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CS Executive · Setting Up of Business, Industrial and Labour Laws · Micro, Small and Medium Enterprises

Bharat Gears Pvt Ltd, a company registered under the Companies Act, is a small manufacturing enterprise and plans to wind up its business. A friend says the Central Government's closure scheme for MSMEs would help it. What is the correct position under the MSMED Act, 2006?

The company is excluded. Section 25 of the MSMED Act, 2006 allows the Central Government to notify a closure scheme for micro, small or medium enterprises, but expressly not for a company registered under the Companies Act, 1956.

  1. AThe closure scheme covers MSMEs that are not companies registered under the Companies Act, 1956, so the company is excludedCorrect
  2. BThe closure scheme applies to all MSMEs, including registered companies
  3. CThe closure scheme applies only to medium enterprises, whether companies or not
  4. DThe closure scheme applies only to companies registered under the Companies Act, 1956

Explanation

Section 25 lets the Central Government notify a scheme to facilitate closure by an MSME, not being a company registered under the Companies Act, 1956. A company is therefore outside the scheme. The option saying all MSMEs are covered ignores this exclusion.

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