Closing off Company/Defunct Company

All start ups who register their company as a private limited must comply with the companies Act 2013 and do the necessary filing such as MGT-7, AOC-4 and ADT-1. The filings are necessary whether the company has started its operation or not. Failing to comply will attract penalty under the Act. If a company does not have operations it is advisable to close the company or file for dormant status.

If the company chooses to close the company

Closing the company under the FAST TRACK EXIT MODE is the simplest and the fastest mode of closing the company. For this, the company should not have had operation or business transaction from one year from the Incorporation date or not carrying any business for two years from immediate financial year.

Directors need to call for general meeting to take the approval of shareholder for removal of names for Registrar of Companies (MCA). Also Directors needs to execute certain documents such as Indemnity Bond and Affidavits etc to give effect for removal of names.

Form FTE has to be duly certified by a Chartered Accountant or a Company Secretary or a Cost Accountant in whole time Practice.

If the company choose to file for dormant status

A company shall be eligible to apply for status of dormant company only if it follows the following conditions

 There has not been any inspection, inquiry or investigation carried out against the company.

 No prosecution has been initiated and pending against the company under any law.

 The company does not have any public deposits outstanding nor is the company in default in payment thereof or interest thereon.

 There is no secured or unsecured company outstanding loan by the company

 There is no dispute in the management or ownership of the company

 The company does not have any outstanding statutory taxes, dues, duties etc

 The company has not defaulted in the payment of salary to employees or workmen’s dues

 The securities of the company are not listed on any stock exchange within or outside India

The company needs to file Form MSC-1, the registrar will issue a certificate in Form MSC-2 allowing the status of a Dormant Company to the applicant.

P.S. The dormant company shall file a “Return of Dormant Company” annually indicating financial position duly Audited by a chartered accounting in practice in form MSC -3 along with the required fees.