___/_____ under the Companies Act, 1956, having its Registered Office at ________________________________________do hereby declare that:
 
2. I/ We ________________, S/o D/o Shri/Smt_______________ am/are Director (s) of this company.

3. That I/We have made an affidavit dated the _________, duly sworn before First Class Judicial Magistrate or Executive Magistrate or Oath Commissioner or Notary, affirming that the Company ___________________Private/ Limited have nil assets and liabilities as on date.
 
4. Further, the Company has been inoperative from the date of its incorporation. / The company commenced business/operations/commercial activity after incorporation but has been inoperative for the past _________________ year(s)*. And the company is not intending to do any business or commercial activity. Thus the Company is defunct and I request the Registrar of Companies, _______________ to strike off the name of the Company from the Register of Companies under Section 560 of the Companies Act, 1956.
* Strike out whichever is not applicable.
 
5. I /We do hereby undertake and indemnify in writing:

(a) to pay and settle all lawful claims arising in future after the striking off the name of the Company.
 
(b) to indemnify any person for any losses that may arise pursuant to striking off the name of the Company.
 
(c) to settle all lawful claims and liabilities which have not come to our notice up to this stage, even after the name of the Company has been struck off in terms of Section 560 of the Companies Act, 1956.

 
Place:                                                               (Name, Father’s name, Address & Signature)
Date:                                                                (To be given by every director)

WITNESSES:
 
1.                                                                     Signature:
Name:
Father’s name:
Address:
Occupation:
 
2.                                                                     Signature:
Name:
Father’s name:
Address:
Occupation:

ANNEXURE -C
  

Statement of Account

 
Name of the Company:                                                                     CIN No.
Statement of Account as on date:
Particulars: (Brief break up in respect of each item                          Amount (Rs.)
needs to be given).
I. Sources of Funds                                                                             ---------------
(1) Capital                                                                                           ---------------
(2) Reserves & Surplus (including balance in Profit                          ---------------
and Loss Account)
(3) Loan Funds                                                                                    ---------------
Secured loans from Financial          ---------------
Institutions
Secured loans from Banks               ---------------
Secured loans from Govt.                ---------------
Others Secured loans                       ---------------
Debentures                                       ---------------
Unsecured Loans                              ---------------
Deposits & interest thereon              ---------------
Total Loan Funds                                                                                 ---------------
Total of (1) to (3)                                                                                 ---------------
II. Application of Funds
(1) Fixed Assets                                                                                   ---------------
(2) Investments                                                                                    ---------------
(3) (i) Current Assets, loans and Advances                                         ---------------
Less: (ii) Current Liabilities & provisions
Creditors                                           ---------------
Unpaid Dividend                              ---------------
Payables                                           ---------------
Others                                               ---------------
Total Current Liabilities &                                                                  ---------------
Provisions                                                                                             ---------------
Net Current assets ( i –ii)                                                                      ---------------
(4) Miscellaneous expenditure to the extent not                                   ---------------
written off or adjusted
(5) Profit & Loss Account (Debit balance)                                           ---------------
Total of 1 to 5
Date:                                                                    Name and Signature of
                                                                                (Managing Director)*
Place:
Name and Signature                                             Name and Signature of
(Secretary)*                                                                   (Directors)
* Applicable only if there is MD/Secretary
Duly certified by Statutory Auditor or Chartered Accountant in whole time
practice.
Membership No/Certificate of Practice Number with seal
   
ANNEXURE D
CERTIFIED TRUE COPY OF THE BOARD RESOLUTION PASSED ON __________

“RESOLVED THAT the consent of the Board of Directors of the Company be and is hereby granted and accorded for striking off the name of the Company under Section 560 of the Companies Act, 1956 and that Mr. _________________, Mr. _________________ and Mr. _________________, Directors of the Company be and are hereby jointly and/or severally authorized to make an application in this regard to the Registrar of Companies, ________ and that they are also hereby authorized to sign / execute such Applications, Affidavits, Indemnity Bonds, Letters, Declarations, documents as may be required in this regard by the Registrar of Companies on behalf of the Company.”

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This blog is Created by CA Anil Kumar Jain.