How to Cancel Company Registration in India?

Once the company registration is done there are many compliance requirements that are required to be met and there is an equivalent expense to cater. There would be no benefit in having additional costs for a company that is not purposeful and that which doesn’t generate the expected profit. Thus, it would be in the best interest of the business to cancel company registration.

Earlier, closing down a Pvt. Ltd. Company was a tiresome task which included a lot of procedures but things have changed for the good now and the process is much quicker.

There are mainly two options to cancel company registration.

Option 1: Fast Track Exit (FTE) mode

This mode closes the company quickly; even a company which is non-operational can apply mode to cancel company registration.

This process comes under the provisions of Section 560, of the Companies Act, 1956.

• To shut down, a company under Fast Track Exit, the Registrar of a company can apply through the Form FTE that is available on the official portal of MCA. A certified director has to download and sign the form digitally.

Similarly, ROC can also close any defunct company if there is a rational cause. Even though before giving any decision a chance of being heard has to be given to the defunct company by as per the due procedure stated under section 560.

• On receiving the application, the Registrar of companies will display the name of the company on the official website for 30 days, as a notice sign to anyone who may have an objection to the striking off/ removal of the name of the company.
• After the period of 30 days, the Registrar of companies will issue a certificate to cancel the company registration mentioning that it strikes its name off from the register of companies.

Required documentation

Following are the documents required to be attached along with the Form FTE to cancel company registration:

• A letter of Approval from the Board of Directors for the cancellation of registration and closure of the company. It requires prior approval from the Board of Directors to take the above step.
• The bank accounts linked with the company, registrations with the govt. authorities must be closed/cancelled before applying for the closure process of the company.
• When the board resolution being passed, all the directors of the company must provide an affidavit on a stamp paper, notarized copy and individually stating the below-mentioned points:
• The directors undertake that they are the current directors of the company who are applying for closure.
• The company has closed the bank accounts that are in the name of the company.
• The admission that the company has nil liability and assets.
• The company not involved in any business transactions or work for the precedent year.
• The reasons valid for not having an efficient business.
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• A declaration that the company has no legal dues as on the date of closure and that there are no legal matters pending before any court of law or against any other corporation.

After that, all the directors of the company must execute an Indemnity Bond which must be witnessed by at least two individuals on a stamp paper and be in agreement to do the below:

• To assure any individual for any losses that may take place to after striking off the company name.
• To compensate and settle all the legal claims that may take place in future after the striking of the company name.
Option 2: The Dormant status

This mode is suitable when you have registered a company for a future venture and furthermore, a dormant company is primarily inactive and has the following status:

• No business or functional operation.
• No major financial dealings have taken place.
• Not filed annual returns and financial statements.

It is useful to apply for ‘dormant status’ as it lessens the costs of sustaining such a company. Such companies get exempted from financial statements, reduce compliance for conducting a meeting every quarter and expect to conduct only two meetings every year, and need not rotate the auditors. It is very essential to note that a company can have this status only for five years.

Conclusion

There would be no benefit in having additional costs for a company that is not purposeful and that which doesn’t generate the expected profit. Thus, it would be in the best interest of the business to cancel company registration. There are extensive details to cater to cancel company registration or closing a company. Be stress-free and let our experts advisors at Enterslice will guide you through every step. Contact us.

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