Govt aims to reduce time taken for voluntary closure of companies to 3 months: Official

The processing of application for incorporating a company has now come down to only two days.

In a bid to boost ease of doing business, the government aims to further bring down the time taken for voluntary closure of companies to three months, in line with international standards, a senior corporate affairs ministry official said.

The time taken for voluntary closure has already come down to 110 days since the Ministry of Corporate Affairs (MCA) operationalised Centralised Processing for Accelerated Corporate Exit (C-PACE) on May 1, 2023.

“After C-PACE was set up the average time for voluntary closure of companies till February 15, 2024, is at 110 days i.e. less than four months. But it can be improved to three months in line with international standards. Ease of exit for companies was lagging till two years back. A voluntary closure application needs to be filed, which used to take 18 months on average for processing earlier,” the official told Moneycontrol.

However, any further reduction in the timeline will be a challenge because after the promoters apply for voluntary closure, C-PACE gives at least 30 days for the company to respond to MCA. After the response on closure is received from the company, other processes are to be followed, he added.

Ease of entry

The processing of an application for incorporating a company has now come down to only two days, the senior MCA official added.

“The ease of entry to incorporate a company has been reduced from an average of 18 days a couple of years ago to two days now, provided all the documents are in place,” the official said. An important part of the ease of doing business has been towards ease of entry in terms of faster incorporation of companies.

During 2022-23, 1.96 lakh companies and limited liability partnerships (LLPs) were incorporated, a 92 percent jump from 1.02 lakh companies and LLPs incorporated in 2013-14.

Ease of processing corporate filings

The MCA has also operationalised the Central Processing Centre (CPC) from February 16, 2024, for centralised corporate filings.

“The companies’ filings were being processed by the Registrar of Companies (RoC) till now. With CPC operationalised, large firms’ filings are now being processed by it instead of RoC. Corporate filing processing will become easier now,” he said. CPC has been established to process forms filed as part of various regulatory requirements under the Companies Act and the Limited Liability Partnership Act in a centralised manner, requiring no physical interaction with the stakeholders. The forms shall be processed in a timebound and faceless manner.

After the establishment of CPC, jurisdictional RoCs are focusing more on their core functions of inquiries, inspection and investigation to ensure robust corporate governance.

Based on filing trends, it is expected that about 2.50 lakh forms will be processed through CPC annually, which were earlier being processed by RoC, the government had said on February 16, 2024.