MCA Introduces Company Law Settlement Scheme 2010

Ministry of Corporate Affairs Introduces Company Law Settlement Scheme 2010 for Defaulting Companies

It has been observed 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,’ for condoning the delay in filing documents with the Registrar, granting immunity from prosecution and charging additional fee of 25 percent 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 30th May, 2010 to 31st Aug, 2010.

For details refer General Circular No: 1/2010 dated 26.05.2010 available below

Availing the benefit of the Scheme will prevent companies from prosecution and other legal action.

______________________________________________________________

General Circular No. 1 /2010

F. No. 2/7/2010-CL V

Government of India

Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhavan,

Dr. R.P. Road, New Delhi,

Dated the 26th May, 2010

To

All Regional Director,

All Registrars of Companies.

Subject: Company Law Settlement Scheme, 2010

Sir,

It has been observed 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 not filing the documents on time, companies are burdened with additional fee and facing the prosecutions also.

2. There are many companies, who have also 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.

3. 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, in exercise of the powers under Section 611(2) and 637B (b) of the Companies Act, 1956 has decided to introduce a Scheme namely, “Company Law Settlement Scheme, 2010,” condoning the delay in filing documents with the Registrar, granting immunity from prosecution and charging additional fee of 25 percent of actual additional fee payable for filing belated documents under the  Companies Act, 1956 and the rules made there under. The details of the Scheme are as under:-

(i) The scheme shall come into force on the 30th May, 2010 and shall remain in force up to 31st August, 2010.

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

(a) “Act” means the Companies Act, 1956 (1 of 1956);

(b) “company” means a company registered under the Companies Act, 1956 and a foreign company falling under section 591 of the Act;

(c) “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;

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

(iii) 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;

(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 Act and rules made there under along with an additional fee of 25 percent of the actual additional fee standardised under sub-section (2) of Section 611 of the Companies Act, 1956, 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 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;

(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 Form annexed, 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;

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

(viii) Scheme not to apply to certain documents –

(a) 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;

(b) 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;

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

4. 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.

Yours faithfully,
Sd/-
(P.K. Malhotra)
Joint Director

Encl: As above

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