1.06 lakh firms shut shop in 5 yrs

New Delhi: More than one lakh firms voluntarily exited under the Companies Law in nearly five years, the government said on Monday. Besides, many companies have sought voluntary liquidation under the Insolvency and Bankruptcy Code (IBC). “From FY 2018-19 to FY 2023-24 (up to November 30, 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 September 30, 2023) final reports of 1,168 companies have been submitted by liquidators under section 59 of the Insolvency and Bankruptcy Code, 2016 (IBC), of which final dissolution orders have been passed by NCLT in 633 cases during the said period,” Union Minister Rao Inderjit Singh told the Lok Sabha. Section 248(2) of the Companies Act pertains to voluntary exit of companies, while Section 59 of the IBC relates to voluntary liquidation of companies.

In the last five years, Singh said the time taken for voluntary exit under Section 248(2) of the Companies Act, 2013 has varied between an average of 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 NCLT has been about 14 months, Singh, who is Minister of State (MoS) for Corporate Affairs, said in a written reply. 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.