In the last five years, 1.06 lakh firms chose to exit voluntarily: Govt.

The government told the Lok Sabha on Monday that over the past five years, more than 1 lakh companies have chosen to exit voluntarily under the Companies Act. Additionally, numerous companies have opted for voluntary liquidation under the Insolvency and Bankruptcy Code, 2016 (IBC).
According to a written reply from the Minister of State, Corporate Affairs, Rao Inderjit Singh, from the financial year 2018-19 to the financial year 2023-24 (up to November 30, 2023), a total of 1,06,561 companies voluntarily exited under Section 248(2) of the Companies Act, 2013. Moreover, during FY 2018-19 and FY 2023-24 (up to September 30, 2023), 1,168 companies submitted final reports for voluntary liquidation under Section 59 of the IBC, and the National Company Law Tribunal (NCLT) issued final dissolution orders in 633 cases.

Section 248(2) of the Companies Act deals with the voluntary exit of companies, while Section 59 of the IBC pertains to voluntary liquidation. Singh further noted that the time taken for voluntary exit under Section 248(2) of the Companies Act ranged from 6–8 months to 12–18 months over the past five years. Under the IBC, the average time for dissolution after the liquidator’s final report submission varied between 7 and 9 months, and the liquidator took approximately 14 months to submit the final report for adjudication to NCLT.

To streamline and expedite the voluntary exit process, the government established the Centre for Processing Accelerated Corporate Exit (CPACE) earlier this year. Singh reported that under CPACE, the time taken for voluntary exit during the current year is approximately 110 days. As of September 2023, 470 cases are pending for voluntary liquidation under Section 59 of the IBC, and 3,695 cases are pending for voluntary corporate exit under Section 248(2) of the Companies Act, 2013 with CPACE.