Properties of the struck off companies – in light of the proposed amendments to the Companies Act, 2013
The Ministry of Corporate affairs noted that certain amendments of urgent nature would be required to strengthen the corporate governance & enforcement framework.
Notice inviting Comments along with the List of proposed amendments to the Companies Act, 2013 is placed on MCA portal @ http://www.mca.gov.in/Ministry/pdf/NoticeAmendmentsCA2013_05112018.pdf
Suggestion/Comments on the proposed amendments along with justification in brief may be sent latest by 20th November, 2018 through email at [email protected]
Point No.s 17 & 18 of the List of proposed amendments contains amendments to Sec 250 & 252 of the Companies act,2013 which deals with the properties of the struck off companies. The following are the key aspects of such proposed amendments:
- The amendments shall be with effect from the 26th December, 2016.
- All property and any rights whatsoever of the company immediately before the dissolution of the company under section 248, shall vest absolutely in the Central Government free from all encumbrances.
- Such properties shall be administered through a Board of Administrators to be constituted or designated for this purpose and in such manner as may be prescribed.
- The composition, powers and functions of the Board of Administrators and the manner of administration and disposal of, property or rights, by such Board shall be such as may be prescribed.
- The Board of Administrators shall, on disposal of property, immediately deposit the sale proceeds into the Consolidated Fund of India and intimate the details thereof to the Central Government.
- Any person, without reasonable cause, fails to co-operate or interferes in the functions of the Board of Administrators, shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to fifty thousand rupees, or with both.
- the Tribunal may, upon application, also order that on the restoration of the company in the register of companies, all property or rights vested in the Central Government shall vest in the company as if the company had not been removed from the register.
- If any property is disposed of by the Board of Administrators it shall not vest with the company after its restoration, but the proceeds so deposited in the Consolidated Fund of India, net of costs, if any, shall be refunded to the company, if so ordered by the Tribunal.
Concerns of the stake holders:
There are many companies which may not have any considerable business/operations but holds certain property and such companies may not intend to carry on the business in future. Hence, restoration for such companies for the purpose of property/asset alone may not always be feasible.
It is desirable, if the Central Government comes up with an alternate methodology to address such issues.
Disclaimer: The above views are the personal views of the author and the Readers are requested to exercise their due diligence before taking action.