Financial Daily from THE HINDU group of publications
Sunday, Jan 30, 2005
Regulatory Bodies & Rulings
Corporate - Sick Units
Government - Policy
Ministry launches fresh exit option for defunct cos
New Delhi , Jan. 29
COMPANIES looking to get their names struck off the register of the Registrar of Companies can now do so without hassles.
The Ministry of Company Affairs has launched a time-bound exit option to enable such companies to get their names deleted from the registrar offices.
However, the companies will have to meet certain conditions before their name is stuck off.
With the Ministry's earlier attempts not meeting with much success, it has now come out with fresh guidelines to help the Registrar of Companies weed out defunct companies.
The new scheme - Simplified Exit Scheme (SES) 2005 - will come into operation from February 1 and remain in force till July 31.
Except Section 25 companies, all defunct companies registered under the Companies Act can apply under this scheme, sources said. The guidelines stipulate that non-banking financial companies not registered with the RBI and collective investment management companies not registered with the Securities and Exchange Board of India can avail themselves of this scheme only if they have not carried out any operation or commercial activity since incorporation.
However, if they are registered with their respective authorities, they can avail themselves of this scheme if they obtain a no-objection from their regulators.
The guidelines also lay down the procedure and documents required for availing the exit option.
The scheme will also be open to foreign nationals and non-resident Indians who adhere to the procedure laid down under the Companies Act.
Further, a company shall not be allowed to avail itself of this scheme in case any prosecution for a non-compoundable offence is pending against it.
However, companies that are involved in compoundable offences under the Companies Act will be allowed to avail themselves of the scheme only if they file a compounding application first and then apply under this scheme, sources said.
No penal action will be initiated against eligible companies availing themselves of this scheme from the date of filing the application for the simplified exit option.
After the scheme ends, the Ministry will take necessary penal action under the Act against defunct companies which have not availed themselves of this opportunity.
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