20 Mar

Condonation of Delay Scheme 2018 – A remedy for the defaulting companies

The Ministry of Corporate Affairs has released the General Circular on Condonation of Delay Scheme, 2018 on 29th December 2017 to provide a remedy to the Defaulting Companies and their Directors who were disqualified for the reason of non-filing of Financial Statements and Annual Returns with the Registrar of Companies continuously for a period of three financial years.

LEGAL BACKGROUND

  • Statutorily, Companies registered under the Companies Act, 2013 (Act) are required to file their Financial Statements and Annual Returns in the Ministry of Corporate Affairs Portal (MCA Portal) and non-filing of such reports is an offence under the Act.
  • In accordance with the Section 164(2) read with the Section 167 of the Act, the Directors of the Company shall become disqualified who has not filed the Financial Statements and Annual Returns in the MCA Portal continuously for a period of three financial years and such directors shall be required to inform to the concerned Company in Form DIR-8
  • Consequent upon the notification of Section 164(2), the MCA had published the list of 3,09,614 disqualified directors associated with the Companies who had failed to file their Financial Statements and Annual Returns for continuous period of three financial years from 2013-14 to 2015-16 and had also deactivated the Director Identification Number (DINs) of such directors.
  • Now with a view to give an opportunity for the non-compliant defaulting companies, the MCA has introduced a Condonation of Delay Scheme, 2018 [CODS-2018] (Scheme) with effect from 01.01.2018 to 31.03.2018.

KEY FEATURES OF THE SCHEME

  • The Condonation of Delay Scheme shall be applicable to all defaulting companies (other than whose names has been struck off from the Registrar of Companies under Section 248(5) of the Act) to file its overdue documents which were due for filing till 30th June 2017.
  • The Scheme shall apply to filling of the following forms:
    1. For Annual Returns – Form Number 20B /21A /MGT-7
    2. For Balance Sheet/Financial Statement and Profit and Loss account – Form 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, AOC-4, AOC-4(CFS), AOC (XBRL) and AOC-4(non-XBRL)
    3. Submission of Compliance Certificate with the Registrar – Form 66
    4. Intimation for Appointment of Auditors – Form 23B/ADT-1
  • With the implementation of this Scheme, the DINs of the concerned disqualified directors de-activated at present, have been temporarily activated during the validity of this scheme to enable them to file the overdue documents.
  • The Defaulting Companies shall file the overdue documents in the respective e-Forms along with the prescribed fees and shall seek the Condonation of Delay by filing the form e-CODS attached to this scheme online available on the MCA Portal from 20th February 2018. The fees for filling the e-form CODS is Rs. 30,000/-

In this regard, all the Companies who have failed to file their financial statements for three financial years are requested to file it before 31st March 2018 to avoid the striking off the name of the Company from the Registrar of Companies.

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