Section 92 of Companies Act, 2013 (Sections 159 and 160 of Companies Act 1956) requires every company to file Annual return and Financial Statements within 60 days of Annual General meeting or within 60 days from the date on which the Annual General Meeting should have been held.

The failure in compliance with the section shall attract an additional fee that may extend to 9 times of the original fee based on the duration of defaulting period. Also will attract fine which shall not be less than Rs.50,000/- but which may extend to Rs.5,00,000 for the company and every officer of the company shall be punishable with imprisonment for a term which may extend to 6 months or fine (which shall not be less than Rs.25,000/- but which may extend to Rs.5,00,000/-) or with both.

In addition if the company defaults in filing of the returns/documents for three continuous financial years, the directors of the defaulting company shall attract disqualification from acting as directors of that company and/or any other company under section 164(2)(a).

What is Company Law Settlement Scheme 2014?

By General Circular No. 34/2014 dated 12/08/2014, Ministry of Corporate Affairs has introduced Company Law Settlement Scheme, 2014 in order to give an opportunity to companies who had made defaults in filing of certain returns/or documents, to file such documents as specified

Features of Company Law Settlement Scheme 2014

This schemes gives the chance to all the defaulting companies who have not filed their Annual Returns, Balance Sheet, P/L and Certificates with the Registrar of Companies(ROC) to file it from 15th August 2014 to 15th October 2014.

Following Documents are only allowed to be filed under the scheme:-

  1. Form 20B- Form for filing Annual Return (With Share Capital)
  2. Form 21A- Form for Filing Annual Return (Without Share Capital)
  3. Form 23AC, 23ACA, 23AC XBRL and 23ACA XBRL- Form for filing Balance Sheet and P/L
  4. Form 66- Form for filing Compliance Certificate
  5. Form 23B- Form for Appointment of Auditor.

Advantages of the Scheme

  1. Condonation of the delay in filing the Annual Returns or financial statements.
  2. Grant of the immunity for prosecution.
  3. Reduced charging of additional fee @ 25% of the actual additional fees payable.
  4. Non-applicability of disqualification of directors u/s 164(2)(a).

To avail the benefit of the scheme, the applicant company before filing application under the scheme is required to withdraw the appeal and furnish proof of such withdrawal along with the application.

Action List for Companies :

  • To avail the benefits of the scheme, the defaulting companies have to file all the returns and documents till 30th June 2014 within a period starting from 15th August 2014 to 15 October 2014.
  • Before filing application under the scheme, company is required to withdraw any appeals and furnish proof of such withdrawal along with the application.
  • The defaulting company shall pay statutory filing fees as prescribed under the Companies (Registration Offices and fee) Rules, 2014 along with additional fees of 25% of the actual additional fee payable on the date of filing of each belated document.
  • After filing of belated documents, the application seeking immunity in respect of such documents filed under the scheme is to be made electronically in the e-Form CLSS-2014. The form shall be available on the MCA21 portal from 1stSeptember, 2014.

Options for Inactive companies

Where the company is inactive, i.e. there is no business in it, they can also take advantage under the Scheme by either :

  • Apply to get themselves declared as Dormant Company under section 455 of the Companies Act, 2013 by filing e-form MSC-1 at 25% of the fee for the said form. Or
  • Apply for striking off their names from the Register of the MCA by filing the necessary form at 25% of the normal fees applicable on the said form.

Nonapplicability of the Company Law Settlement Scheme 2014

The scheme does not apply to:

  • To companies against which action for striking off the name (section 560(5) Companies Act, 1956) has already been initiated.
  • Where any application has already been filed by the companies for action of striking off name
  • Where applications have been filed for obtaining Dormant Status under section 455 of the Companies Act, 2013
  • To vanishing companies

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