In March 2023, the Ministry of Corporate Affairs (MCA) established the Center for Processing Accelerated Corporate Exit (C-PACE) at the Indian Institute of Corporate Affairs, Gurgaon, Haryana. The objective of establishing C-PACE is to facilitate and speed up the removal of the names of companies from the Register of Companies, also known as Fast Track Exit, thereby providing ease to companies that are closing their business.
Moreover, the MCA issued a notification on 17 April 2023 notifying companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2023 (Rules), that shall come into force from 1 May 2023.
Following are the key changes brought in by the introduction of C-PACE and the said Rules:
- The Registrar of C-PACE shall exercise functional jurisdiction for processing and disposing of applications being made for the removal of names of companies under Section 248 (through Form STK-2) of the Companies Act, 2013. Also, he/she will have territorial jurisdiction all over India, which was earlier handled by the Registrar of Companies (RoC) of the respective states where the companies' registered offices were situated.
- With effect from 1 May 2023, the application for removal of name in Form STK-2 shall be processed by C-PACE.
- Accordingly, Form STK-2, used for making an application to remove a name from the Register of Companies, is slightly amended.
- The attachment of a certified true copy of the special resolution or consent given by the shareholders of the company for the removal of the name is dispensed within the revised Form STK-2. Instead, such resolution or consent must be filed in Form MGT-14 to the respective RoC, and the SRN of Form MGT-14 needs to be mentioned in Form STK-2.
- Form STK-2 now provides an option to select the relevant ground under Section 248(1) and (2) of the Companies Act, 2013 for filing closure applications.
Our Comments
The concept of C-PACE was introduced in Union Budget 2022-23 and stated that C-PACE should re-engineer the process of corporate exit and speed up the voluntary winding-up of companies from the currently required two years to less than six months. In this regard, C-PACE is being established as a dedicated center for processing applications seeking the removal of names of companies and necessary amendments to the Form and procedures brought out by said Rules. The underlying objective is to facilitate and speed up the removal of the names of companies from the Register of Companies. It is anticipated that entrusting the power to deal with the removal of name application to C-PACE will likely relieve the burden of the jurisdictional RoC, which was dealing with these cases earlier.
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