Close a Private Limited Company
How Close a Private Limited Company?
A Private Limited Company is said to have perpetual succession but there are certain situation, where you will be forced to close/shut down your company. In order to close down your Private Limited Company, there are certain rules and regulations laid by the Ministry of Corporate Affairs, and there are certain documents needs to be submitted as per the norms.
Fast Track Exit Scheme:
Ministry of Corporate Affairs has issued Guidelines for “Fast Track Exit (FTE) Mode” as an opportunity to the defunct companies in order to close their Private Limited Companies which are not operative for more than a year to get struck off from the register under Section 560 of the Companies Act, 1956 in time bound manner. The Fast Track Exit Scheme has come into effect from 3rd July, 2011.
Fast Track Exit Scheme does not applicable to certain companies such as Listed Companies, companies that have been delisted due to non-compliance of listing agreement or any other statutory laws, vanishing companies, companies under inspection/investigation, companies against which prosecution for a non-compoundable offence is pending in court, companies having outstanding public deposits or secured loan or dues towards banks and financial institutions or any other Government Departments etc. or having management dispute or company in respect of which filing of documents have been stayed by court or CLB or Central Government or any other competent authority.
PROCEDURE FOR CLOSING DOWN THE COMPANY
THIS MAY BE DONE IN THE FOLLOWING MANNER
- Board Meeting – Two or more Directors of the company must sign a Board resolution that resolves to apply to the ROC for the declaration of the company as defunct.
- Affidavit – Two or more directors of the company must then submit a notarized affidavit which has also been signed by the 2 or more Directors verifying that the company did business for a period up to date, and has since then discontinued its operations, and has no assets or liabilities.
- Indemnity Bond – A notarized indemnity bond, duly signed by two Directors, which states that in case of any liabilities on the company, such liabilities will be met fully by the applicants, even after the name of the company is struck off the register of companies must be submitted.
- Accounting Information – The financial statement of the Company for the most recent year, prepared up to a period which ended one month before the date of application, must be filed by the Company. The statement of accounts submitted must provide a true and fair view of the company’s financial position, and to verify the same, a declaration stating this shall be submitted by a practicing Chartered Accountant.
- Financial Statement – At least one year from the date of incorporation must have passed before the company petitions the ROC for declaring it as defunct. Audited financial statements for the period in which business has been undertaken must be submitted along with the application. In case any unsecured loans are there, then a waiver letter for the same must be submitted.
If the ROC is satisfied with the application given current laws, then it will strike the name of the company and declare it as defunct. Following the same, a notice in this regard will be published in the official gazette by ROC. Bear in mind that the approval of form FTE will take at least one month from the date of filing to be approved.
List of applications filed under FTE will be available on the portal. In case any stakeholder has any objections to the Striking off the name of any company, he/she may raise such objection by email/letter with the concerned ROC Office within 30 days from the date of filing Form FTE by the company.
Any company, which has been identified as dormant by the Ministry of Corporate Affairs, can apply under FTE. Such companies need not to file Form GNL-1 for normalizing and after converting the status of the company as Active; they can go ahead and file Form FTE.
In order to apply for closure under FTE, applicant is required to file an application in the prescribed Form FTE along with prescribed fee of Rs. 5,000/-
STARTING A BUSINESS
Many founders are confused about what kind of entity to register when they start their business. Should it be a private limited company, limited liability partnership, partnership firm, one person company or a sole proprietorship. Each of these has very specific advantages and disadvantages. There is no one type for all businesses. A private limited company registration, for example, would be a good fit for any venture that will look for funding at a later stage. You can contact dobizindia for all the advice you need. We assure you of great service at a reasonable price.
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