Company Laws in India:Easy Exit Scheme

As professionals, we are aware about the various schemes introduced in the past. These company laws include the simplified exit scheme 2003 and simplified exit scheme 2005, relating to striking off the names of the company from the Register of Companies as defunct companies.  Despite those schemes, many companies did not show any interest in filing their due documents promptly with the Registrar of Companies as no business operations / activities were/are carried on by them.  For those companies, it is a golden opportunity for getting their names strike off from the Register of Companies at no cost except minimal documentation expenses.

Once again, the Ministry has introduced a Scheme namely, “Easy Exit Scheme, 2010” under section 560 of the Companies Act, 1956. The Scheme has come into force on the 30th May, 2010 and shall remain in force up to 31^st August, 2010.

Company Laws in India: Applicability of the Easy Exit Scheme

The following are some important points pertaining to easy applicability of the exit scheme under company laws:

• A defunct company which has active status on Ministry of Corporate Affairs portal may apply under EES, 2010.
• The government company shall submit ‘No Objection Certificate’ issued by the concerned Administrative Ministry or Department or State Government along with the application under this Scheme.
• An application in the Form EES, 2010, annexure is available in MCA site. The form can be filed electronically without a fee.
• In case, the application in Form EES, 2010, is not being digitally signed by any of the director or Manager or Secretary, a physical copy of this form duly filled in, shall be signed manually by a director authorised by the Board of Directors of the company and shall be attached with the application Form at the time of its filing electronically.
• The Form EES, 2010, has to be certified by a Chartered Accountant in whole time practice or Company Secretary in whole time practice or Cost Accountant in whole time practice.
• The company shall disclose pending litigations if any, while applying under this Scheme.

Company Laws in India: Other Requirements to be Complied With

The Form shall be accompanied by an affidavit to be sworn by each of the existing director(s) of the company before

• First Class Judicial Magistrate or
• Executive Magistrate or
• Oath Commissioner or
• Notary

to the effect that the company has not carried on any business since incorporation or that the company did some business for a period up to a date (which should be specified) and then discontinued its operations and has not carried on any business after the 1st April, 2008, as the case may be.

The Form EES, 2010 shall further be accompanied by an indemnity bond, to be given by every director individually or collectively,

• duly notarized

to the effect that any losses, claim and liabilities on the company, will be met in full by every director individually or collectively, even after the name of the company is struck off  by the Registrar of Companies.

Lastly, the Company shall also file a Statement of Account prepared as on date not prior to more than one month preceding the date of filing of application duly certified by a statutory Auditor of the Company or a Chartered Accountant in whole time practice, as the case may be.

[S Dhanapal is an eminent legal expert, practising company secretary and Partner of S DHANAPAL & ASSOCIATES, Chennai. He is the motivating leader who heads corporate-legalclub@googlegroups.com]