Fast Track Scheme Vs Easy Exit Scheme – Key differences

Easy Exit Scheme enters into a new phase, it will now, be known as the Fast Track Exit scheme.

The Easy Exit Scheme (EES) introduced by the Ministry of Corporate Affairs allowed the defunct companies to have an easy exit, by getting their Company names struck off from the Registrar of Companies, on being inoperative since the incorporation or commencing business and becoming inoperative.

This scheme helped such companies and hence forth it was requested to bring back the scheme which is the Easy Exit Scheme, 2011 known to us. But the Ministry thought over it and modified the scheme.

The modifications in the scheme are based on the issue which is being raised in the existing procedures of the EES, which are mentioned hereunder:

1. Prosecution if any, pending has to be compounded or disposed by the Court

The revised procedures provide,  if the pending prosecutions are only for non- filling of Annual Returns u/s 159 and Balance sheet u/s 220 of the Companies Act, 1956 such application may be accepted provided the applicants have already filed the compounding application. However, steps for final strike of the name of the company will be taken only after disposal of compounding application by the competent authority.

2. Director™s detail must be in accordance with the database maintained by the Ministry

In case, the applicant name is not available in the database of directors maintained by the Ministry, the application shall be accompanied by certificate from a Chartered Accountant in whole time practice or Company Secretary in whole time practice or Cost Accountant in whole time practice along with their membership number, certifying that the applicants are present directors of the company. In such cases, the applicants shall not be asked to file Form 32 and Form DIN 3.

3. Dealing with Companies having assets and liabilities which have not been specifically discussed in the scheme

Ministry cannot advise the directors and shareholders for waiver of their liabilities and distribution of assets, to the shareholder other then the process provided in the Act, it is for the management of the company to take action, as permissible under law of the land.

Thus, the definition of defunct company for this purpose now also includes that, company which has nil asset and liability and

(i) has not commenced any business activity or operation since incorporation; or

(ii) is not carrying over any business activity or operation for last one year before making application under FTE.

4. Indemnity bond and affidavit needs to be furnished by the Directors- NRIs or Foreign Nationals

Foreign nationals and NRIs have to get their Indemnity Bond and Affidavit notarized as per their country™s domestic law.

This simplified procedure was introduced by the Ministry in its circular dated 7th April, 2011 with regard to EES. Now the EES is introduced as the Fast Track Exit scheme wherein the concept and the procedure are the same but with few more additions.

The application Form under the new scheme will be named as Form FTE and the revised fee for filling the application will be Rs. 5000.

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