Lok Sabha Question No. 160 (UNSTARRED), answered on 2023-12-04
Subject: Voluntary Exit of Corporate Companies
Ministry: CORPORATE AFFAIRS
Asked by: Chandra Sekhar Bellana, Chinta Anuradha

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

## UN-STARRED QUESTION NO. 160 ANSWERED ON MONDAY, 04 th  DECEMBER 2023 AGRAHAYANA 13, 1945 (SAKA)

## VOLUNTARY EXIT OF CORPORATE COMPANIES

QUESTION

160:  SHRI CHANDRA SEKHAR BELLANA: SHRIMATI CHINTA ANURADHA :

Will the Minister of CORPORATE AFFAIRS be pleased to state:

कारपोरेट कार्य मंत्री

- (a) the number of corporate companies that have voluntary exited in the last five years;
- (b) the process and the average time that is currently taken for a corporate company to voluntarily wind up and exit;
- (c)  whether  the  mechanism  in  place  is  comparable  to  the  international standards; and
- (d) the number of cases of voluntary corporate exit currently pending in the country?

## ANSWER

Minister  of  State  (Independent  Charge)  of  the  Ministry  of  Statistics  and Programme  Implementation;  Minister  of  State  (Independent  Charge)  of  the Ministry of Planning and Minister of State in the Ministry of Corporate Affairs.

सांख्यिकी और कार्यक्रम कार्ायन्वर्न मंत्रालर् क े राज्य मंत्री ( स्वतंत्र प्रभार ) ; र्ोजना मंत्रालर् क े राज्य मंत्री ( स्वतंत्र प्रभार ) और कॉपोरेट मामलों क े मंत्रालर् में राज्य मंत्री।

(Rao Inderjit Singh) राव इंद्रजीत ससंह

## ANSWER

(a), (b) and (d) : Voluntary exit of companies is covered under Section 248(2) of the Companies Act, 2013 and Section 59 of the Insolvency and Bankruptcy Code (IBC), 2016. Under Section 248(2) of the Companies Act, 2013, a company that  seeks  to  have  its  name  removed  from  the  Register  of  Companies  is required to apply to the Registrar of Companies (RoC). On the application, the RoC seeks public objections through newspaper advertisements and publication  in  the  Official  Gazette.  On  receipt  of  objections,  if  any,  RoC scrutinizes  and  approves  the  application,  in  case  it  is  found  in  order,  it  is thereafter, published in the Official Gazette and from the date of publication, the company's name stands struck off.

In compliance with Section 59 of the IBC, 2016, companies which intend to liquidate themselves voluntarily and which have not committed any default may initiate voluntary liquidation proceedings. After passing special resolution of Members and after consent of the creditors holding 2/3rd of the value of debt,  if  any,  a  Liquidator  is  appointed.  The  Liquidator,  after  following  due process for realization of the assets and distribution of the proceeds to the creditors  and  shareholders,  submits  the  final  report  to  the  Adjudicating Authority, i.e. National Company Law Tribunal (NCLT).

From  FY  2018-19  to  FY  2023-24  (upto  30 th   November,  2023)  1,06,561 companies have exited voluntarily under section 248(2) of the Companies Act, 2013. From FY 2018-19 to FY 2023-24 (upto 30 th  September 2023) final reports of 1168 companies have been submitted by Liquidators under section 59 of the Insolvency  and  Bankruptcy  Code,  2016  (Code),  of  which  final  dissolution orders have been passed by the NCLT in 633 cases during the said period.

In the last 5 years, the time taken for voluntary exit under Section 248(2) of the Companies Act, 2013 has varied between an average of approximately 6-8 months to even 12-18 months in some cases. Under the IBC, the average time taken  for  dissolution  of  companies  after  submission  of  final  report  by  the Liquidator has been in the range of 7- 9 months. The average time taken by Liquidator to submit final report for Adjudication to the NCLT has been about 14 Months.

Keeping the above in view, the Central Government has set up on 01.05.2023 the Centre for Processing Accelerated Corporate Exit (CPACE) to centralize and expedite voluntarily exit of the companies under Section 248(2) of the Companies Act, 2013. Under CPACE the time taken for voluntary exit during the current year is around 110 days. 470 cases are currently pending for voluntary liquidation under section 59 of the  IBC  till  September  2023.  Further  3695  cases  are  currently  pending  for voluntary corporate exit under section 248(2) of the Companies Act, 2013 with CPACE. (c) :  The Report of the Bankruptcy Law Reforms Committee which was the precursor to the enactment of the code had considered the well-established principles  of  collective  insolvency  resolution  regime  provided  in  UNCITRAL Legislative Guide on Insolvency while recommending the framework of the Code.

*****