FTE - A FAST TRACK EXIT MODE FOR COMPANIES

INTRODUCTION

Fast Track Exit (FTE) is a simplified procedure for the registered Companies for easy dissolution rather than undergoing the tedious and year long process of Winding Up. Winding up affairs in India is comparatively more time consuming and takes almost a life time for the Companies to get dissolved. In view of this, the Ministry of Corporate Affairs (MCA) introduced Fast Track Exit (FTE) Mode in the year 2011 for Defunct Companies under Section 560 of Companies Act, 1956. Thus, for at least the Defunct Companies the scheme is boon.

MAIN HIGHLIGHTS OF THE SCHEME

• The Company making Application under FTE should have Nil Assets and Liabilities. 
• The Company should not carry on any Activity or Business since Incorporation or should not be carrying out any Business Activity for the last one year before making an Application under FTE.
• A Company whose status on MCA Portal is Active or is identified as Dormant may apply for FTE.
• The Promoters of Defunct Companies by opting for easy Liquidation will save on effort and cost towards Annual Compliance.

WHO CANNOT AVAIL?

FTE is not applicable to the following Companies:

• Listed Companies
• Companies that have been de-listed
• Section 25 Companies
• Vanishing Companies
• Companies under Investigation/Inspection pending in any Court
• Companies where order u/s 234 has been issued and the reply/prosecution is pending
• Companies against which prosecution for a Non-Compoundable offence is pending in Court
• Company in respect of which filing of documents have been stayed by Court or CLB or Central Government or any other competent authority
• Companies with outstanding Public deposits or secured loans
• Companies in a Management Dispute
• Companies owing dues to Income Tax, Sales Tax, Central Excise, Banks and Financial Institutions or Central Government or State Government or any Local Authority

PROCEDURE

- Make an Application in the Form FTE available on MCA Portal, along with a filing fees of Rs. 5000/-

- Form FTE to be accompanied by:

1. Affidavit from each existing Director
2. Indemnity Bond from individual Director or collectively duly notarized
3. Statements of Accounts duly certified by the Statutory Auditor or a CA in whole time practice
4. Board Resolution showing authorization given to the Directors for filing the form with the ROC

Along with these documents, Form FTE is to be filed. The  Registrar of Companies on receipt of application, shall examine the same and if found in order, shall give Notice to the Company giving 30 days time, stating that unless cause is shown to the contrary, its name be struck off from the Register and the Company will be dissolved.