When a company is registered, there are a number of compliance standards that must be completed, along with corresponding costs to cover them. It is not practical for someone to secure more expenditures for a business that is not running or is not generating the anticipated income. Therefore, cancelling the firm's registration would be advantageous for both the company and its owners.

In the past, closing a fully operational privately held company was a laborious procedure that involved several onerous legal obligations. Fortunately, all of those challenges are no longer present because the authority has made the closure process simpler than before. Companies now have two alternatives for revocation or cancellation of their business registration.

Cancellation of Company Registration

There are three options for the cancellation of company registration which are as follows:-

Fast Track Exit (FTE)

The Fast Track Exit feature aids in closing the business with the least amount of legal red tape. Anyone may file for the Fast Track Exit option, even a defunct business. A defunct company has not conducted any business or activity since its establishment one year ago and has neither assets nor obligations. 

In Section 560 of the 2013 Firms Act, it is stated that the Fast Track Exit (FTE) method may be used to wind up dissolved companies. 

In accordance with the aforementioned Act, the firm requesting to revoke its registration certificate under FTE must submit an e-form 61 to the Registrar of Companies.

Process

One may submit an application using the FTE form that is accessible on the MCA website to shut down a business under FTE. The document should be downloaded and digitally signed by an authorized director. For this procedure, there will be a registration fee. Similarly, if there is a good reason, RoC may correspondingly strike out any insolvent corporation. 

However, the defunct corporation must be allowed to be heard before any judgment is made by following the proper procedure outlined in Section 560.

• Upon receipt of the application, the Registrar would post the business name on its website for a certain period of 30 days to alert anyone who might have an objection to the name being removed or struck off.
• The Registrar will give a certificate for the liquidation of the firm after a 30-day period, noting that it removes its name from the register of companies it keeps.

Required Documents

The following list of files must be submitted with the Form FTE:

• Letter of approval from the board of directors authorizing the dissolution of the business and cancellation of the registration. To conduct the aforesaid action, prior BOD permission is necessary.
• Before requesting the closure procedure, all bank accounts linked to the firm and registrations with authorities should be closed or cancelled.

After the board's decision, each of the company's directors must submit an affidavit on stamped paper with a notarized copy in which they each individually state the following:

• The directors affirm that they are the ones running the business at the time it files for closure.
• All of the business's existing bank accounts have been closed.
• the statement that the company has no assets or liabilities
• For the last year, they have not engaged the firm in any business activities or transactions.
• Reasons that are justifiable for not having a functioning business
• Declaring that the firm has no outstanding legal obligations as of the declaration date and that no legal disputes—either against other companies or in court—are ongoing.

The company's directors should next sign an indemnity bond, which should be signed by two people, on a piece of stamp paper, and make the following commitments:

• To release any person from liability for potential damages and to remove the company's name
• Additionally, to cover and resolve all potential future legal disputes that may arise following the removal of the corporate name
• to settle all outstanding legal responsibilities and claims that may not have been brought to our attention before now.

Strike off Voluntarily

A firm being "struck off" or having its registration cancelled merely means that it has ceased operations. It is the easiest way to shut down a company.

Companies That Are Prohibited from Operating 

Private Company 

Public Company

Section 8 Company

One Person Company

Methods For Voluntary Striking Off A Company Name 

By The Company Itself 

Through The Registrar Of Companies

How to cancel a company's registration or strike it off in the event of a voluntary strike off

The procedure is simple and includes the following steps: -

i) Permit any officer or director of the company to hold a board meeting.

ii) Send an agenda-filled notice of the board meeting at least seven days beforehand.

iii) Conduct a board meeting, and secure the adoption of a board resolution.

iv) If necessary, notice of annual general meetings and extraordinary general meetings

v) Convene a general assembly to vote on a special resolution.

vi) The delivery of the MGT-14 and any pertinent attachments.

vii) Submitting the STK-2 & other pertinent paperwork.

viii) The Registrar of Companies (ROC) will strike out the company after publishing a public notice after concluding that all attachments are in order, all criteria are completed, and it is fair and reasonable to do so.

Documents Needed for the Cancellation of Company’s Registration

The following files are included with the electronic forms:

• A notarized indemnification bond that each director has signed (in Form STK 3).
• All of the company's assets and debts are listed in a statement of liabilities (certified by a Chartered Accountant). Certified original Special Resolution copy (duly signed by every director of the company).
• The Board resolution's copy authorising the submission of the application. STK-3 Form No. Indemnity Bonds
• A sworn statement in STK-4 format is a statement of any ongoing legal actions concerning the firm.
• A copy of the relevant delisting order from the relevant stock market, if applicable.
• A certificate of no objection from the department overseeing the company's regulation is needed.

A Company Cannot Strike Off Voluntarily in certain situations

A company cannot file an application on its behalf if it has: 

(a) changed its name or moved its registered office from one state to another; 

(b) sold any property or rights it owned for a price, immediately before ceasing to trade or conduct business; or 

(c) engaged in any other activity. These actions must have taken place before the company stopped operating or trading for profit.

(d) has asked the Tribunal to approve a compromise or agreement, although the issue has not yet been settled.

A Registrar of Company can also cancel a Company’s Registration on the following grounds

One of the subsequent conditions must be met: 

i) a firm must have started operating within a year of incorporation; 

ii) a company must have ceased operations for the two most recent fiscal years without applying for inactive company status during that period.

iii) The memorandum's subscribers have not made the subscription payments they agreed to make at the time of the company's incorporation, and a declaration to that effect has not been filed within one hundred and eighty days of the company's incorporation. 

iv) The company is not operating, as determined by physical verification after the Registrar of Companies locates the company's registered office.

Conclusion

Regardless of their size or type of employment, all businesses must endure difficulty and perceived hurdles to turn a profit. However, occasionally even the best-laid plans couldn't prevent firms from being hampered by unanticipated challenges. And under such circumstances, the only choice left to the firm is to cancel company registration.

People can start a company with a purpose in mind, but frequently when things don't go as planned, they may have to close up shop for a number of reasons, such as a lack of funding, inadequate management, or no working capital.