It has been observed by the Ministry of Corporate Affairs that a large number of companies are not filing their due documents timely with the Registrar of Companies. Due to this, the records available in the electronic registry are not updated and thereby are not available to the stakeholders for inspection. Further, due to non-filing of the documents on time, companies are burdened with additional fee and facing the prosecutions also.
There are many companies, who have not increased their paid up capital up to the threshold limit provided in sub-section (3) and sub-section (4) of Section 3 of the Companies Act, 1956.
In order to give an opportunity to the defaulting companies to enable them to make their default good by filing belated documents and to become a regular compliant in future, the Ministry has introduced a Scheme namely, ‘Company Law Settlement Scheme 2010″.
This newsflash is intended to highlight certain significant aspects of the “Company Law Settlement Scheme, 2010 introduced by the Ministry of Corporate Affairs vides General Circular No: 1/2010 dated 26.05.2010.
Key Highlights
- In order to give an opportunity to the defaulting companies to enable them to make their default good
- by filing belated documents and to become a regular compliant in future, the Ministry of Corporate Affairs has introduced a Scheme namely, “Comnanv Law Settlement Scneme, 2010,’ for condoning the delay in filing documents with the Registrar, granting immunity from prosecution and charging additional fee of 25% of actual additional fee payable for filing belated documents under the Companies Act, 1956 and the rules made there under.
- After granting the immunity, the Registrar concerned shall withdraw the prosecution(s) pending if any before the concerned Court(s).
- At the conclusion of the Scheme, the Registrar shall take necessary action under the Companies Act, 1956 against the companies who have not availed this Scheme and are in default in filing of documents in a timely manner.
- The scheme will be in operation from 30 May 2010 to 31 August 2010.
Key Definitions
“defaulting company” means a company registered under the Companies Act, 1956 and a foreign company falling under section 591 of the Act, which has made a default in filing of documents on the due date(s) specified under the Companies Act, 1956 and rules made there under;
“Designated authority” means the Registrar of Companies having jurisdiction over the registered office of the company
Applicability
Any “defaulting company” is permitted to file belated documents in accordance with the provisions of this Scheme:
Provided that any defaulting private company or public company which has not increased its paid capital up to the threshold limit of rupees one lakh and rupees five lakh respectively as provided in sub section (3) and (4) of section 3 of the Companies Act, 1956, as the case may be, shall first file its documents to increase their paid up capital up to the threshold limit under the scheme and thereafter would be allowed to file other belated documents;
Scheme not applicable to certain documents
- This Scheme shall not apply to the filing of documents for incorporation or establishment of place of business in India or where specific order for condonation of delay or prior approval under the provisions of the Companies Act, 1956 is to be obtained from the Company Law Board or the Central Government or Court or any other Competent Authority is required;
- This Scheme shall not apply to companies against which action under sub-section (5) of section 560 of the Act has been initiated by the Registrar of Companies.
Manner of payment of fees
The defaulting company shall pay statutory filing fees as prescribed under the Companies Act and rules made there under along with an additional fee of 25% of the actual additional fee standardised under subsection (2) of Section 611 of the Companies Act, 1956, payable on the date of filing of each belated document;
Withdrawal of appeal against prosecution
If the defaulting company 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 this Scheme, the applicant shall before filing an application for issue of immunity certificate, withdraw the appeal and furnish the proof of such withdrawal along with the application.
Application for issue of immunity
The application for seeking immunity in respect of belated documents filed under the Scheme may be made electronically in the prescribed form, after closure of Scheme and after the document(s) are taken on file, or on record or approved by the Registrar of Companies as the case may be, but not after the expiry of six months from the date of closure of the Scheme. There shall not be any fee payable on this Form.
Order granting immunity
The designated authority shall consider the application and upon being satisfied shall grant the immunity certificate in respect of documents filed in the Scheme;
After granting the immunity, the Registrar concerned shall withdraw the prosecution(s) pending if any before the concerned Court;
Action Post Closure of Scheme
At the conclusion or the Scheme, the Registrar shall take necessary action under the Companies Act, 1956 against the companies who have not availed this Scheme and are in default in filing of documents in a timely manner.
Dear sirs,
“In order to give an opportunity to the defaulting companies to enable them to make their default good by filing belated documents and to become a regular compliant in future, the Ministry has introduced a Scheme namely, ‘Company Law Settlement Scheme 2010″.”
It is fine.
Due to non compliant :
• the records available in the electronic registry are not updated and thereby are not available to the stakeholders for inspection.
• companies are burdened with additional fee and facing the prosecutions also.
The intent of the Ministry of Corporate Affairs in “condoning the delay in filing documents with the Registrar, granting immunity from prosecution and charging additional fee of 25% of actual additional fee payable for filing belated documents under the Companies Act, 1956 and the rules made there under” is again not genuine.
Let all the companies become compliant from all aspects, give them ample opportunity (instead of from 30 May 2010 to 31 August 2010), by this one time sufficient time and avoiding any additional charges. Does it make sense by charging additional fee? The benefits by becoming all companies compliant would be more sensible than this pittance of additional charges. Let the department openly come out and encourage all the companies and put the sincere efforts in pursuing the companies (who are not becoming compliant ) to become compliant by understanding their economic genuine problems sympathetically.
Let not this ‘Company Law Settlement Scheme 2010″ scheme be an eyewash.
From
Venkateswara Rao Sapare, Hyderabad – 500 008