India: New Guidelines for Fast Track Exit for Defunct Companies Come into Effect July 3

India has introduced new guidelines for Fast Track Exit (FTE) for defunct companies seeking to get their names removed from the Register of Companies.

The guidelines are a major relief for thousands of companies that have registered with the Indian Government (Registrar of Companies, Ministry of Corporate Affairs) but either went out of business or became non-operational and stopped filing statutory returns and documents, with the Registrar of Companies.

Effective July 3, 2011, India’s Ministry of Corporate Affairs is modifying the current process followed by defunct companies wherein they file e-form-61 and file all pending statutory returns alongside it.

The Guidelines for Fast Track Exit by defunct companies, as per the circular issued by the ministry of corporate affairs include:

• A “defunct company” is defined as any company
  (a)which has nil asset and liability and
  (b)has not commenced any business activity or operation since incorporation; or
  (c)is not carrying over any business activity or operation for last one year before making application under FTE.
• Any defunct company which has active status or identified as dormant by the Ministry of Corporate Affairs, may apply for getting its name struck off from the Register of Companies
• The decision of the Registrar of Companies with respect to striking off the name of the company shall be final.
• The fast track exit mode excludes listed companies and companies that have been de-listed due to non-compliance of Listing Agreement or any other statutory laws, among others.
• Any defunct company desirous of getting its name struck off the Register under Section 560 of the Companies Act, 1956 shall make an application in the Form FTE accompanied by filing fee of 5000 rupees;
• In all cases, the Form FTE, 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;
• The Form FTE shall be accompanied by an affidavit.

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Published: June 22, 2011. The information provided on this page is intended merely to highlight issues for general information purposes only. It is not comprehensive nor does it provide legal advice. Any information is subject to change without notice. No liability whatsoever is accepted by Nair & Co.