There are instances where a registered company wishes to close their business but are unable to because of the complex procedures and compliances that need to be followed for the closure. A Private Limited Company is bound to follow a certain set of compliances even if the business has never functioned. In such situations, closure of a company seems to be a better option than to continue it. And in order to simplify and expedite this process, the Ministry Of Corporate Affairs has notified a system called named Fast Track Exit Mode (FTE Mode). Under the Fast Track Exit Mode, the defunct companies who are willing to close their business are given a quick route to get their names struck off from the registrar of companies.
Who can file for FTE ?
Not all companies can close their business using this method; following are the prerequisite to apply for Fast Track Exit:
- Since this provision was introduced to provide an easy route for defunct companies to close their business, the companies applying for Fast Track Exit are required to have no asset or liability when they apply for FTE.
- The company should not have any business activity since the last two years.
Who cannot file FTE ?
These provisions are not applicable to the following companies:
- Section 8 Companies
- Companies Listed on Any Stock Exchange
- Companies which have been delisted due to failure to comply with the statutory provisions
- Companies having outstanding deposits from any financial institutions, government etc.
- Companies which are facing investigation or inspection
- Companies who have pending prosecution or disputes in NCLT or any court.
- A Company who recently has changed their name.
- A Company who recently has changed their registered office
- A Company who recently had activities relating to disposal of assets or any activity other than those required under this provision.
What is the procedure to file for Fast Track Exit ?
Proposed companies who are willing to get their name struck from the registrar are required to file an application for the same with their respective registrar. Following steps would be involved in the process:
- Hold a board meeting for approving the proposal of filing for FTE and authorize the personnel to file the same.
- Pass the necessary board resolution recording the above fact.
- Hold a General Meeting of members and pass a resolution for filing FTE.
- File the special resolution with ROC by filing the respective mail.
- Once the resolution is filed file the FTE application along with required professional report and affidavits.
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