What do you mean by Fast Track Exit (FTE) Mode?
Fast Track Exit was introduced as Scheme under Section 560 of the Companies Act, 2013 which deals with striking of the name of the defunct companies from the Registrar of Companies when conditions thereunder satisfied. Section 560 empowers the ROC to strike off the name of the company that is inactive from the date of incorporation or commenced their business for some time and later became inoperative or defunct due to various reasons. Ministry in order to expedite this process to remove the names of the inactive companies introduced Fast Tract Exit Scheme.
The company deemed to be defunct if a company has not commenced any business activities and has just NIL assets and liabilities or if a company has commenced its business, but unable to continue business and remained inactive for one year prior to the application for Fast Track Scheme. If the applicant of FTE is a government company, then NOC should be obtained from Ministry/department.
- The Companies (Amendment) Act, 2015
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The companies for which FTE scheme not applicable and not eligible to apply for FTE are the listed Companies, Section 25 Companies, companies which had not complied the Listing Agreements or statutes, companies under inspection, investigation, and prosecution, companies which availed secured loans or have public deposits outstanding, companies whose filing of documents stayed by Court or any authority, companies that have the outstanding dues to revenue department, and has any management disputes.
Procedure for applying FTE:
- Form FTE to be certified by a Chartered Account or Company Secretary or Cost Accountant in practice
- Company should furnish the details of pending litigations or prosecutions. Eg. prosecutions related to annual returns or Balance sheet if any pending, company should file a compounding petition along with FTE application.
- Statement to the effect that company has not commenced any business activities since incorporation or commenced business discontinued should be signed by the existing directors of the Company and to be certified by the notary.
- Indemnity Bond to be executed by all the directors and get it notarized to the effect that they are jointly and severally liable even after the name of the Company removed from the Register of Companies.
- Latest updated Statement of Accounts certified by Statutory Auditor or a Chartered Accountant to filed
FTE application with above annexures to be filed with ROC, and ROC within 30 days from the date of receipt of applications, if all conditions and compliance under Section 560 met, will intimate the removal of name of company from the Registrar. Then Company should be dissolved.
Adv. Anitha Gutti