Over 96,000 companies voluntarily wound up operations in last five years

Over 96,000 companies have wound up their operations in the past five years, according to the Ministry of Corporate Affairs.

Businesses opt for winding up for various reasons, including financial unviability.

From April 1, 2018 to March 31, 2023, as many as 96,261 companies exited voluntarily, invoking a section in the Companies Act, according to a report in the Mint.

According to the data from the ministry, under the Insolvency and Bankruptcy Code (IBC), final resolution orders have been passed by the National Company Law Tribunal (NCLT) in 510 cases during the same period.

Also Read: Jaipur airport to commence operations at new domestic cargo unit from Aug 1

The government has set up the Centre for Processing Accelerated Corporate Exit (CPACE) to centralise and expedite the voluntary exit process of companies under Section 248(2) of the Companies Act.

The CPACE was set up on May 1 and since then, the time taken for voluntary exit has been found to be about four months, as per the Mint report.

At present, 520 cases are pending for voluntary liquidation under section 59 of the IBC. As many as 11,037 cases are pending for voluntary corporate exit under section 248(2) of the Companies Act to date.

Also Read: Many chipmakers in talks for India plant: MoS IT Rajeev Chandrasekhar

In the past five years, the time taken for voluntary exit under Section 248(2) of the Companies Act has varied from 6-8 months to 12-18 months.

Under the IBC, the average time taken for dissolution of the company after submission of the final report has been in the range of 7-9 months. The average time taken by a liquidator to submit the final report for adjudication to the NCLT has been about 14 months, according to the Mint report.