Condonation of Delay Scheme, 2018: A Ray of Hope For Disqualified Directors

Almost after a period of 6 months there is finally some relief to the Directors who were disqualified in terms of section 164(2)(a) read with  167(1)(a) of Companies Act, 2013. Just one circular (General Circular No. 16/2017, Dated 29.12.2017) at the very end of the year has changed the rule of game completely. Disqualified directors were moving here and there in search of relief. Finally, MCA has emerged with some sought of relief i.e. Condonation of delay scheme, 2018’, wherein all defaulting Companies* (which are not stuck off from MCA record) are given a chance to file their pending documents/returns which are due till June 30, 2017.  For this, the DIN of disqualified directors will be temporarily activated during the validity of Condonation of Delay Scheme, 2018.

In this write-up, the newly introduced Scheme i.e. ‘Condonation of Delay Scheme, 2018’, which shall be operative from 01.01.2018 to 31.03.2018, shall be discussed at glance.

Ques 1. Condonation of Delay Scheme, 2018 shall be effective from?

Ans. The scheme shall come into force with effect from 01.01.2018 and shall remain in force up to 31.03.2018.

Ques 2. Is Condonation of Delay Scheme, 2018 applicable to those Companies also which have been stuck off?

Ans. This scheme is applicable to all defaulting companies* except those companies which have been stuck off/ whose names have been removed from the register of companies under section 248(5) of the Act).

*Defaulting Company– Please note that here the defaulting Company means those Companies which are active in nature, whose name have not been removed from Register of Companies under section 248(5) of Companies Act, 2013.

A defaulting company is permitted to file its overdue documents which were due for filing till30.06.2017 in accordance with the provisions of this Scheme.

Ques 3. Whether Condonation of Delay Scheme, 2018 is applicable in respect of all overdue documents?

Ans. This scheme shall only applicable to the following overdue documents:

1. Form Number 20B/MGT-7- Form for filing Annual return by a company having share capital.

2. Form 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, AOC-4, AOC-4(CFS), AOC (XBRL)    and     AOC-4(non-XBRL)   –     Forms     for     filing     Balance Sheet/Financial Statement and profit and loss account.

3. Form 66-  Form  for  submission  of  Compliance  Certificate  with  the Registrar.

4. Form 23B/ADT-1- Form for intimation for Appointment of Auditors.

Ques 4. What is the procedure under Condonation of Delay Scheme, 2018 (CODS, 2018)?

Ans. Procedure:

Temporarily activation of DIN of disqualified directors

To facilitate the filing of overdue document, DINs of the disqualified directors (which are presently de-activated) shall be temporarily activated from 01.01.2018 to 31.03.2018.

Filing of overdue documents together with additional fees

The defaulting company shall file the overdue documents in the respective prescribed eForms 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 document.

Filing form e-CODS 2018 attached to this scheme along with a fee of 30,000/- 

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 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.

The e-Form CODS 2018 would be available from 20.02.2018 or an alternate date, which will be intimated by the ministry on www.mca.gov.in. The stakeholder should complete the necessary procedural requirements and file overdue documents without waiting for the availability of the e-CODS form.

Ques 5. What happen to the Directors of the Defaulting Companies who have not availed Condonation of Delay Scheme, 2018?

Ans. The DINs of the Directors associated with the defaulting companies that have not filed their overdue documents and the eform 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.

The Registrar shall take all necessary actions under the Companies Act, 1956/ 2013 against the companies who have not availed themselves of this Scheme and continue to be in default in filing the overdue documents.

Ques 6. What would happen to the pending prosecution(s) (if any) in respect of the documents which can be filed under this Scheme?

Ans. The Registrar concerned shall withdraw the prosecution(s) pending if any before the concerned Court(s) for all documents filed under the scheme. However, this scheme is without prejudice to action under section 167(2) of the Act or civil and criminal liabilities, if any, of such disqualified directors during the period they remained disqualified.

Author: C S Ekta Maheshwari is the Author of this article and is a Practicing Company Secretary. The Author can be reached at pcs.ekta@gmail.com

Disclaimer:

The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn’t constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided herein above.