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Sunday, January 13, 2013

Guideline on Fast track exit guideline source MCA

General Circular No. 36/2011


F. No. 2/3/2011-CL V

Government of India

Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhavan,

Dr. R.P. Road, New Delhi

Dated the 7th June, 2011

To

All Regional Director,

All Registrar of Companies.

Subject: Guidelines for Fast Track Exit mode for defunct companies under

section 560 of the Companies Act, 1956

Sir,

There are a number of companies, which are registered under the

Companies Act, 1956, but due to various reasons they are inoperative since

incorporation or commenced business but became inoperative or defunct later on.

Such companies may be desirous of getting their names strike off from the

Register of Companies maintained by Registrar of Companies.

2. As per section 560 of the Companies Act, 1956, Registrar of Companies

may strike off the name of companies on satisfying the conditions therein. As per

present practice, a company desirous of getting its name struck off, has to apply to

Registrar of companies in e-form 61. All pending statutory returns are required to

be filed along with e-form 61.

3. In order to give an opportunity for fast track exit by a defunct company, for

getting its name struck off from the register of companies, the Ministry has

decided to modify the existing route through e-form – 61 and has prescribed the

new Guidelines. The Guidelines for “Fast Track Exit mode” for defunct

companies under section 560 of the Companies Act, 1956 are enclosed herewith.

4. These Guidelines will be implemented w.e.f. 3rd July, 2011.

Yours faithfully,

-Sd/-

(Monika Gupta)

Assistant Director

Encl: As above

Guidelines for Fast Track Exit mode for defunct companies under

section 560 of the Companies Act, 1956

1. For Fast Track Exit mode (FTE), it is stated as under:-

(a) Any company will be called as “defunct company” for the purpose

of these guidelines, which has nil asset and liability and

(i) has not commenced any business activity or operation

since incorporation; or

(ii) is not carrying over any business activity or operation for

last one year before making application under FTE.

(b) Any defunct company which has active status or identified as

dormant by the Ministry of Corporate Affairs, may apply for

getting its name strike off from the Register of Companies;

(c) Any defunct company which is a Government Company shall

submit ‘No Objection Certificate’ issued by the concerned

Administrative Ministry or Department or State Government along

with the application;

(d) the decision of the Registrar of Companies in respect of striking

off the name of company shall be final.

(e) The fast track exit mode is not being extended to the following

companies namely:-

(i) listed companies;

(ii) companies that have been de-listed due to non-compliance

of Listing Agreement or any other statutory Laws,

(iii) companies registered under section 25 of the Companies

Act, 1956;

(iv) vanishing companies;

(v) companies where inspection or investigation is ordered and

being carried out or yet to be taken up or where completed

prosecutions arising out of such inspection or investigation

are pending in the court;

(vi) companies where order under section 234 of the Companies

Act, 1956 has been issued by the Registrar and reply thereto

is pending or where prosecution if any, is pending in the

court;

(vii) companies against which prosecution for a noncompoundable

offence is pending in court;

(viii) companies accepted public deposits which are either

outstanding or the company is in default in repayment of the

same;

(ix) company having secured loan ;

(x) company having management dispute;

(xi) company in respect of which filing of documents have been

stayed by court or Company Law Board (CLB) or Central

Government or any other competent authority;

(xii) company having dues towards income tax or sales tax or

central excise or banks and financial institutions or any other

Central Government or State Government Departments or

authorities or any local authorities.

Explanation: “vanishing company” means a company,

registered under the Companies Act, 1956 and listed with

Stock Exchange which, has failed to file its returns with

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.

(f) 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 C 5,000/-;

(g) 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;

(h) 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;

(i) 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.

(j) The company shall disclose pending litigations if any, involving

the company while applying under FTE;

(k) 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.

(l) 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;

(m) 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;

(n) In case of foreign nationals and NRIs, Indemnity Bond and

Affidavit may be notarized as per their respective country’s law.

(o) 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.

(p) 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.

2. Procedure to be adopted by Registrar of Companies in this matter:-

(a) The Registrar of Companies, on receipt of the application, 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 email

on its e-mail address intimated in the Form, 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;

(b) The Registrar of companies shall put the name of applicant(s) and

date of making the application(s) under fast track exit mode, on

daily basis, on the MCA portal www.mca.gov.in, giving thirty

days time for raising objection, if any, by the stakeholders to the

concerned Registrar;

(c) In case of company(s) like Non-Banking Financial Company(s),

Collective Investment Management Company(s) which are

regulated by other Regulator(s) namely RBI, SEBI, the Registrar

of Companies, at the end of every week, shall send intimation of

such companies availing fast track exit mode during that period to

the concerned Regulator(s) and also an intimation in respect of

all companies availing fast track exit mode during that period to

the office of the Income Tax Department giving thirty days time

for their objection, if any;

Explanation (1) “Non-Banking Financial Company” means a

company as defined under clause (f) of section 45-I of the

Reserve Bank of India Act, 1934

(2) “Collective Investment Management Company” means the

company as defined in clause (h) of sub-regulation of 2 of

Securities and Exchange Board of India (Collective Investment

Companies) Regulations, 1999

(d) The Registrar of Companies immediately after passing of time

given in sub-paras (a) to (c) of this Para and on being satisfied

that the case is otherwise in order, shall strike its name off the

Register and shall send notice under sub-section (5) of section

560 of the Companies Act, 1956 for publication in the Official

Gazette and the applicant company shall stand dissolved from the

date of publication of the notice in the Official Gazette.

*******

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

needs to be given).

Amount (Rs.)

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 :

Place:

Name and

Signature of

(Managing Director)*

Name and

Signature

(Secretary)*

Name and Signature of

(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

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