When a company is registered, there are certain compliance
requirements that must be met regardless of how the company operates.
Therefore, it is sometimes wise to cancel the registration if the company
continues to suffer losses. Here we discussed about How to Cancel Company
Registration under Companies Act.
Undoubtedly, running and controlling a business is a
daunting task. Anyone starting a business will have the same idea and plan to
apply the same. But, when there is a planned incident that causes damage, the
business can be shut down for a variety of reasons. Once a company is
registered, many compliance requirements must be met, and the cost of providing
food is the same. There will be no point in overcharging for a company that is
not functional and does not generate the expected revenue. Therefore, the
cancellation of the company's registration will be in the interest of the
business for all.
In the past, shutting down a private limited company was a
tedious process that involved many processes but now things have changed for
the better and the process is very intense.
There are two main options for companies to cancel company
registration.
Option 1: Fast Track
Exit (FTE) mode:
This mode allows you to close the company quickly, even if a
company can apply for the same mode that is closed.
A dormant company is a company that has zero assets, zero
liability, and has not commenced any kind of business or activity since its incorporation
or carried out any business operations since the previous year.
This process is subject to section 560 of the Companies Act,
1956.
- For winding up a company under
FTE, a person can apply through the form (FTE) available on the website of MCA.
An authorized director should download the form and digitally sign it. The
application fee has to be paid for this process.
- Similarly, the ROC can also wind
up any dormant company if there is a valid reason. However, before passing any
decision, the dormant company should be given an opportunity of being heard by
following due process under section 560.
- On receipt of the application, the
Registrar shall display the name of the Company on its website for a specified
time of 30 days as a notice signal to any person objecting to the deletion of
the name of the Company.
- After a period of 30 days, the
registrar will issue a certificate for winding up the company, mentioning that
he strikes his name out of the register of companies maintained by him.
Required Documents:
1- Letter of acceptance from the board of directors for
winding up the company and cancellation of registration. Prior approval from
BOD is required for taking the above steps.
All bank accounts associated with the company, registration
with the Govt. Officers should be closed/canceled before applying for the
closure process.
2- Upon the Board's resolution being passed, all directors
of the company must provide an affidavit on a stamp paper, notarized copy, and
in-person stating the points mentioned below:
- The directors have pledged that
they are the current directors of the company applying for winding up
- The company has closed all those
bank accounts which are present in the name of the company.
- The disclosure that the assets and
liabilities of the company are nil.
- He has not involved the company in
any business activity or transaction for the last year.
- Legitimate reasons for not having
a functional business.
- Stating that the company has no
legal dues as of the date of declaration and no suit is pending against any
court or any other company.
3- Thereafter, all the directors of the company must execute
an indemnity bond, which must be seen on a stamp paper by two persons and agree
to do the following:
- To indemnify any person for any
loss this may be caused to the company name.
- In addition, to pay and settle all
future legal claims arising out of the strike in the name of the company
- To resolve all legal claims and
liabilities these have not come to our notice so far.
Option 2: Inactive
State:
This method
is appropriate when you have listed a company for a future project. A dormant
company is primarily dormant and has the following status:
- No functional operation or business.
- No major financial transactions have taken place.
- Financial statements and yearly returns not filed.
Applying for a 'dormant position' is helpful as it reduces
the cost of maintaining such a company. Such companies are exempt from
including financial statements, reduce compliance to holding one meeting every
quarter and are expected to hold only two meetings annually, and are not
required to rotate auditors. It is very important to note that a company can
have this status only for five years.
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Company registration, Company registration online, Company registration in India, Company registration process, Company registration cancellation, Company registration cancellation process, Company registration
