FAQs on FTE

1. What is Fast Track Exit mode?

Fast Track Exit mode is introduced by Ministry of Corporate Affairs for giving opportunity to non-operating companies for getting their names struck off from the records of Ministry of Corporate Affairs. Fast Track Exit mode is an easy mode of closing non-operating companies at cheaper cost with lesser formalities under section 248.

2. What is defunct Company?

Defunct Company means a Company registered under the Companies Act 2013 (hereinafter referred to as “the Act”), or under any previous company law which is not carrying over any business activity or operation

• Since incorporation or is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining status of a dormant company under section 455
• Having Nil assets & liability

3. What is Vanishing Company?

Vanishing Company means a Company which fulfills following conditions:

• A Company registered under the Companies Act 2013 or any previous Company Law for the time being in force
• Listed on Stock Exchange,
• Has failed to file its returns with Registrar of Companies (hereinafter referred to as “ROC”) and stock exchange for consecutive period of 2 years ,
• Is not maintaining its registered office at the address notified with ROC or Stock Exchange,
• None of its directors are traceable

4. Which Companies can apply under fast track exit mode?

Following Companies can apply under fast track exit mode for striking off its name from register of Registrar of Companies:

• A Company has failed to commence its business within one year of its incorporation; or
• A Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455 of the companies act, 2013

5. Which Companies cannot apply under fast track exit mode?

Following Companies cannot apply under fast track exit mode:

1. Listed Companies
2. De-listed Companies due to non- compliance of Listing Agreement or any other statutory Laws
3. Section 25/Section 8 Companies
4. Vanishing companies
5. Companies where investigation/ inspection ordered and yet to be taken up or pending
6. Companies where notice u/s 234 of the Companies Act, 1956or Section 206 or 207 has been issued by ROC and reply is pending or report under section 208 not yet submitted or is pending
7. Companies where prosecution for an offence is pending in court
8. Companies whose application for compounding is pending before the competent authority for compounding the offences committed by the company or any of its officers in default
9. Companies accepted deposits which are outstanding or default in repayment
10. Company having outstanding loan secured or unsecured
11. Company having management dispute;
12. Company in respect of which filing of documents have been stayed by court or Company Law Board (CLB) or Central Government or any other competent authority;
13. Company having dues towards income tax or sales tax or central excise or banks and financial institutions or any other Central Government or State Government Departments or authorities or any local authorities
14. If at any time in the previous 3 months the company has
    • Has changed its name or shifted its registered office from one State to another;
    • Has made a disposal for value of property or rights held by it, immediately
    • Before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business;
    • Has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement;
    • Has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
    • Is being wound up under Chapter XX of this act or under the Insolvency and Bankruptcy code, 2016

6. Which form is required to be filed with ROC for making application under fast track exit mode?

E-Form STK-2 is required to be filed with ROC for making application under fast track exit mode.

7. Which documents are required to be attached to the e-form STK-2 ?

Following documents are required to be attached to e-form STK-2:

1. Statement of accounts containing assets and liabilities of the company made up to a day, not more than thirty days before the date of application and certified by a Chartered Accountant
2. Copy of Board Resolution authorizing directors to file application
3. Indemnity Bond duly notarizes and signed by all directors in Form STK 3;
4. Affidavit duly notarizes and signed by all directors in Form STK 4
5. A copy of the special resolution duly certified by each of the directors of the company or copies of consent of seventy five per cent of the members of the company in terms of paid up share capital as on the date of application;
6. Statement regarding pending litigations,if any,involving the Company
7. Physical Copy of e-form STK-2 duly signed by Director/MD/Manager/ Secretary if no DSC is available
8. NOC from appropriate authority in respect of following companies
   • Companies which have conducted or conducting non-banking financial and investment activities asreferred to in the Reserve Bank of India Act, 1934
   • Housing finance companies as referred to in the Housing Finance Companies (National Housing Bank) Directions, 2010 issued under the National Housing Bank Act, 1987
   • Insurance companies as referred to in the Insurance Act, 1938
   • Companies in the business of capital market intermediaries as referred to in the Securities and Exchange Board of India Act, 1992;
   • Companies engaged in collective investment schemes as referred to in the Securities and Exchange Board of India Act, 1992 ;
   • Asset Management Companies as referred to in the Securities and Exchange Board of India Act, 1992;
   • Any other company which is regulated under any other law for the time being in force
   • Copy of order of the concerned regulatory authority, if any, approving the filing of this application;
   • Copy of relevant order for delisting, if any, from the concerned Stock Exchange

8. What is the process for filing application under fast track exit mode?

Following is the process for filing application under fast track mode:

• A Company eligible to apply for striking off its name needs to apply to Registrar of Companies in STK-2
• The FormSTK-2, should be filed electronically on the Ministry of Corporate Affairs portal namely www.mca.gov.in and by making payment of Rs. 5000/-;
• Application in Form STK 2 shall be signed by a director duly authorised by the Board in their behalf.
• In case, the digital signature of any of the director or Manager or Secretary is not available for affixing to Form FTE, a physical copy of the Form duly filled in, shall be signed manually by a director authorised by the Board of Directors of the Company and shall be attached with the application Form at the time of its filing electronically;
• Form STK- 2 , shall be certified by a Chartered Accountant in whole time practice or Company Secretary in whole time practice or Cost Accountant in whole time practice;
• Any pending litigations involving the Company should be disclosed while applying under this Fast track exit mode;
• Attachment documents as stated in question no. 7
• Upload STK- 2 with MCA.

9. What process ROC will initiate after filing application underfast track exit mode?

ROC will initiate following process after filing application under fast track:

• Place on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;
• Publish in the Official Gazette;
• Published in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which theregistered office of the company is situated

In case of any application made under sub-section (2) of section 248 of the Act, the Company shall also place the application on its website, if any, till the disposal of the application.

The Registrar of Companies shall, simultaneously intimate the concerned regulatory authorities regulating the company, viz, the Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over the company, about the proposed action of removal or striking off thenames of such companies and seek objections, if any, to be furnished within a period of thirty days from thedate of issue of the letter of intimation and if no objections are received within thirty days from therespective authority, it shall be presumed that they have no objections to the proposed action of striking offor removal of name.

10. Is there any stamp duty required to be paid on any documents?

Stamp Duty is required to be paid on Affidavit and Indemnity Bond as per respective State Stamp Act. As per Bombay Stamp Act, (Maharashtra) affidavit should be on non-judicial stamp paper of Rs. 100/- and Indemnity Bond on non-judicial stamp paper of Rs. 500/- or franking of equivalent value for both.

11. Is there any Attestation / Notary required on Affidavit and Indemnity Bond?

An affidavit should be sworn by each of the existing director(s) of the Company before a First Class Judicial Magistrate or Executive Magistrate or Oath Commissioner or Notary. An Indemnity bond shall be duly notarized.

12. How many directors etc. are required to sign various documents required to be filed with Registrar of Companies?

Signatures of Managing Director/Director/Secretary etc. is required as follows:

Sr. No.		Name of the document		Signature requirement
1		e-form STK-2		Digital Signature Certificate (DSC) of any one of the following who is authorized to sign as per Board Resolution:- Managing Director Director Manager Secretary CEO CFO
2		Board Resolution		Certified True Copy signed by any one of the following:- Managing Director Director Manager Secretary
3		Special Resolution OR Consent Letter by the members		Certified true copy by each of the directors of the company consent of 75% seventy five per cent of the members of the company in terms of paid up share capital as on the date of application;
4		Affidavit		Signed before authorities as mentioned in answer to Question No.11 by all existing directors of the Company.
5		Indemnity Bond		Signed before authorities as mentioned in answer to Question No.11 by all existing directors of the Company.
6		Statement of Accounts		The fast track exit mode is silent on how many directors should sign the Statement of Accounts. So, it is advisable to take signatures of 2 directors, including Managing Director, if any.. To be certified by any one of the following:- Statutory Auditor of the Company Chartered Accountant in whole-time practice

13. Is Director Identification Number (DIN) mandatory for filing application with ROC?

DIN is not mandatory for Managing Director or Director of the Company making application under fast track mode. Details of Managing Director or Director can be filled up for inserting Permanent Account Number (PAN) or Passport Number instead of DIN.

14. Is DSC of Director is mandatory for filing online application with ROC? Or can a Company file application with ROC without having DIN and DSC of any of its directors?

DSC of Director is not mandatory for filing online application i.e. e-form STK-2 with ROC. If DSC is not available take the print out of e-form STK-2 and obtain manual signature of director authorized to sign it as per Board Resolution and attach the same to e-form STK-2.

15. Which information is required to fill up the application (Form STK-2) and other documents required to be attached to it?

1. Following information is required to fill up the application (e-from STK-2):

• Date of Board Meeting for passing resolution for closure under the Fast track exit mode
• Name of the Company
• CIN
• Registered Office Address
• Email ID
• Date of Incorporation
• Status of the Company i.e listed/delisted/Regd with SEBI/NBFC/Venture Capital Company
• In case the activities of company are regulated by sectoral regulator like RBI, SEBI, IRDAI etc. give following details
  • Name of regulator
  • Registration number
  • Date of approval of regulatory body
• Date of general meeting for passing special resolution or consent as may be prescribed obtained
• Copy of DIN application or DIN number else PAN copy or Passport copy. [Information about Director/ MD/ Manager/ Secretary (DIN is not compulsory- options- PAN/Passport ]
• Copy of Memorandum of Association for Main object of the Company
• Brief Description of main business last carried out by the Company
• Any litigations pending against or involving Company (Brief details)
• Details of Assets and Liabilities (Statement of Accounts not older than 30 days of filing Application)

2. Information for Affidavit/ Indemnity Bond:-

a. Copy of Pan / Passport as stated above plus present and permanent residential address proof if passport is not available or update.

b. How many years the Company is not operating with reasons

c. Confirmation about no dues with Income Tax/ Sales Tax/ Central Excise/Bank /Financial Institution/ Govt or Local authority

16. Can a Company against which litigation(s) are pending can application for the fast track exit mode?

Fast track exit mode does not mention anywhere that a Company against which litigation is pending cannot apply for striking off the name of the Company from the Register maintained by the ROC. Hence, a Company against which litigation is pending can apply under fast track mode. Further, details of pending litigations are required to be filled up in e-form STK-2 which has a reference in affidavit format too.

17. Can a Company pending income tax/ sales tax/ central excise/ other Govt dues go for the Fast track exit mode?

No. A Company which has not paid income tax/ sales tax/ central excise/ other Govt. dues cannot make application under fast track exit mode. Format of affidavit mentioned in the form STK-4 and e form STK-2 requires confirmation from directors that there are no dues as mentioned above are pending.

18. Whether NOC from Income Tax/ Sales Tax/ Central Excise/Other Govt authorities required for filing application with ROC?

No. NOC is not required from Income Tax/Sales Tax/Central Excise/other Govt authorities. But all directors need to confirm that there are no dues pending against Company with any such authorities. And MCA will send letter confirming that Income Tax has no objection for striking off the name of the said Company.

19. Is email address appearing in Master Data needs to be updated before filing application under Fast Track Exit Mode?

There is no need to update Master Data with current email address. The email address mentioned in e-from STK-2 will not be pre-filled by MCA. It can be typed by the applicant.

20. What are the liabilities of directors after striking off the name of the Company by ROC?

• To pay and settle all lawful claims arising in future after the striking off the name of the Company.
• To indemnify any person for any losses that may arise pursuant to striking off the name of the Company.
• To settle all lawful claims and liabilities which have not come to notice even after striking off the name of the Company.

21. Whether Companies having some current assets or bank balance can apply under Fast track exit mode?

No. Company is required to have NIL Balance Sheet.

22. What is the effective date of closure of Company?

ROC will send notice (containing list of companies struck off) under section 248(5) of the Act for publication in the Official Gazette. The ApplicantCompany under fast track exit mode shall stand dissolved from the date of publication of the notice in Official Gazette.

23. How old can be the Statement of Accounts which is required to be attached to application?

Statement of Accounts certified by chartered accountant to be attached to e-form shall not be older than 30 days preceding the date of application in e-Form STK-2.

24. What if the RBI/SEBI /IT/other GOVT department raises objection for Striking off the name of the Company?

The applicant Company can reply to the objections raised by RBI, Income Tax Department or any other department. There is no time period specified by ROC for giving reply by the applicant Company. If RBI, Income Tax or the relevant Department is satisfied with the reply given by the applicant Company, ROCwill allow the striking off name of such Company.

25. Is there remedy to the Company if any of the stakeholders raises objection for Striking off the name of the Company?

If any of the stakeholders raises objection, the applicant Company can reply to that. There is no time period for giving of reply by the applicant Company.