Corporate Affairs Ministry (MCA) has centralised the striking off process of companies with the establishment of the Centre for Processing Accelerated Corporate Exit (C-PACE).
The office of C-PACE was inaugurated on May 1, 2023 by RK Dalmia, Director, Inspection & Investigation, MCA. Harihara Sahoo, ICLS, has been appointed as first Registrar of the office of C-PACE, MCA said on Saturday.
The setting up of the C-PACE is part of the several measures taken by MCA in the recent past towards ease of doing business and ease of exit for the companies. This move would be particularly useful for start-ups that face failures due to various reasons.
The C-PACE office will work under the supervision/administration of Director General of Corporate Affairs (DGCoA) in New Delhi.
The establishment of the C-PACE will help to reduce the stress on the Registry along with keeping the registry clean besides availability of more meaningful data to the stakeholders. The C-PACE will also benefit the stakeholders by providing a hassle-free filing, timely and process-bound striking off their company’s names from the Register, an official release said.
The setting up of C-PACE is part of government’s overall efforts to speed up the voluntary winding up of companies from the currently required two years to less than 6 months. It maybe recalled that the Finance Minister Nirmala Sitharaman had in her Budget speech last year announced that C-PACE would be set up during 2022-23. Several IT-based systems have been established for accelerated registration of new companies. “Now the Centre for Processing Accelerated Corporate Exit (C-PACE) with process re-engineering, will be established to facilitate and speed up the voluntary winding up of these companies from the currently required 2 years to less than 6 months”, Sitharaman had said in her budget speech last year.
The Centre has been taking several steps to make entry as well as exit seamless for entrepreneurs so as to give a push to the Make in India initiative. The aim is to, among other things, reduce the time for completion of voluntary winding up of companies.
Nearly five years back, the Economic Survey had highlighted the ‘Chakravyuha Challenge’ for India where it was relatively easy to enter, but barriers to exits remained. It had also highlighted that India seems to have a disproportionately large share of inefficient firms with very low productivity and with little exit. This lack of exit generates externalities that hurt the economy. Also, any impeded exit has substantial fiscal, economic, and political costs, the survey had then highlighted.
With this latest MCA move, all the STK forms will be processed with C-PACE at Manesar, Gurugram, instead of the earlier practice of State Registrar of Companies (RoCs) dealing with the same.