Ministry of Corporate Affairs (MCA), Government of India has on 26 May 2010, introduced a “Company Law Settlement Scheme, 2010” (CLSS) under the Companies Act, 1956 (the Act). The objective of CLSS is to give an opportunity to defaulting companies to enable them to make their default good by filing belated documents and to become a regular compliant in future. CLSS would condone the delay in filing documents with the Registrar of Companies (ROC), grant immunity from prosecution by levying additional fee of 25% of actual additional fee payable for filing belated documents under the Act and the rules made there under.

The salient features of CLSS are as under:

Meaning of Defaulting Company

“Defaulting company” has been defined to mean –

  • a company registered under the Act; and
  • a foreign company covered under section 591 of the Act

which has made a default in filing of documents on the due date specified under the Act and rules made there under.

Operative period of CLSS:-CLSS is operative from 30 May 2010 till 31 August 2010.

Companies eligible to avail CLSS

  • Any “defaulting company” is permitted to file belated documents in accordance with CLSS.
  • Defaulting private company or public company existing on 13 December 2000 which has not increased its paid capital to the prescribed minimum limit of Rs. 100,000 or Rs. 500,000 respectively, are first required to increase it’s paid up capital to the said prescribed minimum limit before they could avail of the benefits under CLSS.

Ineligibility under CLSS

CLSS cannot be availed under following situations:

  • Filing of documents for incorporation or establishment of place of business in India (by a foreign company under section 592); or
  • Where specific order for condonation of delay or prior approval is required to be obtained from the Company Law Board / Central Government / Court / any other competent authority under the Act; or
  • Defaulting company which has filed any appeal against any notice issued (or) complaint filed before the competent court for violation of the provisions under the Act in respect of which application is made under CLSS, unless such appeal has been withdrawn; or
  • Companies against which action under Section 560 (5) of the Act has been initiated by the ROC to strike off its name.

The Circular issued by the Government contains the procedure to be followed to obtain the benefits under CLSS including immunity from prosecution under the Act.


  • CLSS is a welcome step by MCA aimed to give an opportunity to defaulting companies to enable them to regularize their past default and seek immunity from prosecution under the Act by filing belated documents on payment of additional fees.

Source: General Circular No. 1 /2010 dated 26 May 2010 issued by MCA.

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