SECP Fast Track Exit Scheme (FTES) Strike-Off

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. --- Statutory Architecture: Section 426 vs. Formal Winding Up 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: Statutory Benefits of the Fast Track Exit Scheme No Court Appearances: Executed entirely through the relevant Company Registration Office (CRO) of the SECP. Waiver of Outstanding Annual Returns: Companies applying under FTES are generally relieved from filing overdue annual statutory returns (Form A, Form 29) for past defunct years upon payment of the prescribed FTES processing fee. Relief from Personal Directorial Liability: Securing an official Certificate of Dissolution shields directors from future statutory penalties, NAB inquiries, and FBR automated notices. --- Eligibility Criteria for FTES under Section 426 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: Ineligible Companies The SECP expressly bars the following categories from applying under FTES: Listed companies and their direct subsidiaries. Banking companies, non-banking finance companies (NBFCs), insurance firms, and modarabas. Companies against which statutory recovery proceedings or public interest investigations are pending. Companies owning immovable property or active commercial dispute assets. --- Step-by-Step FTES Application Procedure The strike-off workflow follows a structured sequence of internal corporate authorizations, independent auditor verifications, and regulatory submissions on the eZoffice portal: Phase 1: Board of Directors Resolution The Board convenes a formal meeting to: Resolve that the company has ceased business and holds zero assets and liabilities. Authorize the closure of corporate bank accounts. Convene an Extraordinary General Meeting (EGM) to seek shareholder authorization under Section 426. Phase 2: Members' Special Resolution 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. Phase 3: The Auditor's Certificate of NIL Assets & Liabilities A mandatory prerequisite for FTES is an Auditor's Certificate issued by an independent Chartered Accountant (ICAP firm) certifying that: The firm has audited the financial position of the company. The company has no known assets, property, or investments. The company has no outstanding liabilities, loans, trade payables, or statutory tax obligations. The financial statements showing NIL balance sheet balances are true and fair. Phase 4: Statutory Declarations & Personal Indemnity Bonds To protect third-party creditors against fraudulent strike-offs, all directors must execute personal affidavits and an Indemnity Bond on non-judicial stamp paper: Statutory Declaration: Each director swears under oath that the company has no outstanding debts and has closed all operations. Indemnity Bond: The directors jointly and severally indemnify the SECP and any prospective creditor, undertaking that if any liability, tax demand, or legitimate commercial debt emerges in the future, the directors will satisfy such claims personally from their personal assets. Phase 5: Submission on eZoffice & SECP Public Notice The complete FTES dossier is uploaded to the SECP portal along with the prescribed regulatory fee (PKR 10,000 – 15,000). Upon verifying documentation, the Registrar of Companies publishes a Public Notice in the Official Gazette and on the SECP website for a mandatory period of ninety (90) days. The public notice invites any creditor, regulatory agency (FBR, Provincial Revenue Authority, EOBI), or interested party to show cause why the company should not be struck off. Phase 6: Striking Off and Gazette Dissolution If no objections or claims are received within the 90-day statutory window: The Registrar strikes the name of the company off the register under Section 426(5). A final notification is published in the Official Gazette confirming that the company is officially dissolved. --- Mandatory Pre-Exit FBR & Banking Clearance A critical aspect of closing a corporate entity is terminating tax and banking liabilities to prevent future enforcement actions: The FBR De-Registration Requirement 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. Filing a final "Discontinued Business" tax return prevents the FBR Iris automated assessment engine from generating arbitrary ex-parte default notices under Section 121 or Section 122 in future tax years. The company applies for formal De-Registration of Corporate NTN once the SECP dissolution gazette is issued. --- Critical Pitfalls & Directorial Liabilities in Strike-Offs Failing to follow statutory safeguards under FTES can lead to severe civil and criminal liabilities: Striking Off While Carrying Concealed Liabilities: Under Section 426(7), if a company is struck off but is later proven to have conducted fraudulent transactions or concealed liabilities, the High Court possesses the power to order the restoration of the company to the register at any time within twenty (20) years and hold the directors personally liable without limit. Leaving Bank Accounts Active: Applying for FTES while leaving small balances in corporate bank accounts causes automatic rejection by the SECP. Every bank account must be closed and verified prior to filing. Submitting Without Auditor's NIL Certificate: Submitting unaudited management accounts or certificates from unauthorized accountants leads to immediate dismissal of the application. --- Comprehensive FTES Execution Checklist Before filing your strike-off application on SECP eZoffice, ensure all requirements are fulfilled: [ ] Company verified as inactive for at least one full continuous year. [ ] Comprehensive balance sheet audit conducted; zero assets and zero debts verified. [ ] All corporate bank accounts closed; signed bank closure certificates secured. [ ] Board of Directors meeting convened and exit resolution passed. [ ] Members' EGM convened; Special Resolution passed by 75% majority. [ ] Independent Chartered Accountant firm engaged to issue NIL Assets & Liabilities Certificate. [ ] Sworn Affidavits executed by all directors on non-judicial stamp paper. [ ] Joint and several Indemnity Bond executed by all directors and notarized. [ ] Final income tax return filed on FBR Iris; tax liabilities reconciled. [ ] FTES application submitted on SECP eZoffice with fee challan paid via 1Bill. [ ] 90-day Gazette public notice window monitored for third-party objections. [ ] Final Dissolution Notification received from SECP; FBR NTN cancelled. --- Conclusion & Legal Advisory 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.