Company Closure in Fast Track Exit (FTE) Mode

No business started since Incorporation or ceased to carry on business due to lack of funds or any other reason? Close your Private Limited Company and stop complying with routine compliances applicable to your private limited company.

Why Company Closure?

Every year more than 1.5 Lacs companies get registered with www.mca.gov.in and we celebrate that new India is aspiring high and treading the path of Entrepreneurship. More and more companies are getting registered daily, and there is only a leap in this figure. MCA regime also introduced the Free Company Registration campaign wherein they are taking zero fees for company registration which also boosted the numbers of company incorporations. 

While these numbers are great to ears what is horrifying here is that a large number of the companies registered do not start their business and a lot of many do not even complete their mandatory post-incorporation compliance. There are companies which do business for initial 1-2 years and then fail to continue the plunge of startup due to lack of funds/ management disputes/ not having MVP developed/ any other reason. Thus, it becomes necessary to close your company to skip the routine compliances applicable to your company. MCA has come up with the Fast Track Exit Mode where the company can apply for the closure of the company.

Evolution of Fast Track Company Closure:

When a company is registered, the MCA issues a certificate of incorporation by way of the Registrar of Companies now working under the aegis of CRC which acknowledges the existence of the business enterprise. 

Once the name of the company is registered under MCA, it can’t be removed from the Register of Companies until the company applies for its closure or is processed by going for the revival. When any company fails to commence its business or fails to continue its business, the registrar can also suo moto strike off the enterprise by means of sending a notice in STK-1 to the company at its registered workplace address. 

What is the Strike of a Company?

If we go by general interpretation, the strike-off means removing the name of the company from the registers maintained by the Registrar of Companies. What it means is that after the closure of the company, the company will not be in existence after being struck off and can’t carry out any operation thereafter. 

Time for Strike of Companies

It typically takes a minimum of 6 months for a company to be formally struck off. However, the duration of time can vary subject to ROC Approval as they may ask for the additional documents and sometimes the procedure becomes complex. The company can apply for striking off on its own to safeguard itself. 

Note:

All the companies incorporated on or after 2nd November 2018; however; it has not filed INC-20A. They can file for the closure of the company.  For ongoing organization i. having commercial enterprise transactions. They should wait for 2 years before they can file for Closure of Company in STK-2. 

Benefits of Strike off:

Instead of complying with various forms of MCA including audits and returns etc, it is advisable to strike off a company that is dormant or non-active company. This saves compliance costs for a company and you can always start a new company because your DIN is saved from getting disqualified. On the other hand, if you leave the company as it is, you should note that your DIN will be disqualified which will also affect other companies where you are a director. Not only this, but you will also fetch problems in the new company registration.

Received STK-1, Can we go for Company Closure now?

If your company has received notice in STK-1 from ROC for the company closure, note that you can still file for the closure of your company and save your DIN from getting disqualified. What is important to note here is that, after the STK-1 Notice has been served to the company, the company is required to file all the ROC Forms pending as on date before they can file for the closure. 

If you have any company, which need to be struck off legally, you can get in touch with us at info@ccoffice.in or connect at 9988424211 and one of our compliance managers will get back to you to understand your issues.