MCA issues new rules on voluntary exit of companies-FourV Update
New Delhi: Companies keen to exit their business for various economic reasons can now hope for quick regulatory clearance with the government operationalising the newly set up Centre for Processing Accelerated Corporate Exit (CPACE).
The Ministry of Corporate Affairs on Monday notified the rules authorising CPACE to handle this work, taking over the task from RoCs across the country. CPACE is set up at the Indian Institute of Corporate Affairs, an institution attached to the ministry.
The amended rules for removal of companies from the official register will be effective 1 May, the ministry said while also bringing out the forms for voluntary closure.
The move of shifting voluntary closure of companies to a centralised agency is part of a revamp of the approval process for various corporate filings aimed at uniform and quick decision-making process.
The ministry also replaced three forms that are related to the process of striking off the names of companies while giving the all-India jurisdiction to CPACE for voluntary closure of companies.
The forms entail some changes, including provision for disclosing pending litigation, explained Virender Bhasin, Executive Director, Entity Setup and Management at Nexdigm, a consultancy.
“The changes are welcome and it will accelerate the pace of strike applications pending with respective ROCs at a faster pace after introduction of centralized processing centre for exit. Also, some modifications in the form will provide better transparency resulting in good governance,” said Bhasin.
Companies chose to go for voluntary closure for various economic reasons including unviability of the business or changed circumstances. For closure, the companies should not have any unmet liability. Voluntary closure is different from government’s action of removing a company from the register for defaulting on filing statutory documents for two consecutive years, although most such defaulting companies may also be defunct.
