Fast Track Exit (FTE) Mode: Procedure for striking off the name of the company

Last Updated at: October 23, 2019
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Fast Track Exit (FTE) Mode: Procedure for striking off the name of the company

There are times when the company isn’t working, or maybe the profits are not at par with the expectations, or else the owner wants to start a new company. In any of the above situations, the owner would like to get the name of the company struck off from the Register of Companies instead of holding the burden of it for long.

So, in order to boost up the process of the disposal and removal of the companies from the registered list, the FTE scheme was introduced on 26th December’16.

FTE stands for Fast Track Exit scheme, under which the companies which are no longer functioning, are given an opportunity to get names removed from the registered list.

This scheme was made in accordance with section 560 under the Companies Act, 1956.

The guidelines of this scheme were introduced and made by the Ministry of Corporate Affairs (MCA).

ELIGIBILITY CRITERIA:

All the companies are not directly eligible for the application of FTE and certain eligibility criteria need to be followed as under:

    • To apply for the Fast track Exit scheme, the company must neither have any asset nor any liability.
    • Either the company should not have started any business or other operations since its commencement or should not have been involved in any sort of business for the past 1 year.

Remove Your Company Name

COMPANIES ON WHICH FTE IS NOT APPLICABLE:

Along with the eligibility criteria, the FTE scheme is not applicable to several companies. These include:

  • The companies that have been listed.
  • Companies falling under section 25 (Companies Act).
  • The companies which are vanishing.
  • The companies which are susceptible to an investigation or maybe even inspection.
  • The companies which have been undertaken or against whom prosecution is pending in the court.
  • Companies that are under immense debt or the ones facing management issues.
  • The companies for which the filing of important documents have been put to stay by the court or other higher authorities.
  • Companies who haven’t filed in the taxes of banks or the other financial institutions.

DOCUMENTS REQUIRED:

If the company wants to get their name struck off from the registered list, the applicant needs to fill in the application form online with the registrar, and along with that need to pay an application fee of INR 5,000.

After the successful application, various documents need to be submitted which include:

  • An Affidavit: It is the proclamation take by all the director(s) of the company that either it has not undertaken any business since its commencement or the business was terminated on the respective date (which needs to be specified on the documents).
  • Indemnity Bond: The bond has to be signed and must be given by every director either individually or collectively in the name of the company, that if any losses, debts, assets or liabilities incur even of striking off the name of the company, they will be paid by the directors individually or as whole in the name of their company.
  • Statement of Account: It is to be prepared by a professional Chartered Accountant or by a company secretary and has to be attached with the application form. The account statement so prepared must not be older than 30 days, preceding the date of application.
  • Copy of Board Resolution

APPLICATION PROCEDURE:

The procedure to apply and fill in the form for FTE is as given below:

Step 1: If the company fulfils the eligibility criteria, they first need to register themselves with the Registrar of Companies for the FTE form.

Step 2: Just after the registration is completed, the company needs to remit the fee payment of INR 5,000.

Step 3: The Registrar of Companies examines the company, and check whether it satisfies the criteria, and then within 30 days of the application the company is dissolved, and the name of the company is also struck off from the list.

Step 4: After the application is filled, the stakeholders are given a tenure of 30 days to raise any objections.

Step 5: After all the objection and intimation process is completed, the Registrar of Companies finally approves and strikes off the name of the company and a notice is further sent to the official gazette under section 560(5) of the Companies Act, 1956.

STAMP DUTY:

The final step involves paying off the stamp duty on the Affidavit and Indemnity Bond with respect to the State Stamp Act.

As per the Delhi Stamp Act, on the affidavit, there has to be a non-judicial stamp paper of INR 10 and on Indemnity bond, a stamp paper of INR 200.

POST-STRIKE OFF LIABILITIES:

All the directors must pay, and settle at the claims against the company which might arise in the future and must also pay off and settle all the liabilities in the name of the directors or the company.

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Fast Track Exit (FTE) Mode: Procedure for striking off the name of the company

2665

There are times when the company isn’t working, or maybe the profits are not at par with the expectations, or else the owner wants to start a new company. In any of the above situations, the owner would like to get the name of the company struck off from the Register of Companies instead of holding the burden of it for long.

So, in order to boost up the process of the disposal and removal of the companies from the registered list, the FTE scheme was introduced on 26th December’16.

FTE stands for Fast Track Exit scheme, under which the companies which are no longer functioning, are given an opportunity to get names removed from the registered list.

This scheme was made in accordance with section 560 under the Companies Act, 1956.

The guidelines of this scheme were introduced and made by the Ministry of Corporate Affairs (MCA).

ELIGIBILITY CRITERIA:

All the companies are not directly eligible for the application of FTE and certain eligibility criteria need to be followed as under:

    • To apply for the Fast track Exit scheme, the company must neither have any asset nor any liability.
    • Either the company should not have started any business or other operations since its commencement or should not have been involved in any sort of business for the past 1 year.

Remove Your Company Name

COMPANIES ON WHICH FTE IS NOT APPLICABLE:

Along with the eligibility criteria, the FTE scheme is not applicable to several companies. These include:

  • The companies that have been listed.
  • Companies falling under section 25 (Companies Act).
  • The companies which are vanishing.
  • The companies which are susceptible to an investigation or maybe even inspection.
  • The companies which have been undertaken or against whom prosecution is pending in the court.
  • Companies that are under immense debt or the ones facing management issues.
  • The companies for which the filing of important documents have been put to stay by the court or other higher authorities.
  • Companies who haven’t filed in the taxes of banks or the other financial institutions.

DOCUMENTS REQUIRED:

If the company wants to get their name struck off from the registered list, the applicant needs to fill in the application form online with the registrar, and along with that need to pay an application fee of INR 5,000.

After the successful application, various documents need to be submitted which include:

  • An Affidavit: It is the proclamation take by all the director(s) of the company that either it has not undertaken any business since its commencement or the business was terminated on the respective date (which needs to be specified on the documents).
  • Indemnity Bond: The bond has to be signed and must be given by every director either individually or collectively in the name of the company, that if any losses, debts, assets or liabilities incur even of striking off the name of the company, they will be paid by the directors individually or as whole in the name of their company.
  • Statement of Account: It is to be prepared by a professional Chartered Accountant or by a company secretary and has to be attached with the application form. The account statement so prepared must not be older than 30 days, preceding the date of application.
  • Copy of Board Resolution

APPLICATION PROCEDURE:

The procedure to apply and fill in the form for FTE is as given below:

Step 1: If the company fulfils the eligibility criteria, they first need to register themselves with the Registrar of Companies for the FTE form.

Step 2: Just after the registration is completed, the company needs to remit the fee payment of INR 5,000.

Step 3: The Registrar of Companies examines the company, and check whether it satisfies the criteria, and then within 30 days of the application the company is dissolved, and the name of the company is also struck off from the list.

Step 4: After the application is filled, the stakeholders are given a tenure of 30 days to raise any objections.

Step 5: After all the objection and intimation process is completed, the Registrar of Companies finally approves and strikes off the name of the company and a notice is further sent to the official gazette under section 560(5) of the Companies Act, 1956.

STAMP DUTY:

The final step involves paying off the stamp duty on the Affidavit and Indemnity Bond with respect to the State Stamp Act.

As per the Delhi Stamp Act, on the affidavit, there has to be a non-judicial stamp paper of INR 10 and on Indemnity bond, a stamp paper of INR 200.

POST-STRIKE OFF LIABILITIES:

All the directors must pay, and settle at the claims against the company which might arise in the future and must also pay off and settle all the liabilities in the name of the directors or the company.

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A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.