FAST TRACK EXIT (FTE) SCHEME UNDER COMPANIES ACT, 2013

FAST TRACK EXIT (FTE) SCHEME

Section 248, 249, 250, 251 & 252 of the Companies Act, 2013

{Read with Companies (Removal of Names of Companies from Register of Companies) Rules, 2016}

[Effective from 26^th December, 2016]

FAST TRACK EXIT (FTE) scheme has been notified under the new Companies Act, 2013. It is very simple and cost saving method of winding up of the Company without going for lengthy liquidation process and without High court intervention. Under these sections, the power has been given to Registrar of Companies to strike off the name of the Company from the Register of Companies on suo-motto basis but a Company can also file the application in the prescribed form to the ROC for removing the name of the Company after extinguishing all its liabilities and after complying with some conditions.

ü Following categories of the Companies shall not be removed/Strike off via FTE Scheme:

1.      listed companies;

2.      companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;

3.      vanishing companies;

4.      companies where inspection or investigation is ordered and being carried out or actions on such order are yet to be taken up or were completed but prosecutions arising out of such inspection or investigation  are pending in the Court;

5.      companies where notices under section 234 of the Companies Act, 1956 (1 of 1956) or section 206 or section 207 of the Act have been issued by the Registrar or Inspector and reply thereto is pending or report under section 208 has not yet been submitted or follow up of instructions on report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the Court;

6.      companies against which any prosecution for an offence is pending in any court;

7.      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;

8.      companies, which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;

9.      companies having charges which are pending for satisfaction; and

10.  Companies registered under section 25 of the Companies Act, 1956 or section 8 of the Companies Act. 2013.

§   “Vanishing Company” means a company, registered under the Act or previous company law or any other law for the time being in force and listed with Stock Exchange which has failed to file its returns with the Registrar of Companies and Stock Exchange for a consecutive period of two years, and is not maintaining its registered office at the address notified with the Registrar of Companies or Stock Exchange and none of its directors are traceable.

§   “Dormant Company”: As per Section 455 of the Companies Act, 2013, where a company is formed and registered under this Act

1.     for a future project, or

2.     to hold an asset or intellectual property, and

3.     has no significant accounting transaction,

Such a company or an inactive company may make an application to the Registrar in the Form MSC-1for the status of a dormant company

“Inactive company” means a company which

                    i.            has not been carrying on any business or operation, or

                  ii.            has not made any significant accounting transaction during the last two financial years, or

                iii.            has not filed financial statements and annual returns during the last two financial years;

“Significant Accounting Transaction” means any transaction other than –

(i)                 payment of fees by a company to the Registrar;

(ii)               payments made by it to fulfil the requirements of this Act or any other law;

(iii)             allotment of shares to fulfil the requirements of this Act; and

(iv)             Payments for maintenance of its office and records.

ü REMOVAL OF NAME OF COMPANY FROM THE REGISTER ON SUO-MOTTO BY ROC:

1.      The Registrar of Companies may remove the name of a company from the register of companies when

a.     a company has failed to commence its business within one year of its incorporation,  or

b.  a company is not carrying on any business or operation for a period of two immediately preceding financial years, and

c.    has not made any application within such period for obtaining the status of a dormant company under section 455 of the Companies Act, 2013.

2.   He shall send a notice in the Form STK-1 to the company and all the directors of the company, by registered post with acknowledgement due or by speed post, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of 30 days from the date of the notice.

 3.      The ROC shall

a.  place notice (Form STK-5) on the official website of the Ministry of Corporate     Affairs on a separate link established on such website in this regard;   

b.   publish notice (Form STK-5) in the Official Gazette;

c.   Publish notice (Form STK-5A)* in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated. 

*inserted vide Companies (Removal of Names of Companies form the Register of Companies) Amendment Rules, 2017 dated 12^th April, 2017

4.      The Registrar of Companies shall intimate the concerned regulatory authorities regulating the company, viz,  the Income-tax  authorities, Central Excise authorities and Service-tax authorities having jurisdiction over the company, about the proposed action of removal or striking off the names of such companies and seek objections, if any, to be furnished within a period of 30 days from the date of issue of the letter of intimation and if no objections are received within 30 days from the respective authority, it shall be presumed that they have no objections to the proposed action of striking off or removal of name.

5.      At the expiry of the 30 days, the Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice (Form STK-7) in the Official Gazette the same shall also be placed on the official website of the Ministry of Corporate Affairs (MCA) and on the publication in the Official Gazette of this notice, the company shall stand dissolved.

6.      The Registrar, before passing an order of removal of name of the Company, shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company.

ü APPLICATION BY COMPANY FOR REMOVAL OF NAME OF COMPANY :

1.      If a Company

a.       has failed to commence its business within one year of its incorporation, or

b.      is not carrying on any business or operation for a period of two immediately preceding financial years, and

c.       In this regard, has not made any application within such period for obtaining the status of a dormant company under section 455 of the Companies Act, 2013,

may file an application for removal of name of the company in Form STK-2 along with the fee of Rs. 5,000/-.

2.      The application in Form STK-2 shall be accompanied by:

a.   Indemnity bond duly notarised in Form STK-3 (To be given individually or collectively by every Director);

b.   An affidavit in Form STK-4 by every Director of the company;

c.   a statement of accounts containing Assets and Liabilities of the company made up to a day, not more than 30 days before the date of application and certified by a Chartered Accountant; 

d.   a copy of the special resolution duly certified by each of the directors of the company or consent of 75% of the members of the company in terms of paid up share capital as on the date of application;

e.    PAN card and Address proof of all the Directors certified by Practicing CA/CS/CWA or any Gazetted officer;

f.     Copy of de-listing order from Stock Exchange, if any;

g.    Any other documents as per other laws, if any applicable;

h.     a statement regarding pending litigations, if any, involving the company;  

i.    No objection certificate from  appropriate Regulatory Authority concerned in respect of following companies, namely:-

                   i.    companies which have conducted or conducting non-banking financial and investment activities as referred to in the Reserve Bank of India Act, 1934 (2 of 1934) or rules and regulations there under;

                            ii.      Housing Finance Companies as referred to in the Housing Finance Companies (National Housing Bank) Directions, 2010 issued under the National Housing Bank Act, 1987 (53 of 1987);

                          iii.      Insurance Companies as referred to in the Insurance Act, 1938 (4 of 1938) or rules and regulations there under; 

                          iv.      Companies in the business of Capital Market intermediaries as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or  rules and regulations there under;

                     v.      Companies engaged in collective investment schemes as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992)  or  rules and regulations there under;

                        vi.      Asset Management Companies as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations there under; 

                          vii.      Any other company which is regulated under any other law for the time being in force.

Note: If the person is a foreign national or non-resident Indian, the indemnity bond in Form STK-3 and affidavit in Form STK-4 shall be notarised or apostatised or consularised.

3.      The application in Form STK-2 shall be signed by a Director duly authorised by the Board in their behalf.

4.      Where the director concerned does not have a registered digital signature certificate, a physical copy of the form duly filled in shall be signed manually by a Director duly authorised in that behalf and shall be attached with the Form STK-2 while uploading the form. 

5.      The Form STK-2 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. 

6.      The ROC shall

a.    place notice (Form STK-6) on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;   

b.    publish notice (Form STK-6) in the Official Gazette;

c.    Publish notice (Form STK-5A)* in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated;

d.  the company shall also place the application Form STK-2 on its website, if any, till the disposal of the application.

*inserted vide Companies (Removal of Names of Companies form the Register of Companies) Amendment Rules, 2017 dated 12^th April, 2017.

7.      The Registrar of Companies shall intimate the concerned regulatory authorities regulating the company, viz,  the Income-tax  authorities, Central Excise authorities and Service-tax authorities having jurisdiction over the company, about the proposed action of removal or striking off the names of such companies and seek objections, if any, to be furnished within a period of 30 days from the date of issue of the letter of intimation and if no objections are received within 30 days from the respective authority, it shall be presumed that they have no objections to the proposed action of striking off or removal of name.

8.      At the expiry of the 30 days, the Registrar may, unless cause to the contrary is shown, strike off its name from the register of companies, and shall publish notice (Form STK-7) in the Official Gazette the same shall also be placed on the official website of the Ministry of Corporate Affairs (MCA) and on the publication in the Official Gazette of this notice, the company shall stand dissolved.

ü LIABILITIES AFTER STRIKE OFF/NAME REMOVAL OF THE COMPANY

1.  The assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies.

2.   The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved, shall continue and may be enforced as if the company had not been dissolved.

ü RESTRICTIONS ON MAKING APPLICATION IN FORM STK-2:     

As per section 249 of the Companies Act, 2013, an application in the form STK-2 under sub-section (2) of section 248 on behalf of a company shall not be made if, at any time in the previous three months, the company:

        i.            has changed its name or shifted its registered office from one State to another;

        ii.          has made a disposal for value of property or rights held by it, immediately before cesser 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;

      iii.            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;

     iv.         has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or

      v.            is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy Code, 2016.

·                If a company files an application in STK-2 in violation of above mentioned restrictions, it shall be punishable with fine which may extend to one lakh rupees.

·                An application filed in STK-2 shall be withdrawn by the company or rejected by the Registrar as soon as conditions mentioned above are brought to his notice.

ü EFFECT OF COMPANY NOTIFIED AS DISSOLVED

As per section 250 of the Companies Act, 2013, where a company stands dissolved under section 248, it shall on and from the date mentioned in the notice (Form STK-7), cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.

ü FRAUDULENT APPLICATION IN FORM STK-2 FOR REMOVAL OF NAME

As per section 251 of the Companies Act, 2013, where it is found that an application filed by a company in the form STK-2 has been made with the object of evading the liabilities of the company or with the intention to deceive the creditors or to defraud any other persons, the persons in charge of the management of the company shall, notwithstanding that the company has been notified as dissolved:

  i.   be jointly and severally liable to any person or persons who had incurred loss or damage as a result of the company being notified as dissolved; and

 ii. be punishable for fraud in the manner as provided in Section 447 (Punishable with an imprisonment for a term which  shall not be less than 6 months but which may extend to 10 years and shall also be liable to fine which shall not be  less than the amount involved in the fraud but which may extend to 3 times the amount involved in the fraud);

  iii.   The Registrar may also recommend prosecution of the persons responsible for the filing of an application in form STK-2.

 ü APPEAL OR APPLICATION TO TRIBUNAL FOR RESTORATION OF NAME OF THE COMPANY IN THE REGISTER OF COMPANIES

·      As per section 252 of the Companies Act, 2013, any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal within a period of 3 years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the Register of Companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies.

Before passing any order, the Tribunal shall give a reasonable opportunity of making representations and of being heard to the Registrar, the company and all the persons concerned.

If the Registrar is satisfied, that the name of the company has been struck off from the Register of Companies either inadvertently or on the basis of incorrect information furnished by the company or its directors, which requires restoration in the Register of Companies, he may within a period of 3 years from the date of passing of the order dissolving the company under section 248, file an application before the Tribunal seeking restoration of name of such company.

·      A copy of the order passed by the Tribunal shall be filed in the form INC-28 by the company with the Registrar within 30 days from the date of the order and on receipt of the order, the Registrar shall restore the name of the company in the Register of Companies and shall issue a fresh certificate of incorporation.

·      If a company or any member or creditor or workman thereof feels aggrieved by the company having its name struck off from the register of companies, the Tribunal on an application made by the company or member or creditor or workman before the expiry of 20 years from the publication in the Official Gazette of the notice in STK-7 may, if satisfied that the company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored to the register of companies, order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off from the register of companies.

 Consent of Shareholder 

[Pursuant to sub-section (2) of the section 248 of the Companies Act, 2013]

To,

The Board of Directors

Name of Company

Registered office of the Company

Dear Sir,

Having the ……………Equity/Preference shares in the Company (………% of the total paid up Share Capital of the Company), I/We hereby give my/our consent, pursuant to sub-section (2) of Section 248 of the Companies Act, 2013 and rules made there under, to the Company to file an application in the Form STK-2 to the Concerned Registrar of Companies for removing the name of the Company from Register of Companies.

Signature

Name of Shareholder

Father’s Name

Address

L.F. No.:

Form No. STK – 3

INDEMNITY BOND

(To be given individually or collectively by every Director)

[Pursuant to clause (i) of sub-rule (3) of rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

To

The Registrar of Companies,                                                                                            

……………………………….

                          

1.         I/We, the Director(s) of M/s………………………………….., incorporated on …………… under the Companies Act, 2013 or the Companies Act, 1956 having its registered office at ……………………………………………………………………do hereby declare that:

(i)                 I/We ………………………..S/o / D/o / W/o Shri…………………..am/are and Directors of this Company.

(ii)               That I/We have made an affidavit confirming that the company does not have any assets & liabilities as on date.

(iii)             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) (Strike out whichever is not applicable). 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 248 of  the Companies Act, 2013.

2.         I/We do hereby undertake to indemnify:

(i)                 The claimants for all lawful claims against the company arising in future after the striking off the name of the company.

(ii)               Any person for any losses that may arise pursuant to striking off the name of the Company.

(iii)             The claimants for all lawful claims and liabilities, which have not come to our notice up to this stage, and if any claim arises or observed even after the name of the Company has  been  struck  off  in  terms of Section 248 of the Companies Act, 2013

     

Date: 

Place:                                                              

                                   

(Name, Father’s Name, Address and Signature)

(To be given by every Director)

WITNESSES:

1. Signature

Name                           :

Father’s Name :

Address                       :

Occupation                  :                          

2. Signature

Name                           :

Father’s Name :

Address                       :

Occupation                  :                          

           

                                   

Form No. STK – 4

AFFIDAVIT

(To be given individually by every Director)

[Pursuant to sub-section (2) of section 248 read with clause (iii) of sub-rule (3) of rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016]

1. I……………………………..Director of M/s…………………………….(hereinafter called “the Company”), incorporated on………………..under the Companies Act, 2013 or the Companies Act, 1956 having its registered office at…………………………………………… and having CIN:……………………………. do solemnly affirm and state as under:

(i)                 I………………………..S/o / D/o Shri………………….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 viz Chartered Accountant/Company Secretary/Cost Accountant) am Director of the Company stated above since………………….(Mention Date of Appointment).

(ii)               My present residential address is ……………………………………………………. (Copy of documentary evidence duly attested by a Gazetted Officer or a whole time practicing professional viz Chartered Accountant/Company Secretary/Cost Accountant) is enclosed.

(Alternatively, an affidavit sworn before Magistrate may be enclosed).

(iii)             My permanent address is ……………………………………………………. (Copy of documentary evidence duly attested by a Gazetted Officer or a whole time practicing professional viz Chartered Accountant/Company Secretary/Cost Accountant) is enclosed.

(Alternatively, an affidavit sworn before Magistrate may be enclosed).

(iv)             The company does not maintain any bank account as on date.

(v)               I Company M/s…………………………….does not have any assets and liabilities as on date.

(vi)             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 past…………………..year(s) due to following reasons…………………….(Give the reasons here).    

(vii)           As on date, the company does not have any dues towards Income Tax/Sales Tax/Central Excise/Bank and Financial Institutions; any other Central or State Government Departments/Authorities or any Local Authorities.

2. I further affirm that-

(i)                 No inquiry, technical scrutiny, inspection or investigation or ordered or pending against the Company;

(ii)               No prosecution or any compounding application for any offence under the Act or under any of the other Acts is pending against the Company or against the undersigned;

(iii)             The Company is neither listed nor delisted for non-compliance of listing agreement;

(iv)             The Company is not a company incorporated for charitable purposes under section 8 of the Companies Act, 2013 or section 25 of the Companies Act, 1956;

(v)               The Company does not have any management disputes or there is no litigation pending with regard to management or shareholding of the company;

(vi)             No order is in operation staying filing of the documents by a court or tribunal or any other competent authority;

(vii)           The Company is not prevented from making the applications for strike off as mentioned in section 249 of the Act.

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.

Signature:…………………………                                                                                                          

            (Deponent)

Date:

Place:

NOTE: Attention is also drawn to provisions of section 449 which provide for punishment for false evidence.                       

Contact Details:

VISHAL SHARMA

Company Secretary

Mob: 9716763754

Email: csvishalpbs@gmail.com

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