Quick scheme - company closures
Mar 17th 2011 | 8:40 pm
#1
Thread Starter
Joined: Sep 2009
Posts: 4,680
Quick scheme - company closures
Hi folks
For any folks out there who have opened a company in India and want to close it, there is currently a 'quick exit' scheme available.
This is available up until END OF APRIL 2011.
The process is quite simple :
1. Company bank account must be closed. This can be done there and then at your bank branch.
2. Each company director must sign an affadavit stating that the company is not trading and has decided to close. Each affadavit costs approximately 500 rupees.
3. Submit the affadavit to the Ministry of Corporate Affairs in Panjim, together with form 32 (available from the Ministry). The cost of closure with them is 3000 rupees.
4. Letter to RBI notifying them of the closure
This can be done even before the RBI have agreed registration - after all if you're closing the company you no longer need RBI permissions.
This can be done by a lawyer. Any lawyer who tells you other than above - ditch that lawyer and find another!
DO NOT BELIEVE any company secretary or accountant who tells you that you have to wait for RBI or regulate any issues before you can undertake the quick exit scheme, they are lying to you in order to extort further monies from you !!!
Posted for info.
Dread - x
For any folks out there who have opened a company in India and want to close it, there is currently a 'quick exit' scheme available.
This is available up until END OF APRIL 2011.
The process is quite simple :
1. Company bank account must be closed. This can be done there and then at your bank branch.
2. Each company director must sign an affadavit stating that the company is not trading and has decided to close. Each affadavit costs approximately 500 rupees.
3. Submit the affadavit to the Ministry of Corporate Affairs in Panjim, together with form 32 (available from the Ministry). The cost of closure with them is 3000 rupees.
4. Letter to RBI notifying them of the closure
This can be done even before the RBI have agreed registration - after all if you're closing the company you no longer need RBI permissions.
This can be done by a lawyer. Any lawyer who tells you other than above - ditch that lawyer and find another!
DO NOT BELIEVE any company secretary or accountant who tells you that you have to wait for RBI or regulate any issues before you can undertake the quick exit scheme, they are lying to you in order to extort further monies from you !!!
Posted for info.
Dread - x
Mar 22nd 2011 | 7:43 pm
#2
Forum Regular
Joined: Apr 2010
Posts: 72
Re: Quick scheme - company closures
I was talking with a couple last night who started a company to buy a property through some people here but they changed there mind about the purchase of property and have now been told that it will cost around 1 lakh to close the company that has never done any business
Mar 24th 2011 | 5:43 am
#3
Thread Starter
Joined: Sep 2009
Posts: 4,680
Re: Quick scheme - company closures
I was talking with a couple last night who started a company to buy a property through some people here but they changed there mind about the purchase of property and have now been told that it will cost around 1 lakh to close the company that has never done any business
Tell them to go and see a reputable lawyer.
I am very well aware of several lawyers and company secretaries who are telling people it will cost 1 lakh (sometimes even more) to close a company.
This is being done for no other reason than to extort further monies out of people.
There is a quick exit scheme for closing companies available via the Ministry of Corporate Affairs in Panjim, until the end of April 2011. The cost is 3000 rupees, the cost of one affadavit per company director, plus a nominal admin fee from a lawyer.
Tell them to seek advice elsewhere via a different lawyer.
If not pm me and I will advise on a lawyer who will sort this out. They need to move relatively quickly.
Dread - x
Mar 26th 2011 | 12:28 am
#4
Forum Regular
Joined: Aug 2009
Posts: 92
Re: Quick scheme - company closures
Easy Exit Scheme
Here is the link to the 2010 Circular issued by the Ministry of Corporate affairs outlining the scheme details. The MCA have also published a statement indicating that after the closure of the scheme, they will take penal action against directors of defaulting companies, so it is well worthwhile taking advice from your Chartered Accountant or professional advisors if you fall into this category.
http://www.mca.gov.in/Ministry/lates...S_3dec2010.pdf
Veri
Here is the link to the 2010 Circular issued by the Ministry of Corporate affairs outlining the scheme details. The MCA have also published a statement indicating that after the closure of the scheme, they will take penal action against directors of defaulting companies, so it is well worthwhile taking advice from your Chartered Accountant or professional advisors if you fall into this category.
http://www.mca.gov.in/Ministry/lates...S_3dec2010.pdf
Veri
Mar 26th 2011 | 12:30 am
#5
Thread Starter
Joined: Sep 2009
Posts: 4,680
Re: Quick scheme - company closures
Easy Exit Scheme
Here is the link to the 2010 Circular issued by the Ministry of Corporate affairs outlining the scheme details. The MCA have also published a statement indicating that after the closure of the scheme, they will take penal action against directors of defaulting companies, so it is well worthwhile taking advice from your Chartered Accountant or professional advisors if you fall into this category.
http://www.mca.gov.in/Ministry/lates...S_3dec2010.pdf
Veri
Here is the link to the 2010 Circular issued by the Ministry of Corporate affairs outlining the scheme details. The MCA have also published a statement indicating that after the closure of the scheme, they will take penal action against directors of defaulting companies, so it is well worthwhile taking advice from your Chartered Accountant or professional advisors if you fall into this category.
http://www.mca.gov.in/Ministry/lates...S_3dec2010.pdf
Veri
Please note that although the circular states that the scheme ends on 31/1/11, it has been extended until 31/4/11
Dread - x
Last edited by dreadsoc; Mar 26th 2011 at 12:35 am.
Mar 27th 2011 | 2:03 pm
#6
Forum Regular
Joined: Dec 2009
Posts: 56
From: Munich, Germany
Re: Quick scheme - company closures
As far as I know, this particular "quick scheme" works only for defunct companies, however.
If your company owns land (sales deed seems to be enough in this case) or any other assets it is not considered defunct and the scheme is not applicable.
That's what I've been told at least.
The (only?) way to go in such cases (especially if you, like me, cannot take care of matters yourself because you're not allowed to enter the country due to lack of visa), is to simply(?) sell your company shares to someone who is interested and eligible.
For the quick exit scheme to be applicable you need to sell your assets first, and be in India in order to get the paperwork done (notarial stamps, stamped paper, and all that other bureaucratic BS they throw your way and that you can't possibly ever hope to get done, ever, if you're stuck outside India).
If your company owns land (sales deed seems to be enough in this case) or any other assets it is not considered defunct and the scheme is not applicable.
That's what I've been told at least.
The (only?) way to go in such cases (especially if you, like me, cannot take care of matters yourself because you're not allowed to enter the country due to lack of visa), is to simply(?) sell your company shares to someone who is interested and eligible.
For the quick exit scheme to be applicable you need to sell your assets first, and be in India in order to get the paperwork done (notarial stamps, stamped paper, and all that other bureaucratic BS they throw your way and that you can't possibly ever hope to get done, ever, if you're stuck outside India).
Last edited by GermanFool; Mar 27th 2011 at 2:09 pm.
Mar 28th 2011 | 7:16 am
#7
Thread Starter
Joined: Sep 2009
Posts: 4,680
Re: Quick scheme - company closures
As far as I know, this particular "quick scheme" works only for defunct companies, however.
If your company owns land (sales deed seems to be enough in this case) or any other assets it is not considered defunct and the scheme is not applicable.
That's what I've been told at least.
The (only?) way to go in such cases (especially if you, like me, cannot take care of matters yourself because you're not allowed to enter the country due to lack of visa), is to simply(?) sell your company shares to someone who is interested and eligible.
For the quick exit scheme to be applicable you need to sell your assets first, and be in India in order to get the paperwork done (notarial stamps, stamped paper, and all that other bureaucratic BS they throw your way and that you can't possibly ever hope to get done, ever, if you're stuck outside India).
If your company owns land (sales deed seems to be enough in this case) or any other assets it is not considered defunct and the scheme is not applicable.
That's what I've been told at least.
The (only?) way to go in such cases (especially if you, like me, cannot take care of matters yourself because you're not allowed to enter the country due to lack of visa), is to simply(?) sell your company shares to someone who is interested and eligible.
For the quick exit scheme to be applicable you need to sell your assets first, and be in India in order to get the paperwork done (notarial stamps, stamped paper, and all that other bureaucratic BS they throw your way and that you can't possibly ever hope to get done, ever, if you're stuck outside India).
To be eligible for the quick exit scheme you need to show that your company is no longer operating, or has never operated.
If your property or land is in the company name then the quick exit scheme cannot be applied to that company.
If you are not in India,you can appoint a power of attorney to act for you.
As a foreigner you cannot sell the company or shares to an Indian person, only to another foreigner (yes I know another stupid Indian law!!!), however you can appoint an Indian person as an additional director to the company, but you have to ply in more money for share capital to be able to allocate company shares to them, which will cost minimum 1 lakh.
You can still appoint an Indian as another director to the company without issuing shares in that company to them.
I think those who will most benefit from the quick exit scheme are those who have already sold their property and have still got a company, or those who opened a company to buy a property, have not registered (ie on agreement of sale) and are trying to sell.
Dread - x
Mar 30th 2011 | 3:01 pm
#8
Joined: May 2007
Posts: 8,227
From: Noni the Indian Goan Beach Mulberry
Re: Quick scheme - company closures
To be eligible for the quick exit scheme you need to show that your company is no longer operating, or has never operated.
If your property or land is in the company name then the quick exit scheme cannot be applied to that company.
If you are not in India,you can appoint a power of attorney to act for you.
As a foreigner you cannot sell the company or shares to an Indian person, only to another foreigner (yes I know another stupid Indian law!!!), however you can appoint an Indian person as an additional director to the company, but you have to ply in more money for share capital to be able to allocate company shares to them, which will cost minimum 1 lakh.
You can still appoint an Indian as another director to the company without issuing shares in that company to them.
I think those who will most benefit from the quick exit scheme are those who have already sold their property and have still got a company, or those who opened a company to buy a property, have not registered (ie on agreement of sale) and are trying to sell.
Dread - x
If your property or land is in the company name then the quick exit scheme cannot be applied to that company.
If you are not in India,you can appoint a power of attorney to act for you.
As a foreigner you cannot sell the company or shares to an Indian person, only to another foreigner (yes I know another stupid Indian law!!!), however you can appoint an Indian person as an additional director to the company, but you have to ply in more money for share capital to be able to allocate company shares to them, which will cost minimum 1 lakh.
You can still appoint an Indian as another director to the company without issuing shares in that company to them.
I think those who will most benefit from the quick exit scheme are those who have already sold their property and have still got a company, or those who opened a company to buy a property, have not registered (ie on agreement of sale) and are trying to sell.
Dread - x
Briefly they had gone to see how their property was progressing (ongoing since 2006) they have not even moved in
Parts of the letter from Registrar of Companies read!
" Now therefore, you being the company or the director as the case may be is hereby called upon to show cause as to why action should not be taken for prosecution under Section 162,168, 210(5) .
Please take notice that if no reply is received nd/or cause shown within fifteen days from the date of issue of this notice(which was last summer) necessary prosection shall be launched at your risk, costs and responsibility and without further notice"
Anybody else received one of the notices!
Mar 30th 2011 | 3:40 pm
#9
Thread Starter
Joined: Sep 2009
Posts: 4,680
Re: Quick scheme - company closures
Met a couple last night, who showed me a letter they had received that day from the Government of India - Ministry of Corporate Affairs.
Briefly they had gone to see how their property was progressing (ongoing since 2006) they have not even moved in
Parts of the letter from Registrar of Companies read!
" Now therefore, you being the company or the director as the case may be is hereby called upon to show cause as to why action should not be taken for prosecution under Section 162,168, 210(5) .
Please take notice that if no reply is received nd/or cause shown within fifteen days from the date of issue of this notice(which was last summer) necessary prosection shall be launched at your risk, costs and responsibility and without further notice"
Anybody else received one of the notices!
Briefly they had gone to see how their property was progressing (ongoing since 2006) they have not even moved in
Parts of the letter from Registrar of Companies read!
" Now therefore, you being the company or the director as the case may be is hereby called upon to show cause as to why action should not be taken for prosecution under Section 162,168, 210(5) .
Please take notice that if no reply is received nd/or cause shown within fifteen days from the date of issue of this notice(which was last summer) necessary prosection shall be launched at your risk, costs and responsibility and without further notice"
Anybody else received one of the notices!
This letter appears to be some kind of default notice. The reason for trhe default should be stated in the same letter.
Have this couple filed their annual returns ? If not this could be the reason for the notice, and has happend to others who have not filed returns.
The problem is that once a company name is allocated by the MCA, the company is considered live and annual returns must be filed. Unfortunately many people are being told by lawyers etc that they need not do the returns until they have RBI clearance for the company.
If I have guessed correctly, tell the couple not to panic as there are steps which can be taken. Also of the company is not trading/has not traded they should be eligible for the quick exit scheme, which should negate the default issues.
This couple need to see an accountant and a lawyer forthwith. If they are members of BE, please ask them to pm me with further details, and I may be able to offer more specific advice.
Dread - x
Mar 30th 2011 | 9:13 pm
#10
Forum Regular
Joined: Aug 2009
Posts: 92
Re: Quick scheme - company closures
This letter appears to be some kind of default notice. The reason for trhe default should be stated in the same letter.
Have this couple filed their annual returns ? If not this could be the reason for the notice, and has happend to others who have not filed returns.
The problem is that once a company name is allocated by the MCA, the company is considered live and annual returns must be filed. Unfortunately many people are being told by lawyers etc that they need not do the returns until they have RBI clearance for the company.
If I have guessed correctly, tell the couple not to panic as there are steps which can be taken. Also of the company is not trading/has not traded they should be eligible for the quick exit scheme, which should negate the default issues.
This couple need to see an accountant and a lawyer forthwith. If they are members of BE, please ask them to pm me with further details, and I may be able to offer more specific advice.
Dread - x
Have this couple filed their annual returns ? If not this could be the reason for the notice, and has happend to others who have not filed returns.
The problem is that once a company name is allocated by the MCA, the company is considered live and annual returns must be filed. Unfortunately many people are being told by lawyers etc that they need not do the returns until they have RBI clearance for the company.
If I have guessed correctly, tell the couple not to panic as there are steps which can be taken. Also of the company is not trading/has not traded they should be eligible for the quick exit scheme, which should negate the default issues.
This couple need to see an accountant and a lawyer forthwith. If they are members of BE, please ask them to pm me with further details, and I may be able to offer more specific advice.
Dread - x
[I]"Ministry has undertaken a massive drive to cleanse the MCA21 Registry, as it was found that a number of companies who were in the old Registry are not filing their documents in the MCA21 system. Accordingly, computer generated Show-cause Notices were issued to a number of defaulting companies.
While migrating data from Manual Registry into electronic registry under MCA21, certain inaccuracies might have crept in; and as such computer generated notices may contain some errors, like wrong addresses/wrong names of companies, etc. Some directors who have already resigned, or some companies which may have been merged or liquidated, might not have been recorded in the electronic registry.
In case any discrepancy is found in such Show Cause Notice issued, the same may kindly be intimated to the respective ROC, so that the electronic registry data is made up-to-date.
We regret inconvenience caused, if any, on account of such mistakes."
A Chartered Accountant will be able to check out the legitimacy of your notice - Dread's advice is very wise. If you have a Company you really
should appoint a CA to act for you in company law matters, returns etc; there are some excellent lawyers who will appoint a CA on your behalf, but in some cases where a CA has not been consulted advice can fall lamentably short, and has given people serious difficulties.
Mar 31st 2011 | 2:34 am
#11
Joined: May 2007
Posts: 8,227
From: Noni the Indian Goan Beach Mulberry
Re: Quick scheme - company closures
This notification and apology is from the MCA website:
[I]"Ministry has undertaken a massive drive to cleanse the MCA21 Registry, as it was found that a number of companies who were in the old Registry are not filing their documents in the MCA21 system. Accordingly, computer generated Show-cause Notices were issued to a number of defaulting companies.
While migrating data from Manual Registry into electronic registry under MCA21, certain inaccuracies might have crept in; and as such computer generated notices may contain some errors, like wrong addresses/wrong names of companies, etc. Some directors who have already resigned, or some companies which may have been merged or liquidated, might not have been recorded in the electronic registry.
In case any discrepancy is found in such Show Cause Notice issued, the same may kindly be intimated to the respective ROC, so that the electronic registry data is made up-to-date.
We regret inconvenience caused, if any, on account of such mistakes."
A Chartered Accountant will be able to check out the legitimacy of your notice - Dread's advice is very wise. If you have a Company you really
should appoint a CA to act for you in company law matters, returns etc; there are some excellent lawyers who will appoint a CA on your behalf, but in some cases where a CA has not been consulted advice can fall lamentably short, and has given people serious difficulties.
[I]"Ministry has undertaken a massive drive to cleanse the MCA21 Registry, as it was found that a number of companies who were in the old Registry are not filing their documents in the MCA21 system. Accordingly, computer generated Show-cause Notices were issued to a number of defaulting companies.
While migrating data from Manual Registry into electronic registry under MCA21, certain inaccuracies might have crept in; and as such computer generated notices may contain some errors, like wrong addresses/wrong names of companies, etc. Some directors who have already resigned, or some companies which may have been merged or liquidated, might not have been recorded in the electronic registry.
In case any discrepancy is found in such Show Cause Notice issued, the same may kindly be intimated to the respective ROC, so that the electronic registry data is made up-to-date.
We regret inconvenience caused, if any, on account of such mistakes."
A Chartered Accountant will be able to check out the legitimacy of your notice - Dread's advice is very wise. If you have a Company you really
should appoint a CA to act for you in company law matters, returns etc; there are some excellent lawyers who will appoint a CA on your behalf, but in some cases where a CA has not been consulted advice can fall lamentably short, and has given people serious difficulties.
Mar 31st 2011 | 3:17 am
#12
Thread Starter
Joined: Sep 2009
Posts: 4,680
Re: Quick scheme - company closures
This notification and apology is from the MCA website:
[I]"Ministry has undertaken a massive drive to cleanse the MCA21 Registry, as it was found that a number of companies who were in the old Registry are not filing their documents in the MCA21 system. Accordingly, computer generated Show-cause Notices were issued to a number of defaulting companies.
While migrating data from Manual Registry into electronic registry under MCA21, certain inaccuracies might have crept in; and as such computer generated notices may contain some errors, like wrong addresses/wrong names of companies, etc. Some directors who have already resigned, or some companies which may have been merged or liquidated, might not have been recorded in the electronic registry.
In case any discrepancy is found in such Show Cause Notice issued, the same may kindly be intimated to the respective ROC, so that the electronic registry data is made up-to-date.
We regret inconvenience caused, if any, on account of such mistakes."
A Chartered Accountant will be able to check out the legitimacy of your notice - Dread's advice is very wise. If you have a Company you really
should appoint a CA to act for you in company law matters, returns etc; there are some excellent lawyers who will appoint a CA on your behalf, but in some cases where a CA has not been consulted advice can fall lamentably short, and has given people serious difficulties.
[I]"Ministry has undertaken a massive drive to cleanse the MCA21 Registry, as it was found that a number of companies who were in the old Registry are not filing their documents in the MCA21 system. Accordingly, computer generated Show-cause Notices were issued to a number of defaulting companies.
While migrating data from Manual Registry into electronic registry under MCA21, certain inaccuracies might have crept in; and as such computer generated notices may contain some errors, like wrong addresses/wrong names of companies, etc. Some directors who have already resigned, or some companies which may have been merged or liquidated, might not have been recorded in the electronic registry.
In case any discrepancy is found in such Show Cause Notice issued, the same may kindly be intimated to the respective ROC, so that the electronic registry data is made up-to-date.
We regret inconvenience caused, if any, on account of such mistakes."
A Chartered Accountant will be able to check out the legitimacy of your notice - Dread's advice is very wise. If you have a Company you really
should appoint a CA to act for you in company law matters, returns etc; there are some excellent lawyers who will appoint a CA on your behalf, but in some cases where a CA has not been consulted advice can fall lamentably short, and has given people serious difficulties.
Thank you for this addition Veritas -
Let's hope this is the situation for the couple Noni mentions here.
It seems so many people are being given all sorts of wrong advice regarding their Indian companies. I agree it is essential that directors of Indian companies consult a chartered accountant as well as a lawyer.
I am certainly aware of at least 3 lawyers - one in South Goa and two in North Goa - who are giving people seriously misleading (or even deliberately wrong..) advice regarding companies, so it is essential to consult an accountant as well.
For information of anyone who has a company in Goa : if you have had a name agreed for your company, then the company is considered live and you are required to file annual returns from the following April, and need an accountant. If a lawyer tells you different then you are being given wrong advice.
Dread - x
Mar 31st 2011 | 2:54 pm
#13
Forum Regular
Joined: Apr 2010
Posts: 188
Re: Quick scheme - company closures
Thank you for this addition Veritas -
Let's hope this is the situation for the couple Noni mentions here.
It seems so many people are being given all sorts of wrong advice regarding their Indian companies. I agree it is essential that directors of Indian companies consult a chartered accountant as well as a lawyer.
I am certainly aware of at least 3 lawyers - one in South Goa and two in North Goa - who are giving people seriously misleading (or even deliberately wrong..) advice regarding companies, so it is essential to consult an accountant as well.
For information of anyone who has a company in Goa : if you have had a name agreed for your company, then the company is considered live and you are required to file annual returns from the following April, and need an accountant. If a lawyer tells you different then you are being given wrong advice.
Dread - x
Let's hope this is the situation for the couple Noni mentions here.
It seems so many people are being given all sorts of wrong advice regarding their Indian companies. I agree it is essential that directors of Indian companies consult a chartered accountant as well as a lawyer.
I am certainly aware of at least 3 lawyers - one in South Goa and two in North Goa - who are giving people seriously misleading (or even deliberately wrong..) advice regarding companies, so it is essential to consult an accountant as well.
For information of anyone who has a company in Goa : if you have had a name agreed for your company, then the company is considered live and you are required to file annual returns from the following April, and need an accountant. If a lawyer tells you different then you are being given wrong advice.
Dread - x
Mar 31st 2011 | 11:31 pm
#14
Thread Starter
Joined: Sep 2009
Posts: 4,680
Re: Quick scheme - company closures
I agree that some company secretaries are worth their weight in gold, HOWEVER I am aware of several company secretaries in Goa (Panjim based)who are telling clients who want to close down companies that they need to take a variety of steps before they can do so. In fact none such steps are necessary and those clients are eligible for the quick exit scheme.
The quick exit scheme can be used to close a company even if the company is in default with annual returns, prior to RBI approval, and when company matters have not been correctly run or adhered to, and at any point during the setting up process. The whole point of this scheme is to allow a get out for defunct or inoperative companies.
I have examples of company secretaries charging 1 lakh and more and clearly deliberately prolonging closure, and it is more than obvious that they have done so in order to extort significant amounts of money. The noticable trend appears to be that they become aware of what amount of money is is the company account (conveniently provided by the annual returns filing process), and seem to ensure that their 'costs' amount to about the same figure !
I have also seen deliberate acts such as not completing documents correctly so they 'bounce back' and have to be resubmitted. Of course, many people who have these companies are not resident in Goa and it is a period of some months before the matter can be reattended to. And 'coincidentally, the company secretary gets another years fee of some 25000 rupees or more, plus 'government fees, filing fees, other obscure fees etc. etc. etc.
My advice to all persons who want to close their company is to read the above post and link from Veritas which outlines eligibility for the quick exit scheme, and if you think you are eligible and are told different by a professional, then get a second opinion or contact me by pm. This is regardless of whether the advice comes from company secretary, lawyer or accountant.
Beware folks - Goa is awash with scams .....
Dread - x
