FTE is very simple and cost saving method of Strike Off of the Company without going for lengthy liquidation process and without High court intervention. Under these sections, the power has been given to Registrar of Companies to strike off the name of the Company from the Register of Companies on suo-motto basis but a Company can also file the application in the prescribed form to the ROC for removing the name of the Company after extinguishing all its liabilities and after complying with some conditions
COMPANY STRIKE OFF
There are different instances due to which the Company can be wound up. Strike Off is the procedure through which the assets of the Company are sold and liabilities are paid. However, the Strike off procedure is not that much lengthy and stringent still it may take time more than a year for approval.
Hence, the Central Government has notified the Fast Track Exit (FTE) Scheme 2017 for easy and fast way for closure of the Companies without passing through the stringent Strike Off process.
FTE is very simple and cost saving method of Strike Off of the Company without going for lengthy liquidation process and without High court intervention. Under these sections, the power has been given to Registrar of Companies to strike off the name of the Company from the Register of Companies on suo-motto basis but a Company can also file the application in the prescribed form to the ROC for removing the name of the Company after extinguishing all its liabilities and after complying with some conditions.
The Registrar of Companies may remove the name of a company from the register of companies when;
A company has failed to commence its business within one year of its incorporation, or
A company is not carrying on any business or operation for a period of two immediately preceding financial years, and
Has not made any application within such period for obtaining the status of a dormant company under section 455 of the Companies Act, 2013.
Reasons to Strike Off of a Company:
1. No Compliance Burden:
Once the company is closed, there does not exist the company as such hence the promoters or directors get free from compliance responsibilities and possible dangers of non-compliances.
2. Faster route of Closure:
Inactive or non-functioning company can be closed swiftly in about 3 to 16 days, whereas traditional methods take longer and are more cumbersome procedures.
3. Avoid Fines:
If the inactive or non-functioning company is not following legal compliances, it may incur hefty fines and penalties and punishments for the officers of the Companyin certain cases including debarment of the Directors from starting another Company. Hence, it is better to officially wind up a company that is inactive and avoid potential fines or liabilities in the future.
Which Companies can not go for Strike off ?
The Listed companies cannot apply for strike off.
Companies registered under section 8 of the Companies Act, 2013 or under section 25 of the earlier Companies Act, 1956.
Companies which have already applied for winding up before the High Court or NCLT.
Companies Which are covered under the Insolvency and Bankruptcy Code, 2016 (IBC)
In all the above cases Companies are debarred from making an application for strike off. They have to go for a lengthy winding up procesures.
Which Companies can go for Strike off subject to certain compliances ?
Company which has changed its name or shifted its registered office from one State to another.
Company which has made a disposal for value of property or rights held by it, immediately before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business.
Company which is engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section.
Company which has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded.
What is the procedure for strike off the Company ?
Step 1: The Company shall hold Board Meeting for approval for striking of a name of the Company
Step 2: The Company shall convene the General Meeting of Shareholders and pass the Special Resolution or obtain the Consent of at least 75% of the shareholders for such strike off.
Step 3: The Company is regulated by any other authority than shall take approval from them.
Step 4: After taking approval the Company shall file an application in form STK-2.
Step 5: After receiving an application, ROC shall publish a public notice STK-6. Any objection to the proposed strike off shall be sent within 30 days.
Step 6: After prescribed time from the date of publication of notice in the Gazette notification of India, ROC shall strike off the name and the Company shall stand dissolved.
What documents are required for Company Strike Off ?
Special Resolution or Consent Letters of the Shareholders.
Statement of Accounts certified by the Chartered Accountant.
Affidavit by each Director.
Indemnity Bond of each Director.
DSC token of the Director for filing of forms.
PAN and Address proof of te Directors who are giving the affidavit.
How we help with Strike Off of a company:
Company Review: We willreview the activities of the Company and determines if it is eligible for Strike Off under the FTE Scheme under the Companies Act, 2013 thereby following easier procedure. The review process would be completed in 2 - 3 working days.
Document Preparation: Then we will provide timelines; documents for Strike Off of the company it will take 5 - 7 working days depending on the Company.
Strike off Application: Application for closure of Company will be made to the ROC who will usually approve the application for Strike Off and closing of the company in about 3 months.