Fast Track Exit (FTE) Procedure for Companies

Fast Track Exit (FTE) Procedure for Companies
Madhu Kotwani Feb 13,2018

Fast Track Exit (FTE) Procedure for Companies

Ministry of Corporate Affairs (MCA) issued a Notification for “Removal of Names of Companies from Register of Companies.” As per companies Act, 2013, Which is replaced from strike off (From Fast Track Exist ) of erstwhile Companies Act, 1956. 

This is alternative to winding up of a Company subject to statutory criterion specified under the section.

 

Grounds of Strike off of Companies (When a company can remove the name from ROC)

A company has failed to commence its business within one year of its incorporation. OR

- A company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455.

 

Procedure for Removal of Name of Companies on application of the Company:

Procedure by the Company:

- Calling of Board Meeting/ approval of Board of Director

- Extinguishment of the Liabilities

- Calling of General Meeting/ approval of Members of the company

- Application to ROC

- Filing of forms FTE with ROC with following attachments

  Affidavit,

  An indemnity bond,

  Statement of account duly certified by a Chartered Accountant in practice or auditor of the company and

  Copy of board resolution showing authorization for filing the form

 

Procedure by the ROC:

- ROC will issue Notice on the official website of MCA  for any objections

- Published notice  in the Official gazette

- Publish in one English and one vernacular language newspaper, both having wide circulation in the state in which registered office of the Company is situated

- Intimation to Authorities for any objections

                      Income Tax Authorities

                      Central Excise Authorities

                      Service Tax Authorities

If the authorities have any objections, they have to furnished the same within a period of 30 days from the date of issue of the letter of intimation

If no objections received then ROC shall issue a notice u/s 248(5) of striking off of Company and publish the same in official gazette(placed on the official website of the MCA.)

 

Liability of Directors:

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 under sub-section (5), shall continue and may be enforced as if the company had not been dissolved.

 

Effect of Strike off:

It shall on and from the date mentioned in the notice for

Company cease to operate

COI will cancelled

 

Companies Can`t Remove Under FTE Route:

- Listed companies;

- Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws

- Companies registered under Section 25 of the Companies Act 1956, or Section 8 of Companies Act, 2013

- Vanishing companies; i.e registered under the act or previous company law or any other law for the time being I force and listed with Stock Exchange which has failed to file its return 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 during commencement of business

- 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;

- 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;

- Companies against which any prosecution for an offence is pending in any court;

- 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;

- Companies, which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;

- Companies having charges which are pending for satisfaction;

 

By CS Madhu Kotwani