As par sec 92 of the Companies Act, 2013 provides that every company shall prepare an annual return in the prescribed form. The Annual return shall be signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice. Every company shall file with the Registrar a copy of the annual return, within sixty days from the date on which the annual general meeting is held.
Disqualification of a director
As par sec164 (2) provides that no person who is or has been a director of a company which has not filed financial statements or annual returns for any continuous period of three financial years shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.
Sec- 167(1) (a) provides that the office of a director shall become vacant in case he incurs any of the disqualifications specified in sec-164 i.e., failure to file annual returns for any continuous period of three financial years.
Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014 provides that every director shall inform to the company concerned about his disqualification, if any, under section 164 (2) in Form DIR – 8
Action of MCA in disqualifying directors.
The Ministry of Corporate Affairs in September 2017 identified 3, 09,614 directors associated with the companies that had failed to file the financial statements or annual returns in the MCA 21 online registry for a continuous period of three financial years 2013 – 14, 2014 – 15, 2015 – 16 in terms of provisions of section 164(2) read with section 167 (1) (a) of the Act and they were barred from accessing the online registry. A list of such directors was also published on the website of Ministry of Corporate Affairs.
Condonation of delay scheme, 2018
Consequent of the action made by MCA disqualifying the directors of the companies, there have been a spare of representations from industry, defaulting companies and their directors.
The Ministry of Corporate Affairs has announced a onetime settlement scheme for companies that saw over three lakh directors disqualified from their boards, with a view to giving an opportunity for the non-compliant defaulting companies to rectify the default
This scheme is applicable to all defaulting companies, other than the companies which have been struck off or 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 30.06.2016 in accordance with the provisions of this scheme.
The expression ‘defaulting company’ is defined as a company which has not filed its financial statements or annual return as required under the Companies Act, 1956 or Companies Act, 2013, as the case may be, and the Rules made there under for a continuous period of three years.
The expression ‘overdue documents’ is defined as the financial statements or the annual returns or other associated documents, as applicable, in the case of a defaulting company.
The following are the overdue documents-
- Form No. 20B/MGT-7 – Form for filing Annual return by a company having share capital;
- Form 21A/MGT-7 – Particulars of Annual Return for the company not having share capital;
- Form 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, AOC – 4(CFS), AOC (XBRL) and AOC -4 (non-XBRL) – Forms for filing balance sheet/financial Statement and profit and loss account;
- Form 66- Form for submission of compliance certificate with the Registrar;
- Form 23B/ADT – 1 – Form for intimation for appointment of auditors.
Procedure to be followed under this scheme-
- The DINs of the disqualified directors de-activated shall be temporarily activated during the validity period to enable them to file the overdue documents;
- The defaulting company shall file the overdue documents paying the statutory filing fee and additional fee payable.
- The defaulting company after filing the documents under this scheme shall seek condonation of delay by filing e-CODS 2018 along with a fee of –Rs 30,000/- as prescribed under the Companies (Registration Offices and Fee) Rules, 2014 well before the last date of the scheme
- 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 MCA – 21 registry and are still found to be disqualified on the conclusion of the scheme shall be liable to be deactivated on the expiry of the scheme.
- If the name of the company is removed from the register of companies under sec-248 of the Act and if the said company has filed application for revival under sec-252 up to the date of the scheme, the Director’s DIN shall be re-activated only NCLT order of revival subject to the company having filing all overdue documents.
Period of the scheme
The scheme shall come into force with effect from 01.01.2018 and shall remain in force up to 31.03.2018.
Powers of Registrar
The Registrar concerned shall withdraw the prosecution(s) pending if any before the concerned court(s) for all documents filed under the scheme.
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.
At the conclusion of the scheme the Registrar shall take all necessary actions under the respective Act against the companies who have not availed themselves of this scheme and continue to be in default in filing the overdue documents
The e-Form CODS 2018 would be available from 20.02.2018 or an alternate date, which will be intimated by the ministry .
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