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FY 2026-27
Close a defunct or inactive company in Pakistan without court liquidation. Complete 2026 legal guide on SECP Fast Track Exit Scheme (FTES) under Section 426.
By Syed Asad Hussain Zaidi · 8 September 2026
Entrepreneurs and business groups in Pakistan frequently establish private limited companies that, due to evolving market conditions, regulatory shifts, or commercial decisions, cease active commercial operations. Many directors mistakenly assume that merely abandoning an inactive company or leaving its bank accounts at zero balance is sufficient. In reality, an inactive or dormant company remains legally alive under corporate law, accumulating statutory non-filing penalties from the Securities and Exchange Commission of Pakistan (SECP), triggering automated show-cause notices under Section 123A (UBO) and Section 130 (Form A), and exposing its directors to personal legal disqualification.
To provide a cost-effective, expeditious, and non-litigious mechanism for closing defunct companies, the Companies Act, 2017 provides the Fast Track Exit Scheme (FTES) under Section 426, read with the Companies (Easy Exit) Regulations. This administrative procedure allows qualifying inactive private companies to have their names struck off the register of companies without undergoing expensive and protracted High Court winding-up proceedings.
This legal guide outlines the statutory eligibility criteria, documentation sequence, auditor certifications, indemnity requirements, and FBR tax considerations governing company strike-offs in Pakistan in 2026.
Before initiating corporate closure, directors and shareholders must evaluate whether the company qualifies for the administrative Fast Track Exit Scheme or must undergo formal winding-up proceedings under Part X of the Companies Act, 2017:
| Closure Method | Governing Provision | Key Characteristics & Timelines | | :--- | :--- | :--- | | Fast Track Exit Scheme (FTES) | Section 426 of Companies Act 2017 | Administrative strike-off for defunct companies with NIL assets and NIL liabilities. Low-cost, completed within 60–90 days without court intervention. | | Members' Voluntary Winding Up | Section 301 of Companies Act 2017 | Solvent liquidation requiring declaration of solvency, liquidator appointment, realization of assets, settling creditors, and High Court filing (12–24 months). | | Court-Ordered Winding Up | Section 304 of Companies Act 2017 | Insolvent or compulsory liquidation initiated by creditors or SECP for commercial insolvency or regulatory default. Contested High Court process. |
Not every inactive company is entitled to utilize the Fast Track Exit Scheme. Under the Companies (Easy Exit) Regulations, an applicant company must fulfill all of the following statutory benchmarks:
| Eligibility Criterion | Statutory Standard & Verification Requirement | | :--- | :--- | | 1. Company Type | Private limited company, single-member company (SMC), or unlisted public company. Listed entities are ineligible. | | 2. Defunct Operating Status | Company has never commenced commercial operations, or has completely ceased business for at least one (1) full year. | | 3. Absolute NIL Balance Sheet | Company possesses no assets, property, or outstanding debts to banks, vendors, employees, or tax authorities. | | 4. Zero Pending Inquiries | No active litigation, court proceedings, SECP investigations, or NAB inquiries pending against the entity or directors. | | 5. Formal Bank Account Closure | All corporate bank accounts in Pakistan and abroad must be fully closed, verified by official bank closure certificates. |
The SECP expressly bars the following categories from applying under FTES:
The strike-off workflow follows a structured sequence of internal corporate authorizations, independent auditor verifications, and regulatory submissions on the eZfile portal:
| Phase | FTES Stage | Key Actions & Legal Documentation | Regulatory Purpose | | :--- | :--- | :--- | :--- | | Phase 1 | Board Resolution | Pass board resolution resolving that the company has ceased trading and holds zero assets/debts. | Internal corporate authority | | Phase 2 | EGM Special Resolution | Shareholders convene EGM and pass 75% Special Resolution authorizing strike-off under Section 426. | Shareholder consent | | Phase 3 | Auditor's NIL Certificate | Independent Chartered Accountant audits financial statements and issues certified NIL assets/liabilities report. | Independent audit proof | | Phase 4 | Indemnity Bonds & Affidavits | All directors execute sworn declarations and personal indemnity bonds on non-judicial stamp paper. | Protection of creditors | | Phase 5 | Submission on eZfile | Upload application, auditor certificate, and indemnity bond on SECP eZfile; pay 1Bill processing challan. | Regulatory filing | | Phase 6 | Public Notice & Strike-Off | SECP publishes 90-day public notice in Gazette; upon zero objection, company name is struck off the register. | Legal dissolution |
The Board convenes a formal meeting to:
The shareholders convene the EGM and pass a unanimous (or 75% majority) Special Resolution approving the formal strike-off of the company's name from the SECP register under the Fast Track Exit Scheme.
A mandatory prerequisite for FTES is an Auditor's Certificate issued by an independent Chartered Accountant (ICAP firm) certifying that:
To protect third-party creditors against fraudulent strike-offs, all directors must execute personal affidavits and an Indemnity Bond on non-judicial stamp paper:
The complete FTES dossier is uploaded to the SECP portal along with the prescribed regulatory fee (PKR 10,000 – 15,000).
If no objections or claims are received within the 90-day statutory window:
A critical aspect of closing a corporate entity is terminating tax and banking liabilities to prevent future enforcement actions:
| Clearance Body | Mandatory Actions & Documentation | | :--- | :--- | | 1. Commercial Bank | Liquidate balance to zero, cancel chequebooks/cards, and obtain official Bank Account Closure Certificate. | | 2. FBR (Federal Tax) | File final income tax return up to date of closure, reconcile Section 165 statements, and apply for Tax Clearance Certificate. | | 3. Provincial Tax (PRA/SRB) | Settle outstanding service tax liabilities and cancel provincial sales tax on services registrations. | | 4. Labor & EOBI | Close employer registrations and secure No-Objection Certificates from EOBI and social security institutions. |
Under Section 115(3) of the Income Tax Ordinance, 2001, a person discontinuing business must give notice to the Commissioner Inland Revenue within fifteen (15) days of discontinuance.
Failing to follow statutory safeguards under FTES can lead to severe civil and criminal liabilities:
Before filing your strike-off application on SECP eZfile, ensure all requirements are fulfilled:
The SECP Fast Track Exit Scheme provides corporate founders, overseas directors, and business groups with a clean, lawful, and permanent method for dissolving inactive corporate entities without undergoing costly court liquidation. By adhering strictly to Section 426 prerequisites, securing proper auditor verifications, and closing bank and tax registrations, promoters permanently eliminate ongoing compliance burdens and safeguard their professional reputations.
For legal representation in SECP company strike-offs, executing Fast Track Exit documentation, drafting directors' indemnity bonds, or securing FBR tax clearance certificates, contact Syed Asad Hussain Zaidi | Advocate High Court at info@taxcalc.pk or consult our Corporate Legal Advisory Services.
Legal & Statutory Notice: The information provided in this publication is for general educational, academic, and statutory informational purposes only under the relevant laws of Pakistan (including the Income Tax Ordinance, 2001, the Companies Act, 2017, and the Trade Marks Ordinance, 2001). This content does not constitute formal legal, financial, or tax advice. For specific assessments, consult a licensed Advocate or qualified tax professional.
