Every business has to survive through the hardship and apparent obstacles to earn profit irrespective of their size or nature of work. But sometimes even the well-planned strategies couldn’t save the businesses from being hindered by adversity that occurs unexpectedly. and in such cases business left with no other option than cancel company registration.
Individuals can commence a business with a goal they wish to deploy and oftentimes when things don’t work as expected; they might have to be close due to several reasons which include insufficient funds, poor management, and zero working capital.
How to go about Revocation of Company Registration under Companies Act, 2013?
Once an organization is registered there are various compliance requirements that need to be met and there is an equal expenditure to cater. It is not feasible for someone to procure additional costs for the company which is not operating or unable to reap the projected revenue. Thus; it would be beneficial for the business and its members to cancel company registration.
In past, the closure of a fully functional privately held entity was a cumbersome task that included plenty of legal requirements that are difficult to meet. Fortunately, all those obstacles have vanished as the authority makes the closure procedure easier than ever. Currently, two options are accessible to companies to cancel company registration. These are as follows:
Fast Track Exit (FTE) mode: What is it all about?
This mode allows the owner to swiftly wrap up the company; even an organization that is defunct (non-operational) can opt for this mode. In the business context, a defunct company means a company that does not possess any asset and liability whatsoever. It is also referred to as a type of entity that remains inactive since the incorporation or has not been involved in core business activities for more than one year.
Section 560, of Companies Act, 2013
The provision for wrapping up the defunct companies under Fast Track Exit (FTE) mode is mentioned under Section 560, of the Companies Act, 2013. As per the said Act, the company seeking cancellation of registration certificate under FTE has to apply e-form 61 to Registrar of company. The applicant is also required to fill all pending statutory returns along with the said form. Also, the form cannot be submitted to the concerned authority in the absence of the Director’s signature.
The authority would charge a prescribed application fee for this process. Similarly, the Registrar of Company can discard the name of the companies in the presence of a reasonable cause. Though, before passing any judgement, an equal chance is given to the defunct company to clarify their stands in the purview of due procedure under section 560
Objection raised from the Other Parties
Upon receiving the application, the ROC would show the company’s name on its online portal for 30 days of the timeline. Such relaxation is given to confront any objection raised from the other parties in the given timeline. Once this timeline is over without dispute or conflict, the registrar will grant their approval by conferring the certificate for the closure to the applicant.
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What are the Documents Required to Cancel Company Registration?
The following documents shall be required to cancel company registration. Keep in mind that these documents would go along the Form FTE:
Approval letter from the BODs regarding the closure of the company: Before applying for cancellation, the company must get cancel all the active certificates and license as well as bank accounts as it is a mandatory requirement which should be met without avoidance. Upon passing of board resolution, all the directors ought to render an affidavit on stamp paper individually stating the following details:-
- The director’s declaration ensuring that they are working as an active employer and have applied for closure.
- The company has got rid of all the active bank accounts related to the company.
- The declaration ensuring that the company has no longer possesses any asset and liability.
- Declaration that company remains inactive and doesn’t involve with any sort of activities for the past year.
- The legitimate reasons for not being operative for the given period.
- Stating that organization has no pending charges or legal disputes against anyone.
After that, an Indemnity Bond should be executed by the company’s directors in the presence of the two witnesses on a stamp paper and agree to do the below:
- To indemnify any person for any financial losses that may happen to strike off the company’s name.
- To address all the legal claims that probably come into existence in the future after then canceling the company’s name.
- To settle the legal claims that hasn’t been the highlight so far.
The Dormant status: What is it all about?
This mode comes in handy when one has a registered company for a future project. A Dormant company is primarily non-functional and has the following traits:
- No functional business or operation.
- Free from any financial transaction
- Not address any financial and tax liabilities.
It is wise to opt for ‘dormant status’ as it reduces the maintenance cost for such a company. Such a company rejoices relaxation on account of maintaining compliance for holding a meeting. Keep in mind that such a company has this status for five years only.
One has to address various requirements to cancel company registration. Be cautious while drafting the documents for the same because most of the error occurs on this account only. In case if you wish to opt for a hassle-free way to cancel the company registration then let experts advisors at CorpBiz help you out.
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