contributed by Abhishek Dubey, who
is a Senior Associate with BMR Legal. Prior to joining BMR Legal, Abhishek has worked
with Amarchand & Mangaldas & Suresh A. Shroff & Co. and P&A Law
companies who have defaulted in making annual statutory filings with the
Registrar of Companies (hereinafter “RoC”). The scheme offers to condone the
delay in filing annual statutory documents with the RoC and grant immunity for
prosecution in respect of such delayed filings. The scheme is named the “Company Law
Settlement Scheme 2014” (hereinafter the “Scheme”). Under the Scheme,
companies are permitted to file annual statutory documents that were due for
filling until June 30, 2014.
made available from September 1, 2014. The Scheme will remain in force up to
October 15, 2014 and defaulting companies will have an opportunity to file
their delayed filings until that date.
of MCA for Introduction of the Scheme
punishment (both penalty and imprisonment) for non-compliances under the Companies
Act, 2013 (hereinafter “2013-Act”) has been considerably increased vis-à-vis
the Companies Act, 1956.
contains a specific provision for higher penalty in case of subsequent offenses.
Section 451 of the 2013-Act prescribes that if the offense is committed on a
subsequent occasion within a period of three years, in addition to any
imprisonment prescribed for directors, the penalty amount shall be twice the
amount of fine prescribed for such offense.
the 2013-Act makes a person, who is a director of
a company which has not filed financial statements or annual returns for any
continuous period of three financial years,
ineligible for appointment as a director for a period of five years.
to escape the stricter provisions of the 2013-Act and provide the directors of
such companies an opportunity to avoid disqualification, the Ministry of
Corporate Affairs has rolled out the Scheme permitting delayed filing of annual
compliances at a significantly reduced penalty amount.
Delayed Filings & Reduced Penalty
contraventions good through this Scheme. The Scheme offers an opportunity to
the defaulting companies to make delayed filings in respect of the following
annual return by a company having share capital;
return for the company not having share capital;
23ACA-XBRL – Forms for filing Balance Sheet and Profit & Loss account;
66 – Form for submission of Compliance Certificate with the RoC; and
for Appointment of Auditors.
defaulting companies have to pay the statutory filing fee as prescribed under
the Company (Registration Offices and Fee) Rules, 2014 and, in addition, a
reduced penalty of 25% of the total prescribed penalty for the contraventions
(as opposed to full prescribed penalty amount).
of Obtaining Dormant Company Status or Striking-off the Name from Register of
documents under the Scheme can also simultaneously either:
status for a maximum period of 5 years, under Section 455 of the 2013-Act by
filing e-form MSC-1 at 25% of the prescribed fee. Once a company is declared a
dormant company under the 2013-Act, it is not required to comply with all the
compliance requirements of the 2013-Act and is only expected to make minimum
annual filings with the RoC; or
striking off the name of the company from the register of companies by filing
e-Form FTE at 25% of the prescribed fee. However, for making an application to
strike off the name of the company from the register of companies, inter alia, the following pre-conditions
must be complied: (a) the company shall have NIL assets and liabilities (which
may include NIL contingent liabilities); (b) the
company shall not have any dues towards Income Tax or other government
authorities. Therefore, companies having any outstanding tax demands or
dispute/litigation with the tax department may not be able to file an
application under the Scheme for striking its name off the register of
defines an “inactive company” as a company which
has not been carrying on any business or operation, or has not made any
significant accounting transaction during the last two financial years, or has
not filed financial statements and annual returns during the last two financial
conclusion, the Scheme offers a good opportunity to the defaulting companies to
make their defaults good by paying only 1/4th of the prescribed
penalty and an occasion to the directors of such companies to avoid
disqualification. However, the time window of only 45 day (i.e., from September
1, 2014 to October 15, 2014) looks very narrow and must be extended to achieve
the objective of the Scheme