Govt. says over 1.06 lakh firms voluntarily exited in last five years

More than 1 lakh firms voluntarily exited under the companies law in almost five years, the government told the Lok Sabha on Monday.

Besides, many companies have sought voluntary liquidation under the Insolvency and Bankruptcy Code, 2016 (IBC).

“From FY 2018-19 to FY 2023-24 (up to 30 November, 2023) 1,06,561 companies exited voluntarily under section 248(2) of the Companies Act, 2013.”

“From FY 2018-19 to FY 2023-24 (up to 30 September 2023) final reports of 1,168 companies have been submitted by liquidators under section 59 of the IBC, of which final dissolution orders have been passed by NCLT (National Company Law Tribunal) in 633 cases,” Minister of State, Corporate Affairs, Rao Inderjit Singh said in a written reply.

Section 248(2) of the Companies Act pertains to voluntary exit of companies while Section 59 of the IBC relates to voluntary liquidation.

In the last five years, Singh said the time taken for voluntary exit under Section 248(2) of the Companies Act has varied between 6-8 months to even 12-18 months in some cases.

Under the IBC, average time taken for dissolution after submission of final report by the liquidator has ranged between 7-9 months. The time taken by liquidator to submit final report for adjudication to NCLT has been 14 months.

Earlier this year, the government set up the Centre for Processing Accelerated Corporate Exit (CPACE) to centralise and expedite voluntarily exit of 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, 3,695 cases are pending for voluntary corporate exit under section 248(2) of the Companies Act, 2013 with CPACE,” Singh said.