Winding Up Of A Company
A private limited company is an artificial judicial person and requires various compliances like appointment of Auditor, regular filing of income tax return, annual return filing and more. Failing to maintain compliance for a Company could result in fines and/or debarment of the Directors from incorporating another Company. Therefore, if a private limited company has become inactive and there are no transactions in the company, then it is best to wind up the Company. To enable inactive private limited companies to quickly close or wind up, the Ministry of Corporate Affairs has introduced Fast Track Exit Mode - an easier way to close inactive companies at a cheaper cost with lesser formalities. A defunct company which has not carried out any business activity or operations for last one year or since incorporation and having NIL assets & liability can apply for stricking-off of name under the Fast Track Exit Mode.
Process For Closing A Company
Frequently Ask Questions (FAQs)
What is Winding up of Company under Fast Track Exit?
Fast Track Exit is a scheme introduced by the Ministry of Corporate Affairs (MCA) for inactive companies to wind up and get their names struck off from the MCA record with lesser formalities.
Which companies can apply for winding up under Fast Track Exit?
A defunct company, meaning that has not been carrying any business activity or operation since incorporation or for last one year and having NIL assets and liabilities can apply for winding up under the Fast Track Exit scheme.
Can a Company under litigation apply under Fast Track Exit?
The eligibility will depend on the nature of litigation. For instance, if there is a Management dispute or prosecution pending in court for compoundable offence, then the company cannot be closed using the Fast Track Exit mode.
Can a Company having loans be closed under Fast Track Exit?
A company having secured loans cannot be closed under Fast Track Exit mode. To be eligible for the Fast Track Exit scheme, the Company must have NIL assets and liabilities.
Can a Company having statutory dues be closed under Fast Track Exit Scheme?
No. A Company having income tax / sales tax / central excise / other Govt dues cannot make application under fast track exit mode.
Which companies cannot be closed under Fast Track Exit Scheme?
Listed Companies, Section 8 Companies, De-listed Companies and Vanishing Companies cannot be closed under Fast Track Exit Scheme.
What will happen to the Bank Account of the Company being closed?
Prior to application under the Fast Track Exit Scheme, the bank accounts of the Company must be closed and all assets and liabilities must be NIL.
How long does it take to close a company under Fast Track Exit Scheme?
After filing of the application with the Ministry of Corporate Affairs, it takes about 90 days for striking off of the Company from MCA records.
When is the Company officially considered to be closed?
ROC will publish list of companies struck off in the Official Gazette. The Company under fast track exit mode will be considered closed from the date of publication of the notice in Official Gazette.
Advantages Of Closing Company Under Fast Track Exit Scheme
Easy to Close:
Fast to Close: