The Institute of Company Secretaries of India (ICSI) has formally requested the Ministry of Corporate Affairs (MCA) to consider implementing a “Company Law and LLP Law Settlement Scheme, 2024” (CL&LLSS-2024). This proposal aims to address ongoing technical difficulties faced by companies and LLPs in filing statutory e-forms on the MCA-21 V3 portal. Challenges, such as issues with DSC registration, e-form downloading, master data updating, and pre-fill options, have led to delays in mandatory filings. Consequently, companies risk incurring penalties and facing legal actions under the Companies Act, 2013, specifically under Section 451, which imposes higher fines for repeated defaults. The proposed scheme would offer a one-time opportunity for companies to submit overdue filings without penalties, similar to relief schemes introduced in previous years, like the Company Law Settlement Scheme, 2014, and the Company Fresh Start Scheme, 2020. This approach would help mitigate the legal and financial consequences companies face due to unavoidable filing delays, thus promoting ease of business and compliance. ICSI remains committed to collaborating with the MCA to support stakeholders and ensure business operations are not hindered by technical issues.
THE INSTITUTE OF
Company Secretaries of India
IN PURSUIT OF PROFESSIONAL EXCELLENCE
Statutory body under an Act of Parliament
(Under the jurisdiction of Ministry of Corporate Affairs)
MCA: OCT/2024 | Dated: October 21, 2024
Ms. Deepti Gaur Mukerjee
Secretary
Ministry of Corporate Affairs
Government of India
Shastri Bhawan
New Delhi —110 001
Respected Madam,
Subject: Request for introduction of Company Law and LIP Law Settlement Scheme, 2024 (CL & LLSS-2024)
Greetings of the Day!!!
At the outset, the Institute of Company Secretaries of India expresses its sincere appreciation to the Ministry of Corporate Affairs (MCA) for its thoughtful approach towards stakeholders and its committed efforts to enhance the ease of doing business.
Further, as you are aware, the Institute as a part of its responsibility always thrives to communicate the concerns and issues of stakeholders to the Ministry, to ensure their timely resolution. In furtherance of our intent, we wish to draw your kind attention towards the practical difficulties faced in filing e-forms on MCA-21 V3 portal. As communicated in the past, the majority issues relate to DSC registration, e-Form downloading, master data updation, pre-fill issues etc. which impact filing of forms of significant number of stakeholders. Accordingly, the Institute receives numerous requests for extension of timelines for filing forms on the MCA-21 V3 portal.
Due to such technical glitches, the companies and LLPs are not able to complete their statutory filings within the time limit provided under the Law which leads to penalties and legal action against corporation. Additionally, the provisions as laid down under the Companies Act, 2013(the Act) establishes a stricter framework for defaulting companies, imposing higher additional fees. Section 451 of the Act includes a specific provision for increased fines in the event of repeated defaults.
In view of these issues and their consequences, we hereby request for providing a one-time opportunity to companies and LLPs to file their pending documents and e-forms on the MCA-21 V3 portal to make good their default and grant immunity from prosecution. This would help them avoid incurring higher fees, fines, and other penalties.
Recognizing these concerns and adopting a more lenient approach to promote ease of doing business, the Ministry has previously issued circulars to provide relief to stakeholders. These circulars have facilitated a fresh start through the Company Law Settlement Scheme, 2014 vide General Circular No. 34/2014 dated 12/08/2014, Company Fresh Start Scheme, 2020 vide General Circular no. 12/2020 dated 30/03/2020 and LLP Settlement Scheme, 2020 vide General Circular No. 13/2020 dated 30/03/2020.
In light of past precedents and the aforementioned submissions, we kindly request you to introduce a scheme called the “Company Law and LLP Law Settlement Scheme, 2024″ (CL&LLSS, 2024)”. This scheme would provide companies the opportunity to rectify their defaults by filing the overdue documents, condoning the delays, and granting immunity from prosecution.
We shall be happy to provide any further information or clarification that may be desired in this regard.
Thanking you
Yours faithfully
CS B Narasimhan
President,
The Institute of Company Secretaries of India
Still now there is no update for company law settlement scheme
for a company who has not filed return in MCA from 2018-19, if they wish to file the returns as on date, the additional fees will come around Rs.14.50 lakhs to 15.00 lakhs per company.
Is there any updates regarding the proposed company law settlement scheme ?
REQUEST TO INTRODUCE SETTLEMENT SCHMEME / AMNESTY SCHEME FOR COMPANIES AND LLPS
Respected Sir and Madam,
With reference to the above, I pleased to bring to your kind information that after the introduction of online facility by MCA, all the forms related to MCA were filed through online process only. Step by Step MCA has introduced new process for online filing and the stake holders, professionals and public used to adapt to those online filings.
To facilitate ease of filing MCA has introduced CLSS scheme during 2010, 2011 and 2014 for those who were not able to file the returns in time due to various reasons and also to save them from additional fees and also to make them good compliance.
At the same time MCA portal has been shifted from TCS to Infosys, at that time, the portal has faced some technical issues and the stake holders suffered a lot. Step-by-step MCA has cleared those technical issues.
During the 2019-20, the whole world has got suffered from Covid, numerous peoples lost their lives, and many companies have become sick. It was very difficult to run the life during the years 2019-20 and 2020-21.
The Government has announced lock down from March 2020 to May 2020, there after restricted movement upto November 2020 during 1st phase. Again the Government has announced lock down from April 2021 to June 2021, thereafter restricted movement to further more months depending upon the severity during 2nd phase. During these lock down and restricted movement periods, people suffered a lot for their livelihood.
Our MCA has announced an Amnesty Scheme 2020 from 1st April 2020 to 31st December 2020 and extended upto 31st August 2021 (extension for some forms only), a very welcome measure during Covid Pandemic situation.
Though the scheme was extended, some small companies, due to lack of knowledge and lack of professional support and for some small companies which are located in rural areas, not able to avail the benefits of the scheme fully.
After the Covid situation, only during 2022-23, most of the small companies are being recovered. After that situation, they approached professionals for filing pending forms with additional fees, whereas the additional fees were too high for the forms pending from the period 2019-20. For some small companies, the fees and the penalty amount is much higher than that of the total net worth of the companies.
After the introduction of V3 version, the professionals were busy in facing and resolving the technical issues and they are unable to support the companies in filing belated returns.
Stake holders, professionals, ICSI institute and various associations also represented MCA for an Amnesty scheme for filing the forms for making good of the compliance, but the MCA has announced Amnesty scheme only to LLP during 2023.
Due to the above hindrances, many companies become default and many directors become default. There will be more cases pending with NCLT due to the above situation and the cases may increase.
As this is the right time, that most of the companies start approaching CA and CS professionals for filing annual forms for the financial year 2023-24 from the month of October. During this time if MCA introduces Amnesty Scheme with reduction in additional fees (i.e., 90% waiver on additional fees (or) at least 75% waiver on additional fees), most of the companies will make use of them and they will become Good compliance companies and LLPs.
In addition to this, with reference to the Question asked in the LOK SABHA (Un-Starred Question No.2242, Answered on 5th August 2024 – 14 Shravana, 1946 (saka)) Honble Minister of State in the Ministry of Corporate Affairs Shri.Harsh Malhotra have answered for the scheme related Companies Fresh Start Up Scheme CFSS of 2020, though various representation given by ICSI and various stake holders, Honble Minister has informed that there were no representations received for re-introduction of the scheme from the stake holders. Hence we request the Honble Minister Shri.Harsh Malhotra to kindly re-introduce the Company Fresh Startup Scheme or Company Law Settlement Scheme to make good of the compliances.
In addition to this with reference to the Question asked in the LOK SABHA (Un-Starred Question No.36, Answered on 25th November 2024 – 4 Agrahayana, 1946 (saka)) Honble Minister of State in the Ministry of Corporate Affairs Shri.Harsh Malhotra have answered
The number of Companies who have not filed the Annual Returns and Audited Financial Statements during the last five years are shown below
Year Financials Statements Annual Returns
2018-19 – 1,79,697 1,75,034
2019-20 – 2,18,237 2,19,854
2020-21 – 2,61,785 2,58,961
2021-22 – 3,70,886 3,70,021
2022-23 – 5,30,076 5,14,343
On the above, I like to bring to your kind information, for a small company, who has not filed financial statement and annual return due to unavoidable circumstances has to pay around Rs.15,33,000.00 as additional fees to update the return as on date. I have herewith mentioned a small calculation regarding this for your reference
Year Financials Statements Annual Returns
2018-19 – Rs.2,19,000.00 Rs.2,19,000.00
2019-20 – Rs.1,82,500.00 Rs.1,82,500.00
2020-21 – Rs.1,46,000.00 Rs.1,46,000.00
2021-22 – Rs.1,09,500.00 Rs.1,09,500.00
2022-23 – Rs.73,000.00 Rs.73,000.00
2023-24 – Rs.36,500.00 Rs.36,500.00
Total – Rs.7,66,500.00 Rs.7,66,500.00
Total Fees Amount – Rs.15,33,000.00
The additional fee per day comes around Rs.100/- per day for a form a total of Rs.200/- per day for both forms.
So it is very much difficult and a big financial burden for small companies, whose total networth is very much less than that of the additional fees for the company.
Registrars of Companies are taking action against the companies who have not filed the financial statements and annual returns.
To avoid these hurdles and hindrances, the Ministry may grant immunity and may introduce Company Law Settlement Scheme / Amnesty Scheme with reduced additional fees to help the companies to review and make good of the compliances.
Taking into consideration of these points and taking into consideration of various representation received earlier, we humbly pray and request your kindness to introduce Amnesty Scheme / Company Law Settlement Scheme at your earliest convenience.
If the announcement comes, the professionals and stake holders will plan accordingly to make use of this Golden Opportunity.