Exit scheme this month: Gupta

Faced with the gigantic problem of over three lakh defunct companies, company affairs minister P C Gupta today said the government will announce a new scheme to enable promoters to close operations in a "hassle-free" manner.

"We will announce a simplified exit scheme for defunct companies," Gupta said.

The objective is to not only simplify the complex and cumbersome winding up procedure, but also reduce the burden of paper work on both the government and the industry, he added.

"As of now, industry spends about Rs 400 crore annually in compiling paper work under the Companies Act, and the Registrar of Companies at various offices has to keep a record of 15 crore documents," Gupta said.

There are 6.4 lakh registered companies, but about half of them are not operational. "We are giving them a chance to wind up."

Under the proposed scheme, a promoter would have to give a self-declaration before an Oath Commission along with balance sheets of the last three years for winding up in case there were no liabilities, he said.

The minister said he wanted to make the environment corporate friendly and he was striving to provide a simple exit route as the earlier schemes were not giving the desirable results.