Announcement of Company Law Settlement Scheme (CLSS), 2014 vide General Circular No. 34/2014 dated 12th August 2014

One Time Opportunity for Defaulting Companies and Its Directors         

Companies Who Have Not Filed Their Annual Reports, Financial Statements and Related Documents Due For Filing on Or Before 30/06/2014 Can File These Documents Before 15/10/2014

And Avail Of The Following

  • Pay Only 25% Of Payable Additional Fee, And
  • Enjoy Immunity From Prosecution.
  • Directors   Will   Also   Not   Be Disqualified Under   Section 164(2) Of The Companies Act, 2013.

Related Notification is as follows :-

General Circular No. 34/2014

F. No. 02/13/2014 CL-V

Dated. 12/08/2014

Subject: COMPANY LAW SETTLEMENT SCHEME, 2014

As you are aware, the Companies Act requires companies to file annual documents (Annual return and financial Statements) on the MCA21 electronic registry, within prescribed time limits. Sections 92, 137 and 403 of the Companies Act, 2013, which correspond to sections 159, 220 and 611 of the Companies Act, 1956 may be referred to in this regard. These annual documents are considered very important in context of an up-to-date Registry, it is observed that a large percentage of companies have not filed their statutory documents making them liable for penalties and prosecution for such non-compliance.

2. The Companies Act, 2013 lays down a stricter regime for the defaulting companies with higher additional fees. The quantum of punishment has been enhanced under the above mentioned provisions of the Act vis-a-vis  the earlier Act i.e. Companies Act, 1956. A specific provision for enhanced fine in case of repeated default  also been included in the form of section 451 of the Act. Additionally, the  provisions  section 164(2) of the Act, inter alia, providing for disqualification of directors in case a company has not filed financial statements or annual returns for any continuous period of three financial years has been extended to all companies.

3. The Ministry has received representations from various stakeholders requesting for grant of transitional period/one-time  opportunity  to enable them to file their pending annual documents to avoid attraction of higher fees/fine and other penal action, espescially  disqualification of their Director prescribed under the new provisions of the Act.

4.  in order to give such an opportunity to the defaulting companies to enable them to make their default good by filing these belated documents, the Central Government in exercise of powers conferred under section 403 and 460 of the Companies Act, 2013 has decided to introduce a Scheme namely “Company Law Settlement Scheme 2014” [CLSS-2014] condoning the delay in filing the above mentioned documents with the Registrar, granting immunity for prosecution and charging a reduced additional fee of 25% of the actual additional fees payable as per section 403 read with Companies (Registration Offices and Fee) Rules, 2014 for filing those belated documents under the Companies Act, 1956/2013 and the Rules made thereunder.

5.  In addition, the scheme gives an opportunity to Inactive companies to get their companies declared as ‘dormant company’ under section 455 of the Act (Chapter XXIX) by filing a simple application at reduced fees. The said provision enables Inactive companies to remain on the Register of Companies with minimal compliance requirements.

6. The details of the Scheme are as under:-

(i) The scheme shall come into force on the 15th August 2014 and shall remain in force up to 15th October, 2014.

(ii) Definitions –  In this Scheme, unless the context otherwise requires,

(a) “Act” means the Companies Act, 2013 and Companies Act, 1956 (where ever applicable);

(b) “Company” means a company as defined in clause of 20 of section 2 of the  Companies Act, 2013 ;

(c) “defaulting company” means a company defined under the Companies Act, 2013, and which has made a default in filing of annual statutory documents.

(d) “designated authority” means the Registrar of Companies having jurisdiction  over the registered office of the company.

(e) “immunity certificate” means the certificate referred to in sub-paragraph (vi) of the Scheme;

(f) “inactive Company” means as defined In Explanation (i) to sub-section (1) of  section 455(1) of Companies Act, 2013.

(iii) Applicability: – Any “defaulting company” Is permitted to file belated documents which were due for filing till 30th June 2014 In accordance with the provisions of this Scheme:

(iv)  Manner of payment of fees and additional fee on filing belated document for  seeking Immunity under the Scheme – The defaulting company shall pay statutory filing fees as prescribed under the Companies (Registration Offices and fee) Rules, 2014 along with additional fees of 25% of the actual additional fee payable on the date of filing of each belated document.

(v)  Withdrawal of appeal against prosecution launched for the offences: 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 Companies Act,  1956  and/or Companies Act,  2013  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 proof of such withdrawal along with the application.

(vi)  Application for Issue of Immunity in respect of document(s) filed under the Scheme –  The application for seeking immunity in respect of belated documents filed under the Scheme may be made electronically in the e-Form CLSS-2014 annexed, after the document(s) are taken on file, or on record at approved by the Registrar of Companies as the case may be. The e-Form for filing application to obtain such a certificate will be available on the MCA21 portal from 1st September, 2014 and may be filed thereafter but not later than three months from the date of closure of the Scheme. There shall not be any fee payable on this Form.

Provided that this immunity shall not be applicable in the matter of any  appeal pending before the court of law and in case of management disputes of the company pending before the court of law or tribunal.

(vii)  Order  by  designated  authority  granting  immunity from  penalty and  prosecution – The designated authority shall consider the application and upon being satisfied shall grant the immunity certificate in respect of documents filed under this Scheme.

(viii)  Scheme not to apply in certain cases – (a) This scheme shall not apply to the  filing of belated documents other than the following:

a. Form 20B –  Form for filing annual return by a company having share capital.

b. Form 21A – Particulars of Annual return for the company not having share capital.

c. Form 23AC, 23ACA, 23AC-XBRL and 23ACA-XBRL –   Forms for filing Balance Sheet and Profit & Loss account.

d. Form 66 – Form for submission of Compliance Certificate with the Registrar.

e.  Form 238 –  Form for Intimation for Appointment of Auditors.

(ix) This Scheme shall not apply

a. to companies against which action for striking off the name under sub- section (5) of section 560 of Companies Act, 1956 has already been initiated  by the Registrar of Companies or

b. where any application has already been filed by the companies for action of  striking off name from the Register of Companies or

c.  where applications have been filed for obtaining Dormant Status under  section 455 of the Companies Act, 2013;

d. to vanishing companies

(x)  After granting the immunity, the Registrar concerned shall withdraw the prosecution(s) pending if any before the concerned Court(s);

(xi) Scheme for Inactive Companies: The defaulting inactive companies, while filing due documents under CLSS-2014 can, simultaneously, either:

a. apply to get themselves declared as Dormant Company under section 455 of  the Companies Act, 2013 by filing e-form MSC-1 at 25% of the fee for the  said form; OR

b. apply for striking off the name of the company by filing e- Form FTE at 25% of the fee payable on form FTE.

(xii)  Applicability of clause (a) sub-section (2) of Companies Act, 2013 In case of companies availing the Scheme:- In case of defaulting companies which avail of this Scheme and file all belated documents, the provisions of clause (a) of subsection (2) of section 164 of the Companies Act, 2013 shall apply only for the prospective defaults, if any, by such companies.

7.  At the conclusion of the Scheme, the Registrar shall take necessary action under the Companies Act, 1956/ 2013 against the companies who have not availed this Scheme and are in default in filing these documents in a timely manner.

Yours faithfully,

(KMS Narayanan)

Assistant Director

23387263

Download General Circular No. 34/2014 dated 12 Aug 2014

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Category : Company Law (3352)
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0 responses to “Company Law Settlement Scheme (CLSS), 2014 for Defaulting Companies & Directors”

  1. Tapan says:

    Even after CLSS Scheme One of my client has not made annual filing for year 2013-2014.

    What is the remedy?

  2. divya agarwal says:

    Sir,,
    I want to make my co. Dormant, but there are some pending income tax refunds in it, will that refunds be recoverable once the company becomes dormant?

  3. kodandaramaiah says:

    vide circular 34/2014, the Company Law Settlement Scheme-2014 will be in force from 15.08.14 to 15.10.14 and the application-for-issue-of-immunity can be down loaded from MCA21 portal wef 01.09.14. The application can be filed not later than 3 months from the date of closure of the scheme i.e, to be filed before 14.01.15. This means the defaulting company shall down load the application free of cost during the period 01.09.14 to 15.10.14

    In effect the enforceability of the scheme is during the period 15.08.14 to 15.10.14 and for availing the scheme following three steps to be taken::

    (1).to file the relevant documents during 15.08.14 to 15.10.14.
    (2).to download the application-for-issue-of-immunity during 01.09.14 to 15.10.14.
    (3).The application for immunity shall be filed on or before 14.01.15.

    Any comments on this.

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