Every Companies Registered in India are required to file their financial statements and Annual Returns with the Registrar of Companies and non-filing of such Reports is an offence Under the Companies Act, 2013.
As per Section 164 (2) read with Section 167 of the companies Act 2013, Disqualification of Director on account of default by a company in filing an financial statements and Annual Returns for a Continuous Period of Three Years and As per Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014, every director shall inform to the company concerned about his disqualification, if any, In FORM DIR-8.
MCA in September 2017, identified 3,09,614 Directors associated with the companies that had failed to file financial statement and annual return in MCA for a continuous period of Three Financial Years 2013 -14 to 2015-16.
Many disqualified directors have filed writ petitions before various high courts seeking relief from the disqualification.
Keeping in view, The Central Government has introduced Condonation of Delay Scheme, 2018 (CODS-2018) for Giving an opportunity for the non- compliant, Defaulting Companies to rectify the default.
1. Validity of Condonation of Delay Scheme, 2018
This Scheme shall with effect from 01.01.2018 to 31.03.2018.
2. Applicability of Condonation of Delay Scheme, 2018
This Scheme Applicable to all defaulting Companies (other than the companies which have been stuck off/whose names have been removed from the register of companies under section 248(5) of the Act).
A defaulting company is permitted to file its overdue documents, which were due for filing till 30.06.2017, in accordance with the provisions of this Scheme.
3. Procedure to be followed for the purposes of the Condonation of Delay Scheme, 2018:-
A. IN THE CASE OF DEFAULTING COMPANIES WHOSE NAMES HAVE NOT BEEN REMOVED FROM REGISTER OF COMPANIES:-
a) The DINs of the disqualified directors de-activated at present shall be temporarily activated during the validity of the scheme to enable them to file the overdue documents.
b) The defaulting company shall file the overdue documents in the respective prescribed e-forms paying the statutory filing fee and additional fee payable as per section 403 of the Act read with Companies (Registration Offices and fee) Rules, 2014 for filing these overdue documents.
c) The defaulting company after filing documents under this scheme, shall seek condonation of delay by filing form e-CODS 2018 attached to this scheme along with a fee of Rs. 30,000/- (Rs. Thirty Thousand only) as prescribed under the Companies (Registration Offices and Fee) Rules, 2014 well before the last date of the scheme.
d) The DINs of the Directors associated with the defaulting companies that have not filed their overdue documents and the e-form CODS, and these are not taken on record in the MCA21 registry and are still found to be disqualified on the conclusion of the scheme in terms of section 164(2)(a) r/w 167(1)(a) of the Act shall be liable to be deactivated on expiry of the scheme period.
B. In the event of defaulting companies whose names have been removed from the register of companies under section 248 of the Act and which have filed applications for revival under section 252 of the Act up to the date of this scheme, the Director’s DIN shall be re-activated only after NCLT order of revival subject to the company having filing of all overdue documents.
4. Overdue Documents
i. Form 20B/MGT-7 – Form for filing Annual Return by a company having Share Capital
ii. Form 21A/MGT-7 – Particulars of Annual Return for the company not having Share Capital
iii. Form 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, AOC-4, AOC-4(CFS), AOC-4 (XBRL) – Forms for filing financial statement
iv. Form 66 – Form for submission of Compliance Certificate.
v. Form 23B/ADT-1 – Intimation of Appointment of Auditor
5. E-form CODS – 2018 shall be made available on 20.02.2018 or other date as may be notified on website of MCA. Each company intending to avail the scheme shall be required to file e form CODS 2018 along with consolidated fees of Rs. 30000/- after filing of all overdue documents.
6. The following open issues are yet to be addressed by MCA:
a) If e-form CODS – 2018 is also required to be filed by 31.03.2018. (No mention in scheme, but it appears to be filed by 31.03.2018)
b) If in respect of companies strike off under section 248(5) of the Companies Act, 2013, DIN of disqualified directors shall be temporarily reactivated only after NCLT order for restoration and shall be permanently reactivated only after filing of overdue documents within the scheme time or restoration application has to be filed by 31.03.2018, but DIN shall be permanently activated only after filing of overdue documents even after 31.03.2018. (In my view all three things namely – application for restoration, NCLT order for restoration & filing of overdue documents along with CODS – 2018 needs to be completed by 31.03.2018)
c) If a defaulting Company that has been strike off is actually not carrying any business or its restoration application is rejected by NCLT, how directors of such defaulting Companies shall cure their disqualification? (In our view this scheme does not address such cases)
d) If only overdue documents shall be allowed to be filed by defaulting company or other documents can also be filed? (our view is that only overdue documents shall be allowed to be filed)
e) If non defaulting companies having disqualified directors shall be allowed to file any documents once their DIN are temporarily activated w.e.f. 01.01.2018? (In my view during temporary activation of DIN only filing of overdue documents by defaulting companies shall be enabled, so other companies cannot file.)