Procedure for applications
Action by registrar of companies
Subsequent developments


On June 7 2011 the Ministry of Corporate Affairs introduced its Fast-Track Exit Scheme. The scheme is a modification of the Easy Exit Scheme and adds new guidelines to allow non-defunct companies an easy exit by having their names struck off the Register of Companies.

The Easy Exit Scheme was introduced by the Ministry of Corporate Affairs to allow defunct companies an easy exit by having their name struck off the Register of Companies, where they have been inoperative since incorporation or commenced business and subsequently became inoperative. However, there are many other companies registered under the Companies Act 1956 which commenced operation and then became inoperative, have been inoperative since incorporation or were initially operative but later became defunct. To allow such companies to benefit from such a scheme, the ministry introduced its new guidelines under the fast-track scheme. These guidelines were implemented on July 3 2011.

The registrar of companies may strike off the name of a company if it satisfies the conditions mentioned in Section 560 of the act. In addition, for a company to have its name struck off under current practice, it must apply to the registrar via E-form 61 and file all pending statutory returns alongside such e-form.

Under the fast-track scheme, a 'defunct company' is defined as one that:

  • has no assets or liabilities;
  • has not commenced any business activity or operations since incorporation; or
  • did not carry out any business activity or operations in the year before that in which it applies under the fast-track scheme.

Further, any defunct company that has active status or is identified as dormant by the ministry may apply to have its name struck off from the Register of Companies. Defunct government companies must submit a 'no-objection certificate', as issued by the administrative ministry or department concerned or by the state government, along with the application for striking off.

Procedure for applications

An application must be made by a defunct company (as defined above) through the Fast-Track Exit Scheme Form, annexed electronically on the ministry portal, and accompanied by a filing fee of Rs5,000.

If the application is not digitally signed by any of the directors, a manager or a secretary, a physical copy of the form must be duly completed, signed manually by a director who is authorised by the board of directors and attached with the application form at the time of its electronic filing.

In all cases, the form must be certified by a chartered accountant, company secretary or cost accountant in full-time practice.

If the applicant's name is not available in the database of directors maintained by the ministry, the application must be accompanied by a certificate from a chartered accountant, company secretary or cost accountant in full-time practice, along with his or her membership number, certifying that the applicant is a director of the company. In such cases the applicant will not be asked to file Form 32 and Form DIN3.

The company must disclose pending litigation, if any, in which the company is involved while applying under the fast-track exit scheme.

If any pending prosecutions are only for non-filing of annual returns under Section 159 of the Companies Act 1956 and a balance sheet under Section 220 of the act, such application may be accepted, provided that the applicants have already filed the compounding application. However, steps for final striking off of the company's name will be taken only after disposal of the compounding application by the competent authority.

The form must be accompanied by an affidavit that has been sworn by each director of the company before a first-class judicial magistrate, executive magistrate, oath commissioner or notary, to the effect that the company has not carried on any business since incorporation or carried out business only for a period up to a particular date (which should be specified) and then discontinued its operations.

The form must also be accompanied by an indemnity bond, duly notarised, to be given by every director individually or collectively, to the effect that any losses, claims and liabilities of the company will be met in full by every director, individually or collectively, even after the name of the company has been struck off the Register of Companies.

For foreign nationals and non-resident Indians, the indemnity bond and affidavit must be notarised under their respective national law.

The company must also file a statement of accounts prepared not more than one month before the date of filing of the application, duly certified by a statutory auditor or chartered accountant in full-time practice.

In the case of 100% government-owned companies, if no board exists, an officer of at least the rank of deputy secretary of the administrative ministry concerned is authorised to enter his or her name and other details in the forms in place of the name and other details of the directors, and to sign the relevant documents before filing.


The fast-track exit mode cannot be extended to several types of company. These include:

  • listed companies;
  • companies that have been de-listed due to non-compliance with a listing agreement or any other statutory laws;
  • companies registered under Section 25 of the Companies Act 1956;
  • 'vanishing' companies - that is, companies registered under the act and listed with the stock exchange that have failed to file their returns with the registrar and the stock exchange for a consecutive period of two years and do not maintain their registered office at the address notified, and none of whose directors are traceable;
  • companies where inspections or investigations are underway or are yet to be carried out, or where completed prosecutions arising out of such inspections or investigations are pending in the court;
  • companies for which an order under Section 234 of the act has been issued by the registrar and a reply thereto is pending, or where prosecution is pending in the court;
  • companies against which prosecution for a non-compoundable offence is pending in court;
  • companies that have accepted public deposits which are outstanding or that are in default in repayment of the same;
  • companies with secured loans;
  • companies with management disputes;
  • companies for which the filing of documents has been stayed by a court, a company law board, central government or any other competent authority; or
  • companies with dues owing for income or sales tax, or to central excise, banks or financial institutions, any other central or state government department or authority or any local authority.

Action by registrar of companies

Under Section 560(3) of the act, on finding an application in order, the registrar must give 30 days' notice to the company by email (sent to the email address given in the form), stating that unless cause is shown to the contrary, its name will be struck from the register and the company will be dissolved.

The registrar must also detail daily - on the Ministry of Corporate Affairs' portal - the name of any applicants and the date on which applications were made under the fast-track exit mode, giving 30 days for stakeholders to raise objections before the registrar.

For companies - such as non-banking financial companies or collective investment management companies - that are regulated by other regulators (eg, the Reserve Bank of India or the Securities and Exchange Board of India), at the end of every week the registrar must indicate to the concerned regulators and to the Income Tax Department those companies that have applied under the fast-track exit mode during that period, and allow 30 days for them to raise any objections.

Once the prescribed 30-day period has elapsed, if satisfied that the case is otherwise in order, the registrar must strike the company's name off the register and send notice (under Section 560(5) of the act) for publication in the Official Gazette. The applicant company will be considered dissolved from the date of publication of such notice. The decision of the registrar in respect of striking off the name of company is final.

Subsequent developments

On July 1 2011 the ministry also proposed a procedure for the relaxation of exit norms for non-profit companies (under Section 25 of the act) that would allow them to de-register by taking advantage of the Fast-Track Exit Scheme, provided that they fulfilled and satisfied the prescribed criteria. This move follows the ministry's receipt of representation from various stakeholders for the development of a procedure (under Section 560 of the act) for striking off names of non-profit companies that have been granted a licence under Section 25 of the act.

Such companies include those that normally receive contributions in the form of donations, such as for charitable activities. According to the proposed guidelines, a company must pass a resolution in its general meeting proposing an application to the registrar to strike off its name; such resolution must be approved by all members or shareholders. Furthermore, for a company to benefit from the scheme, it must not have commenced any activity or operation since its incorporation, should have ceased activities for more than three years or should not have received any donation, grants or contribution from anyone other than its members.

In the event that a company obtains special status from any authority - such as the Department of Income Tax, commissioner of charity or any other organisation or department of central government, state government, municipal body or any recognised authority - a 'no-objection certificate' must be obtained from the authority concerned. Furthermore, as well as any existing assets, new assets must be transferred to a similar company before it applies to the registrar for its name to be struck off. This is in line with company law, which details that when such a company is wound up, any asset or property must be transferred to "any other such company having objects similar to the objects of this company". Members or the High Court can determine the company to which the assets must be transferred.

In addition, the company's balance sheets must be up to date and it must have filed its annual returns. The latest balance sheet should show no assets or liabilities. Under the Fast-Track Exit Scheme guidelines, the directors must file an affidavit and indemnity bond, and a certificate must be taken from its practising chartered accountant, company secretary or cost accountant certifying compliance by the company.

The ministry invited comments on the proposed guidelines by July 15 2011 from all persons; as such, the proposal is still pending implementation.

For further information on this topic please contact Neha Goyal or Vikas Goel at Singhania & Partners LLP by telephone (+91 11 4153 1000), fax (+91 11 4153 1001) or email ([email protected] or [email protected]).