MCA tightens norms for closure of companies

FIRMS APPLYING FOR removal of their names from the Register of Companies will have to file financial statements and annual returns in order to cease business operations. 

- SURABHI

To this effect, the ministry of corporate affairs has introduced fresh conditions for companies that wish to de-register with the RoC.

According to the changes, a firm cannot file for removal of names unless it has filed overdue financial statements and overdue annual returns up to the end of the financial year in which it ceased to carry its business operations. Further, in case a company intends to file the application after the action has been initiated by the Registrar, it will have to file all pending financial statements and all pending annual returns prior to this.

The move comes at a time when the government is trying to quicken the process of closure of companies and has set up the Centre for Processing Accelerated Corporate Exit effective May 1. The thinking however, is that such firms remain accountable and responsible for their actions.