Fast Track Exit Scheme – 13/10/2015, by Arun Chacko

Fast Track Exit Scheme – 13/10/2015, by Arun Chacko

What is Track Exit (FTE) Scheme?

The Ministry of Corporate Affairs introduced the Fast Track Exit Scheme to give an opportunity to non-operating companies for getting their names struck-off from the records of the Ministry of Corporate Affairs. Fast Track Exit mode is an easy mode of closing non-operating companies at a cheaper cost with lesser formalities under section 560 of Companies Act 1956. Even after the enactment of Companies Act 2013, the scheme is available.

Who can apply for FTE?

The companies satisfying the following condition can apply for FTE

1.     Has not been in any business operation for last one year prior to applying for the scheme

Or

Has not commenced business activity after incorporation

2.     Do not have any assets and liabilities as on the date of application except share capital and accumulated losses

3.     Does not have any bank account as on the date of application

4.     Does not have any outstanding statutory liabilities

However, the following companies are ineligible for the scheme.

·    Listed Companies

·    De-listed Companies due to non- compliance of Listing Agreement or any other statutory Laws

·    Section 25 Companies

·    Vanishing companies

·    Companies where investigation/inspection ordered are yet to be taken up or pending

·    Companies where order u/s 234 has been issued by ROC and reply is pending

·    Companies where prosecution for a non-compoundable offense is pending in court

·    Companies accepted deposits which are outstanding or default in repayment

·    Company having secured loan

·    Company having management dispute

·    Company for which filing of docs have been stayed by court or CLB or CG or any other competent authority

·    Company having dues of Income-tax / sales tax / central excise / banks / financial institutions / CG / SG / other local authorities

·    Companies not having active/dormant status on MCA portal

Steps to apply for the scheme

1.     Convene board meeting and pass a resolution for applying for FTE and authorizing a practicing chartered accountant to sign the Statement of Accounts

2.     Prepare Indemnity Bond and Affidavits by directors, sworn before a notary. These shall be on stamp papers with a minimum value of Rs. 100.

3.     Prepare Statement of accounts authenticated by a practicing Chartered accountant. The date of the statement shall be on or after the date of the Board.

4.     File the application in form FTE (available from the website mca.gov.in) along with the specified attachments.

The time frame to complete the procedure

The Registrar of Companies shall examine the same and if found in order, shall give a notice to the Company under section 560 (3) of the Companies Act, 1956 by e-mail  giving thirty days’ time, stating that unless cause is shown to the contrary, its name be struck off from the Register and the Company will be dissolved.

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