How to cancel company registration under Companies Act By Vikram Shah - March 6, 2019 Last Updated at: May 19, 2020 0 6258 How to cancel company registration The government is considering a fresh ordination to amend the Companies Act to decriminalize several offensive activities, apart from allowing Amerind companies to directly list overseas. The ministry of corporate affairs has begun discussions on fast-tracking the amendments and may approach the Union Cabinet shortly. Introduction Undoubtedly, running and managing a business is an exasperating task. Anyone who starts a business will have an idea and plan to implement the same. But when there is an unplanned incident, which leads to loss, the business might have to be closed due to various reasons. So, here you will get to know about canceling your company registration. Running a business is a challenging task. Individuals usually start a business with an idea they want to implement and sometimes when things do not work out as planned; they may have to be closed owing to different reasons which include insufficient funds, zero working capital, poor management, and other unforeseen circumstances for different reasons. As always if you’d like to know more about professional help on startups, registrations or compliance, browse our services and find our how we do it differently from others. Register a Company PF Registration MSME Registration Income Tax Return FSSAI registration Trademark Registration ESI Registration ISO certification Patent Filing in india Once a company is registered there are many compliance requirements that need which requires to be met and there is an equal expense to cater. There would be no point in having additional costs for a company that is not functional and that which doesn’t generate the expected revenue. Therefore, it would be in the best interest of the business everyone to cancel company registration. Previously, closing down a private limited company was a tedious task which included a lot of procedures but things have changed for the good now and the process is much quicker. Remove Your Company Name from MCA There are primarily two options for companies to cancel company registration. Option 1: Fast Track Exit (FTE) mode This mode lets you close the company rapidly; even a company which is defunct can apply for this same mode. (A defunct company is a company which has nil assets, nil liability and has initiated no kind of business or activity since its incorporation or has not conducted any business operations since the last one year.) This process comes under Section 560, of the Companies Act, 1956. To shut down, a company under FTE, the Registrar of a company can apply through the Form (FTE) that is available on the MCA website. An authorized director should download and digitally sign the form. There will be an application fee for this process. Likewise, ROC can also strike off any defunct company if there is a reasonable cause. Although, before passing any decision a chance of being heard must be given to the defunct company by following the due procedure u/s 560. On receiving the application, the Registrar would display the name of the company on its website for a specified time of 30 days, as a notice indication to anyone who may have an objection to the removal/striking off the name of the company. After a period of 30 days, the Registrar will issue a certificate for the closure of the company mentioning that it strikes its name off from the register of companies it maintains with the ROC. Required documentation Below is a list of documents that require to be attached with the Form FTE: Approval letter from the Board of Directors for the closure of the company and cancellation of registration. It requires prior approval from the BOD to take the above step. All the bank account connected with the company, registrations with the govt. authorities should be closed/cancelled before applying for the closure process. Upon the board resolution being passed, all the directors of the company should provide an affidavit on a stamp paper, notarized copy and individually stating the below-mentioned points: The directors vow that they are the current directors of the company who are applying for closure. The company has closed all the bank accounts that exist in the company’s name. The disclosure that the company has nil assets and liability. They have not involved the company in any business work or transactions for the past year. The valid reasons for not having a functional business. Stating that the company has no legal dues as on the date of declaration and that there are no litigations pending before any court of law or against any other company. After that, all the directors of the company should execute an Indemnity Bond which should be witnessed by two2 individuals on a stamp paper and agree to do the below: To indemnify any individual for any losses that may take place to strike off the name of the company. To pay and settle all the legal claims that may occur in future after the striking of the name of the company. To resolve all the legal claims and liabilities this may have not come to our notice till this point. Option 2: The Dormant status This mode is appropriate when you have a registered a company for a future project and moreover, a dormant company is mainly inactive and has the below-mentioned status: No functional operation or business. No major financial transactions have taken place. Not filled financial statements and annual returns. It is helpful to apply for ‘dormant status’ as it reduces the costs of maintaining such a company. Such companies get exempt from including financial statements, reduces compliance for holding a meeting every quarter and expect to hold only two meetings yearly, and need not rotate the auditors. It is very important to note that a company can have this status for only five5 years. Conclusion There are extensive details to cater while closing a company or cancelling company registration. Be stress-free and let our experts advisors at Vakilsearch guide you through every step. Contact us. Once a business or organization is registered, there are numerous compliance requirements that have to be met. Buy when it comes to canceling the registration, it has to be in the best interest of the business. Earlier, it was a tedious task to cancel a company registration but now it is much easier and simpler.