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Fast track exit mode- mca

Riddhi (Sr. Manager - Finance) (81 Points)

30 November 2012

Dear Professioanl Collegues,

My query s regarding the fast track exit mode scheme provided by MCA, whereby defunct companies can be closed. The circular presented by MCA dated 7th june 2011 contains a condition for the fast track exit mode scheme that any company can be called as defunct company only when it has got nil assets & liablities, my question is regarding the share capital that considering this condition what will happen to the share capital of the company.

Apart from this the declaration to be provided by directors includes one more condition that there are no bank account of the company as on date.

Kindly how to deal with this two conditions post & pre Strike off.

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10 Replies

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 01 December 2012

FTE Guidelines are applicable to a defunct company. For the purposes of the FTE Guidelines, any company will be called as "defunct company", which has nil asset and liability and

has not commenced any business activity or operation since incorporation; or
is not carrying over any business activity or operation for last 1 year before making application under FTE.

Any defunct company which has active status or identified as dormant by the MCA may apply for getting its name struck off from the ROC.

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CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 01 December 2012

Procedure of Fast Track Exit under FTE Guidelines:-

Any defunct company desirous of getting its name strike off the Register under Section 560 of the Companies Act, 1956 shall make an application in the Form FTE, annexed electronically on the Ministry of Corporate Affairs portal namely www.mca.gov.in accompanied by filing fee of Rs. 5,000/-;

In case, the application in Form FTE, is not being digitally signed by any of the director or Manager or Secretary, a physical copy of the Form duly filled in, shall be signed manually by a director authorised by the Board of Directors of the company and shall be attached with the application Form at the time of its filing electronically;

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;

In case, the applicant name is not available in the database of directors maintained by the Ministry, the application shall be accompanied by certificate from a Chartered Accountant in whole time practice or Company Secretary in whole time practice or Cost Accountant in whole time practice alongwith their membership number, certifying that the applicants are present directors of the company. In such cases, the applicants shall not be asked to file Form 32 and Form DIN 3.

The company shall disclose pending litigations if any, involving the company while applying under FTE;

If the pending prosecutions are only for non-filing of Annual Returns under section 159 and Balance Sheet under section 220 of the Companies Act, 1956, such application may be accepted provided the applicants have already filed the compounding application. However, steps for final strike of the name of the company will be taken only after disposal of compounding application by the competent authority.

The Form FTE shall be accompanied by an affidavit annexed at Annexure- A, which should be sworn by each of the existing director(s) of the company before a First Class Judicial Magistrate or Executive Magistrate or Oath Commissioner or Notary, to the effect that the company has not carried on any business since incorporation or that the company did some business for a period up to a date (which should be specified) and then discontinued its operations, as the case may be;

Form FTE shall further be accompanied by an Indemnity Bond, duly notarized, as annexed at Annexure B, to be given by every director individually or collectively, to the effect that any losses, claim and liabilities on the company, will be met in full by every director individually or collectively, even after the name of the company is struck off the register of Companies;

In case of foreign nationals and NRIs, Indemnity Bond and Affidavit may be notarized as per their respective country’s law.

The Company shall also file a Statement of Account annexed at Annexure C, prepared as on date not prior to more than one month preceding the date of filing of application in Form FTE, duly certified by a statutory auditor or Chartered Accountant in whole time practice, as the case may be.

In the case of 100% Government companies, if no Board is in existence, an officer not below the rank of Deputy Secretary of the concerned administrative Ministry may be authorized to enter his name and other details in Form FTE and in Annexure A, B and C in place of name and other details of the directors and also to sign the said documents before filing.

3 Like

Ankit Gupta (Learner) (1557 Points)
Replied 07 January 2013

sir is Defunct company and a Dormant company same ? Please explain

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 12 January 2013

No both are different....

Defunct companies are explained above...

All Companies which have not filed their statutory annual filings for both form 20B and 23AC / 23ACA will not be allowed to file any other e-form with Ministry of Corporate Affairs unless and until all such pending documents are filed. The status of such companies would be changed to “Dormant".

Ankit Gupta (Learner) (1557 Points)
Replied 12 January 2013

Thankyou sir for your prompt reply

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Tarun Jha (Student CA Final ) (33 Points)
Replied 02 September 2014

Sir, to apply for FTE, shall partly paid share be converted into fully paid share or it can applied directly? i mean, can a company may apply for FTE without converting its partly paid shares into fully paid shares???

Nitin Chhabra (accounts) (21 Points)
Replied 11 December 2014

Dear sir please tell me the procedure to apply it and

can i get your phone number so that i can communicate you for the purpose

Rakesh (Manager) (35 Points)
Replied 20 February 2015

Sir,

Kindly confirm, whether a Company, who has filed the Annual Return and Balance for the year ending 31.03.2014 with no any assets and no any business transaction can file under FTE.

T.Rajkumar (B.com,CS (Final)) (48 Points)
Replied 17 March 2015

Dear sri CS Ankur: Whether the Dormant company under sec.455 of the Companies Act 2013, is eligible for Fast Track Exist Mode? if it's possible, what is the Procedure?