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Condonation of Delay Scheme under Companies Act-2013

Companies Act-2013

Every company incorporated under Companies Act-2013 or its predecessor Act are required to comply with the requirements of the act. Filling of Annual Finance Statement and Annual return is mandatory for all companies registered under companies act. No filling of compliance is an offense under the said Act.

Director Disqualification Criteria under Companies Act-2013

Section 164 of the companies act 2013[1] states disqualification of Director for non-filling of an annual return or financial statement for a continuous period of three years.

As per Rule 14 of the Companies (Appointment and disqualification of Director) Rules 2014, every director who is disqualified shall inform the concerned company in Form DIR-8.

Whereas, the Ministry of Corporate Affairs had launched a company settlement scheme giving opportunities for companies to clear their default. Over 3 lakhs disqualified director was associated with the companies which have failed to fill the financial statement and annual returns.

Various directors affected have also filed writ petitions before the High Court for seeking relief.

What is Condonation of delay scheme for defaulting companies?

Finally, MCA has come up with the solution i.e.  Under this scheme, the defaulting companies are given a chance to file the pending returns. This scheme shall come into force with effect from 01.01.2018 and shall remain in force up to 31.03.2018.

Condonation of delay scheme for defaulting companies

This scheme is applicable to all defaulting companies expect which are been strike off by the Ministry of Corporate Affairs.

What Procedure Need to Followed for filling Condonation of delay Application by defaulting companies?

  1. During the validity of the scheme, the DINs of the disqualified directors will be temporarily activated to file the overdue documents.
  2. The defaulting company shall file all the pending documents in the prescribed forms along with the statutory and additional fees payable as per section 403 of Companies act.
  3. After filing of documents, the company can seek for Condonation of delay by filing form CODS along with a fee of Rs. 30,000/- before the closure of the scheme.
  4. The DINs of the defaulting director that has not filed the overdue documents and reform CODS, will be liable to be deactivated on the closure of the scheme.

The company’s struck off by Ministry

The companies whose name has been struck off from the register of companies and if they have filed for revival under section 252 of companies Act 2013 up to the date of this scheme. The Directors DINs will be re-activated only by NCLT’s order.

The scheme shall not be applicable to certain documents:

  1. Form Number 20B/MGT-7- Form for filing an annual return by a company having share capital.
  2. Form 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, AOC-4, AOC-4(CFS), AOC (XBRL)   and     AOC-4(Non-XBRL) –     Forms for filing Balance Sheet/Financial Statement and profit and loss account.
  3. Form 66- Form for submission of the Compliance Certificate with the Registrar.
  4. Form 23B/ADT-1- Form for intimation for Appointment of Auditors.

Pending Prosecution in Court

Any pending prosecution in court shall be withdrawn by the Registrar during filing of documents under the scheme.

Conclusion

The Ministry of corporate affairs shall take necessary actions against such companies who have not availed themselves and continue to be in default.

Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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