India sets up CPACE for company closures

The Indian government has established the Centre for Processing Accelerated Corporate Exit (CPACE) to handle the swift regulatory clearance of companies that wish to exit their business due to economic reasons. The Ministry of Corporate Affairs has authorized CPACE to take over the task from the RoCs across the country, effective May 1, as part of a revamp of the approval process for various corporate filings. CPACE is located at the Indian Institute of Corporate Affairs, an institution affiliated with the ministry. Companies opt for voluntary closure for several reasons, including business unviability or changing circumstances. They must not have any outstanding liability to close voluntarily, which is different from the government’s action of removing a company from the register for failing to file statutory documents for two consecutive years. Virender Bhasin, the Executive Director of Entity Setup and Management at Nexdigm, a consultancy firm, has stated that CPACE, which will have nationwide jurisdiction for voluntary company closures, has introduced new forms that demand the declaration of pending litigation, leading to enhanced transparency and good governance.