Organisations sometimes show no business activity or operation for a year or more of their establishment. At such times they choose to strike their name off from the official records of the Ministry of Corporate Affairs (MCA). If you’re an MSME who wishes to do the same, the Fast Track Exit Mode scheme introduced by the MCA can benefit you.
The Fast Track Exit Mode Scheme by the MCA enables an MSME to close down their non-operational business at a cheaper cost with fewer formalities under Section 560.
How does an institution benefit from this scheme?
An institution can:
- Avail loans to close down its non-operational business at an affordable price
- Gain assistance from the government to:
– Build intermediary institutions
– Manufacture new products
– Identify target markets
– Meet its training needs
- Gain assistance from the government in the fields of:
What are the features of this scheme?
- Arranging fixed deposits for MFIs/NGOs
The Government of India provides funds to SIDBI. These funds are used for the security deposit requirement of loan for MFIs/NGOs. SIDBI takes 10% as security deposit, out of which MFIs/NGOs get 2.5% (25% security deposit). The institutions can avail further loans on the basis of security deposit.
- Training and Studies on Micro-Finance Program
The Government of India would help SIDBI in meeting the training needs of NGOs, Self Help Groups, intermediaries and entrepreneurs and also in enhancing awareness about the program. This would be performed with the help of various developmental institutes.
- Assistance in building conciliatory institutions
The government of India will help in building intermediary institutions for MFIs that will help them with building new products, identifying target markets, and providing technical and marketing assistance.
What is the eligibility criteria for this scheme?
An MSME is eligible for this scheme if it falls under the following categories:
- The company is not operating or is not carrying any business since the last one year from the date of application
- Company is not operating or not carrying out any business since its incorporation
- The company has no assets and liabilities
- The company’s status should be ‘active’ or ‘dormant’ on the MCA portal
What makes an MSME ineligible for this scheme?
An MSME is ineligible for this scheme if it falls under the following categories:
- Listed companies
- De-listed companies due to non-compliance of Listing Agreement or any other statutory laws
- Companies under Section 25
- Vanishing companies
- The companies against which an investigation or inspection has been ordered and yet to be taken up or pending
- Companies where order u/s 234 has been issued by ROC and reply is pending
- The companies where prosecution for a non-compoundable offence is pending in court
- Companies which have accepted deposits which are outstanding or have defaulted in repayment
- The companies having secured loan
- Companies having management dispute
- The companies for which filing of docs have been stayed by court or CLB or CG or any other competent authority
- Companies having dues of income tax / sales tax / central excise / banks / financial institutions / CG / SG / other local authorities
- The companies not having active / dormant status on MCA portal
How can an MSME apply for this scheme?
If your company is eligible to apply for this scheme, you will need to file the Form FTE with the Registrar of Companies (ROC).
The form must be filed online for a fee of ₹5,000, here.
The documents required to apply for this scheme are:
- Statement of accounts (duly signed by one MD / director / secretary and certified by auditor of the company or any other chartered accountant)
- Copy of board resolution authorizing directors to file application
- Indemnity bond duly notarized and signed by all directors
- Affidavit duly notarized and signed by all directors (separately)
- Physical Copy of e-form FTE duly signed by director / MD / manager / secretary if no DSC is available
- Attested copy of PAN / passport (in case DIN is not available)
- NOC from government (if applicable)
- Any other optional attachment
For further details about this scheme, click here