Non-compliance to be ‘very costly’ for companies: Government

by | posted in: Company Incorporations, e-filing of MCA Returns, Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
Last week, the Parliament cleared a bill to further amend the Companies Act.

Sending out a strong message to corporates, the government has said non-compliance will be “very costly” and strong deterrents will be there to curb the dangerous adventure of using companies for wrongful purposes.

Continuing the clampdown on illicit fund flows, the Ministry of Corporate Affairs has already struck off more than 2.24 lakh companies that have not been doing business for long and has disqualified over three lakh directors associated with such entities.

Against this backdrop, Corporate Affairs Secretary Injeti Srinivas said things are being simplified for legitimate businesses while checks are being strengthened against illegal business activities.

Highlights

  • Ministry of Corporate Affairs has already struck off more than 2.24 lakh companies that have not been doing business for long
  • It has also disqualified over three lakh directors associated with such entities

“It should be very easy to be compliant and very costly to be non-compliant. We want this… There should be a strong deterrent against illegal business. People using the company for wrong purposes, that should be a very dangerous adventure,” he told PTI in an interview.

About the ongoing action with respect to suspected shell companies, he said investigations are being carried out with urgency.

“When you go for prosecution, it should serve as a deterrent. Imprisonment option should essentially be confined to violations involving criminality and fraud,” Srinivas said.

On the scenario of certain genuine entities also facing the heat in the clampdown, Srinivas said every effort is made to ensure that “innocent companies are not inconvenienced”, adding that investigations are carried out only after preliminary scrutiny.

“In any such large exercise, it is not unusual that there could be some collateral damage. It cannot be so perfect but effectively, it is very focused and every effort is made that innocent companies are not inconvenienced,” he noted.

To provide a three-month window for defaulting companies to submit their filings, the ministry would be coming out with the Condonation of Delay Scheme. It is to be in place from January 1 to March 31, 2018.

While making it clear that a law should not be too onerous, he said there is a continuous effort to simplify the law “but non-negotiable in terms of essential compliance”.

Last week, the Parliament cleared a bill to further amend the Companies Act.

The bill would bring about some far reaching changes, Srinivas said, adding that almost 100 sections would get revised and many would contribute towards the ease of doing business.

“At the same time, there is also strengthening of provisions relating to areas such as identification of mismanagement, fraud detection, disclosures and related party transactions,” he said.

The MCA 21 system — which is used by the companies to submit their filings to the ministry — is a strong technology platform that is well entrenched, he noted.

“It is a very robust platform for regulation of companies. It is a huge resource of filings from more than 1.5 million companies. It is user-friendly… It also facilitates better enforcement without being unduly invasive,” Srinivas said.

At the end of November 30, there were a little over 17.12 lakh companies and out of them more than 11.36 lakh entities were active.

Source: Times of India

MCA introduces Condonation of Delay Scheme 2018 for defaulting companies

by | posted in: Company Incorporations, e-filing of MCA Returns, Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
MCA introduces Condonation of Delay Scheme 2018 (CODS-2018) for defaulting companies to file its overdue returns/documents due for filing till 30.06.2017 by temporarily activating DIN of disqualified directors

 

 

 

General Circular No………./2017

File No. 02/04//2017

 

Ministry of Corporate Affairs

5thFloor,‘A’ Wing, Shastri Bhawan

Dr.Rajendra Prasad Road,

NewDelhi-110001.

 

To

 

All Regional Directors,

All Registrar of Companies,

All Stakeholders.

 

Sir,

 

Subject: Condonation of Delay Scheme 2018

Whereas,companies registered under the Companies Act,2013 (or its predecessor Act) are inter-alia required to file their Annual Financial statements and Annual Returns with the Registrar of Companies and non-filing of such reports is an offence under the said Act.

 

Whereas, section 164(2) of the Act read with section 167 of the Companies Act, 2013 [the Act], which provisions were commenced with effect from 01.04.2014, provide for disqualification of a director on account of default by a company in filing an annual return or a financial statement for a continuous period of three years.

 

Whereas, Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014 further prescribes that every director shall inform to the company concerned about his disqualification, if any, under section 164(2), in form DIR-8.

 

Whereas, consequent upon notification of provisions of section 164(2), Ministry of Corporate Affairs (MCA) had launched a Company Law Settlement Scheme 2014 providing an opportunity to the defaulting companies to clear their defaults within the time period specified therein and following the due process as notified.

 

 

Whereas, MCA in September 2017, identified 3,09,614 directors associated with the companies that had failed to file financial statements or annual returns in the MCA21 online registry for a continuous period of three financial years 2013-14 to 2015-16 in terms of provisions of section 164(2) r/w 167(1)(a) of the Act and they were barred from accessing the online registry and a list of such directors was published on the website of MCA.

 

Whereas, as a result of above action, there have been a spate of representations from industry, defaulting companies and their directors seeking an opportunity for the defaulting companies to become compliant and normalize operations.

 

Whereas, certain affected persons have also filed writ petitions before various High Courts seeking relief from the disqualification.

 

Whereas, with a view to giving an opportunity for the non-compliant, defaulting companies to rectify the default, in exercise of its powers conferred under sections 403, 459 and 460 of the Companies Act, 2013, the Central Government has decided to introduce a Scheme namely “Condonation of Delay Scheme 2018” [CODS-2018] as follows.

 

  1. The scheme shall come into force with effect from 01.01.2018 and shall remain in force up to 31.03.2018

 

  1. Definitions – In this scheme, unless the context otherwise requires, –

 

(i) “Act” means the Companies Act, 2013 and Companies Act, 1956 (where ever applicable);

 

(ii) ‘overdue documents’ means the financial statements or the annual returns or other associated documents, as applicable, in the case of a defaulting company and refer to documents mentioned in paragraph 5 of the scheme.

 

(iii) “Company” means a company as defined in clause of 20 of section 2 of the Companies Act, 2013;

 

(iv)  “Defaulting company” means 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 thereunder for a continuous period of three yea

 

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

 

  1. Applicability: – This scheme is applicable to all defaulting companies (other than the companies which have been stuck off/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 30.06.2017 in accordance with the provisions of this Scheme.

 

  1. Procedure to be followed for the purposes of the scheme:– (1) In the case of defaulting companies whose names have not been removed from register of companies,-

 

(i) The DINs of the disqualified directors de-activated at present shall be temporarily activated during the validity of the scheme to enable them to file the overdue documents.

 

(ii) The defaulting company shall file the overdue documents in the respective prescribed eForms paying the statutory filing fee and additional fee payable as per section 403 of the Act read with Companies (Registration Offices and fee) Rules, 2014 for filing these overdue documents.

 

(iii) The defaulting company after filing documents under this scheme, shall seek condonation of delay by filing form e-CODS 2018 attached to this scheme along with a fee of 30,000/- (Rs. Thirty Thousand only) as prescribed under the Companies (Registration Offices and Fee) Rules, 2014 well before the last date of the scheme.

 

(iv) The DINs of the Directors associated with the defaulting companies that have not filed their overdue documents and the eform CODS, and these are not taken on record in the MCA21 registry and are still found to be disqualified on the conclusion of the scheme in terms of section 164(2)(a) r/w 167(1)(a) of the Act shall be liable to be deactivated on expiry of the scheme period.

 

(2) In the event of defaulting companies whose names have been removed from the register of companies under section 248 of the Act and which have filed applications for revival under section 252 of the Act up to the date of this scheme, the Director’s DIN shall be re-activated only NCLT order of revival subject to the company having filing of all overdue documents.

 

  1. Scheme not to apply for certain documents – This scheme shall not apply to the filing of documents other than the following overdue documents:

(i) Form Number 20B/MGT-7- Form for filing Annual return by a company having share capital.

(ii) Form 21A/MGT-7- Particulars of Annual return for the company not having share capital.

(iii) Form 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, AOC-4, AOC-4(CFS), AOC (XBRL)    and     AOC-4(non-XBRL)   –     Forms     for     filing     Balance Sheet/Financial Statement and profit and loss account.

(iv) Form 66-  Form  for  submission  of  Compliance  Certificate  with  the Registrar.

(v) Form 23B/ADT-1- Form for intimation for Appointment of Auditors.

 

  1. The Registrar concerned shall withdraw the prosecution(s) pending if any before the concerned Court(s) for all documents filed under the scheme. However, 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.

 

  1. At the conclusion of the Scheme, the Registrar shall take all necessary actions under the Companies Act, 1956/ 2013 against the companies who have not availed themselves of this Scheme and continue to be in default in filing the overdue documents

 

Yours faithfully,

 

(KMS. Narayanan)

 

Assistant Director (Policy)

MCA-CODs-2018.

Cannot provide relief for de-registered firms, disqualified directors: Minister

by | posted in: Company Incorporations, e-filing of MCA Returns, Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
PP Choudhary, Minister of State for Corporate Affairs

The Corporate Affairs Ministry has ruled out providing any relief for the 2.25 lakh de-registered companies and the 3.09 lakh disqualified directors, stating that these actions were caused by the ‘operation of law’.

“There is no proposal before us to provide any relief to them. No such issue is before us. The only issue before us and taking our attention is to get the pending Companies (amendment) Bill enacted by the Rajya Sabha,” PP Choudhary, Minister of State for Corporate Affairs, told BusinessLine.

The Ministry had de-registered 2.25 lakh companies and disqualified as many as 3.09 lakh directors for not filing financial statements for two or more years. Choudhary said that remedy for these two controversies are before the National Company Law Tribunal (in case of deregistered companies) and the High Courts (for disqualification of directors).

“There is no provision under the law to allow the government to resolve both the controversies. Our actions are by the operation of law enacted by Parliament. It is not within the domain of the government to provide relief without any explicit provision allowing for any relief,” he said.

He also highlighted that the de-registered companies and the disqualified directors had not opted to utilise the window of the Company Law Settlement Scheme in 2014 although it was available for nearly eight months.

Choudhary said the government, in future, could consider providing a departmental mechanism for resolution of grievance instead of going to NCLT for the de-registered companies.

Meanwhile, sources said that over ₹21,000 crore was deposited and withdrawn post-demonetisation by about 35,000 companies forming part of the 2.25 lakh de-registered companies. In one case, a company, which had a negative opening balance on November 8, 2016, deposited and withdrew ₹2,484 crore post-demonetisation. There was another company that had deposited ₹3,700 crore post demonetisation in one account, sources said.

Source: The Hindu Business Online

MCA scanner on banks lending to deregistered companies

by | posted in: Company Incorporations, e-filing of MCA Returns, Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
So far 13 banks have provided information to the government on 13,140 accounts of 5,820 deregistered companies, with the most startling details emerging from IDBI Bank, Bank of Baroda and Canara Bank.

The corporate affairs ministry is likely to ask the department of financial services to take action against the banks which have continued lending to companies that have been deregistered.

The ministry is also likely to raise the issue of banks not showing urgency in sharing information on transactions of these companies before and after the announcement of demonetisation on November 8 last year.

The Registrar of Companies, which comes under the corporate affairs ministry, had struck off 2.09 lakh companies from the list of active establishments after they failed to comply with regulatory requirements. Banking transactions of these companies are restricted only for settling liabilities.

Despite this, according to sources, one government-owned bank has lent more than Rs 280 crore to a company after it was deregistered. Such transactions are likely to have occurred among other public sector banks as well, but the government still doesn’t have detailed data on the dealings, they said. “There is a need for greater transparency. We are simply waiting for the banks to come up with more information. Only a few have shared (the information) so far,” a senior government official said.

So far 13 banks have provided information to the government on 13,140 accounts of 5,820 deregistered companies, with the most startling details emerging from IDBI Bank, Bank of Baroda and Canara Bank.

Earlier this month, the government said these 5,820 companies had deposited Rs 4,573 crore post demonetisation in banks and withdrew Rs 4,552 crore, even as they held balances of just Rs 22 crore on the day demonetisation was announced. This number is likely to go up manifold once the banks share more data.

The government is probing accounts of all the 2.09 lakh companies that were struck off the registry, which previously had about 13 lakh companies.

Four banks — Qatar National Bank, Doha Bank, Emirates NBD Bank and Punjab Gramin Bank — stated that they didn’t hold any accounts of the suspect companies.

A few companies were found to be having multiple accounts in some banks, like Bank of Baroda, where one company held as many as 915 accounts.

MCA extends the due date for filing all AOC-4 (Annual Financial Statemet) till 28.11.2017.

by | posted in: Company Incorporations, e-filing of MCA Returns, Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
MCA has relaxed additional fees and extended the last date of filing of AOC-4 XBRL & non-XBRL e-filing for the companies.

 

Ministry of Corporate Affairs has extended the due date for filing the Audited Financial Statement for Financial Year 2016-17 till November 28,2017.

 

 

Keeping in view the requests received from various stakeholders, for allowing extension of time for filing of financial statements for the financial year ended 3I.03.2017 on account of various factors, it has been decided to extend the time for liling e-forms AOC-4 and AOC-4 (XBRL non-Ind AS) and the corresponding AOC-4 CFC e-forms up to 28.11.20l7 without levying additional fee.

 

The official circular in this regard is appended below.

=================================================================

F No. 01/34/2013-CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhawan,
Dr. R.P. Road, New Delhi – 110001
Dated:- 27th October, 2017

To

All Regional Directors,
All Registrar of Companies,
All stakeholders

Subject: Relaxation of additional fees and extension of last date of filing of AOC-4 and AOC-4 (XBRL Non-IndAS) under the Companies Act, 2013 – reg.

  1. The Ministry of Corporate Affairs has extended the date of filing of AOC-4 (XBRL E-Forms using Ind AS) for the financial Year 2016-17 without additional fees till 31.03.2018 vide General Circular No. 13/2017 dt 26.10.2017. Keeping in view the requests received from various stakeholders, for allowing extension of time for filing of financial statements for the financial year ending on 31.03.2017 on account of various factors, it has been decided to extend the time of filing e-forms AOC-4 and AOC-4 (XBRL Non-IndAS) and the corresponding AOC-4 CFC e-forms upto 28.11.2017 without levying additional fees.
  2. This issues with the approval of competent authority.

Yours faithfully,

KMS Narayanan

Assistant Director

011-23387263

 

Ministry of Corporate Affairs – General Circular14_28102017

Government tightens screws on assets owned by deregistered companies

by | posted in: Company Incorporations, e-filing of MCA Returns, Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
According to the minister, since the country-wide land records have been computerised, it would not take much time for the states to provide the requisite information to the district authorities and the central government.

The corporate affairs ministry today asked states to complete identification of properties owned by deregistered companies at the earliest and ensure district administrations prevent transactions in those assets.

Amid intensifying efforts to fight the black money menace, the ministry has also urged the states to initiate disciplinary action against the officials concerned in case such transactions go through.

The names of around 2.25 lakh companies which have not been carrying out business activities for long have been struck off the official records and a number of directors associated with such firms have been disqualified.

Against this backdrop, Minister of State for Corporate Affairs P P Chaudhary today held a review meeting with representatives from various states on action taken with respect to properties belonging to around 2.09 lakh deregistered companies.

During the meeting, Chaudhary asked the states’ representatives to complete the process of identification and tracking of properties belonging to such companies at the earliest, according to an official release.

In this regard, the states have been requested to share information with the ministry in a time-bound manner.

On September 12, the ministry had sent a letter to states for identification and tracking of properties belonging to around 2.09 lakh companies that were deregistered. Now, the number of such firms is about 2.25 lakh.

Additional state-wise information pertaining to such companies was also shared with the state representatives.

According to the minister, since the country-wide land records have been computerised, it would not take much time for the states to provide the requisite information to the district authorities and the central government.

Since the names of the companies have been struck off, any transaction pertaining to properties owned by them, their directors or authorised signatories would be “void ab initio and a nullity till such companies are restored by an order of the National Company Law Tribunal (NCLT), the release said.

“In fact, by virtue of the company’s name having been struck off from the Register of Companies under the Companies Act, 2013, its identity as a legal person had been lost and hence, the legal ownership of properties belonging to such a company was non-existent,” it added.

Chaudhary advised the representatives to ensure that requisite directions are urgently issued to all the district authorities dealing with registration of properties to put in place appropriate mechanism to prevent transactions in properties belonging to the deregistered companies.

Officials allowing registration of transactions in such properties by ignoring the requisite directions may be subjected to disciplinary action, he told the representatives.

Emphasising that tackling of shell companies is an imperative element in the fight against black money, Chaudhary said such a drive would help unearth benami properties and discourage illegal practices, which would create a healthy economic environment for honest businessmen.