What is the Fast Track Exit (FTE) scheme for company closure?

Last updated 22 May 2026

History of the Fast Track Exit scheme

Before 2010, closing a defunct or inactive company in India was a slow and expensive process. Companies that had stopped operating were required to go through a formal winding-up procedure under the Companies Act 1956, which involved court orders, official liquidators, and years of proceedings. For companies with no assets, no liabilities, and no activity, this was disproportionately burdensome.

The Ministry of Corporate Affairs introduced the Fast Track Exit scheme in June 2010 through a general circular (MCA Circular No. 35/2011 and the earlier notification) under Section 560 of the Companies Act 1956. The scheme was targeted at dormant companies — those that had never commenced business after incorporation, or had ceased all operations and had no assets or liabilities.

How the FTE scheme worked

Under the FTE scheme, a company could apply directly to the Registrar of Companies (ROC) by filing a prescribed application form along with a statement of accounts showing nil assets and nil liabilities, an affidavit from directors, and an indemnity bond. The ROC would publish a notice in the Official Gazette inviting objections. If no objections were received within the specified period, the ROC would strike off the company's name from the register.

The process was significantly faster than winding up — typically 3 to 6 months from application to gazette notification. Government fees under the FTE scheme were nominal. The scheme was widely used: between 2010 and 2015, tens of thousands of companies used the FTE route to exit the register cleanly.

The key limitation of the FTE scheme was that it was not available to companies that had filed or had pending income tax returns, or companies with pending litigation. Companies with any remaining obligations were required to settle them fully before applying.

How the Companies Act 2013 replaced the FTE scheme

The Companies Act 2013 introduced a new framework for voluntary strike-off under Section 248. The Act provided for both ROC-initiated strike-off (Section 248(1)) and voluntary strike-off by companies (Section 248(2)). Section 248 was broadly modelled on the FTE scheme but codified it into primary legislation rather than leaving it as an administrative circular.

The MCA notified the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 to operationalise Section 248(2). These rules introduced the STK-2 form — the formal application for voluntary strike-off — and specified the documents required, the government fee (Rs 10,000), and the process for ROC review and public notice. The 2016 notification effectively replaced the FTE scheme with the STK-2 route.

Key differences between the old FTE scheme and the current STK-2 process

The legal basis is different: FTE was an administrative scheme under a circular, while STK-2 is a statutory process under the Companies Act 2013 and Rules 2016. This makes the current process more robust — a strike-off under STK-2 is backed by primary legislation, giving it stronger legal effect.

The filing mechanism has changed substantially. Under the FTE scheme, applications were filed in physical form or through an older version of the MCA portal. The current STK-2 process is entirely online through the MCA21 portal and requires Digital Signature Certificates (DSC) of all applicant directors. This makes the process verifiable and faster to process.

The government fee increased from a nominal amount under FTE to Rs 10,000 under STK-2. However, this is still significantly lower than the cost of a formal winding-up proceeding.

The annual return requirement is now more strictly enforced. Under the current rules, a company must have filed all pending annual returns (AOC-4 and MGT-7) before applying for STK-2 — or use a condonation scheme such as the CFSS (Companies Fresh Start Scheme) to clear arrears. The FTE scheme was sometimes used to escape filing obligations, but that route is no longer available.

Who benefits from the current simplified route

The STK-2 route is the correct path for any company that has ceased business and has zero assets and liabilities. It is faster and significantly cheaper than winding up, and it is the only voluntary exit mechanism available under the Companies Act 2013 for companies that do not have ongoing disputes or assets to distribute. Founders of startups that did not take off, legacy companies incorporated for projects that were abandoned, and companies that merged their operations informally into another entity all benefit from the STK-2 process.

The process takes typically 3 to 6 months from the date of STK-2 filing to the gazette notification of strike-off — comparable to the old FTE timeline. The key difference is that the online, DSC-based filing under MCA21 has made the process more predictable and easier to track.

This article is for general information only. For your specific situation, consult a practicing CA.