MCA Breather To Over 3 Lakh Disqualified Directors; Allows Filing Of Overdue Annual Returns, Financial Statements Till Mar 31

In a major relief to over three lakh persons recently disqualified as directors of defaulting companies under Section 164(2)(a) read with Section 167(1)(a) of the Companies Act of 2013, the Ministry of Corporate Affairs (MCA) has decided to introduce the Condonation of Delay Scheme, 2018, with a view to grant an extension to the non-compliant companies to file their overdue financial statements, annual returns and other related documents by March 31, 2018.In a bid to combat the issue of black money and illicit fund flows, 3,09,614 directors who were on the Board of Directors of companies that have failed to file Financial Statements or Annual Returns for a continuous period of three financial years during 2013-14 to 2015-16 have been disqualified, as per the Monthly Summary of the MCA for October, 2017, dated November 16. Separately, the names of 2,24,733 companies have been struck off from the register of companies under section 248 of the Act of 2013 for remaining inactive for a period of two immediately preceding financial years without an application within such period for obtaining the status of dormant company under section 455 of the Act. Following the action of striking-off defaulting companies, restrictions have been imposed by the Ministry of Finance on operation of their bank accounts in accordance with the law. The sale and transfer of moveable and immoveable properties of struck-off companies has also been restricted until they are restored.As a result of the above action, there has been a spate of representations from the industry, defaulting companies and their directors seeking an opportunity for the defaulting companies to become compliant and normalize operations. Certain affected persons have also filed writ petitions before various high courts seeking relief from the disqualification.With a view to giving an opportunity to the companies to rectify the default, the Central government has introduced the ‘Condonation of Delay Scheme, 2018’ w.e.f. January 1, 2018, granting an extension to a “defaulting company” to file by March 31, 2018, documents which were due for filing till June 30 this year. The documents to which the scheme applies are the prescribed forms for filing Annual Returns of companies with or without share capital, for filing Balance Sheet, Financial Statement and Profit and Loss Account, for submission of Compliance Certificate and for intimation of Appointment of Auditors. For the purpose of the scheme, a “defaulting company” is one that has not filed its financial statement or annual returns for a continuous period of 3 years as required by the Act of 2013 or its predecessor of 1956, as the case maybe, and the rules framed thereunder. The scheme envisages the temporary reactivation of the Director Identification Number (DIN) of the directors associated with the “defaulting company” for the online submission of the said documents on the payment of Rs. 30,000 for the condonation of delay in addition to the statutory filing fee.However, in respect of companies that have been deregistered under section 248(5) of the Act of 2013 and which have filed an application for revival under section 252 of the Act before the National Company Law Tribunal (NCLT), the DIN shall be activated only upon the order of the NCLT.Finally, the scheme requires the Registrar to withdraw all pending prosecution in respect of the overdue documents filed thereunder, except any action under section 167(2) of the Act of 2013 and any civil or criminal liabilities of the disqualified directors incurred during the period of disqualification.Read the Circular here

MCA Breather To Over 3 Lakh Disqualified Directors; Allows Filing Of Overdue Annual Returns, Financial Statements Till Mar 31

MEHAL JAIN

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