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To Restore the DINs of Disqualified Directors a way out has been notified as Condonation of Delay Scheme, 2018

The companies who were inoperative or were not carrying on any business for the period of last two years as it is a violation of Section 248(1) of the Companies Act were issued Show Cause Notice(SCN) from the RoC giving a time of 30 days to reply to the notice and failure to reply to the notice will lead to strike off of the company and necessary action will be taken by against the Directors of the company
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On 26th November 2016 the process of strike off of company from the Registrar of Companies (RoC) was notified by the Ministry of Corporate Affairs. It stated that the company can be striked off either on suo motu by the RoC or on the application by the company.

The companies who were inoperative or were not carrying on any business for the period of last two years as it is a violation under Section 248(1) of the Companies Act were issued Show Cause Notice(SCN) from the RoC giving a time of 30 days to reply to the notice and failure to reply to the notice will lead to strike off of the company and necessary action will be taken by against the Directors of the company. Around 2.4 lakhs companies were striked off till December, 2017.

Further 3.09 lakh directors were issued SCN in the September 2017 and were disqualified for violation of Sections 164(2) and 167(1)(a) of the Act by the Ministry of Corporate Affairs as these directors failed to submit their annual filings for last 3 years. As a result of this the DIN of the disqualified directors were deactivated and they had to step down from their directorships in the companies. Some directors approached the court against their disqualification by the Ministry of Corporate Affairs.

The Condonation of Delay Scheme, 2018 has been notified by the Ministry of Corporate Affairs vide its circular no. 16/17. The Scheme will be valid and effective for the period between January 1, 2018 to March 31, 2018. The Scheme has been notified after the request from various stakeholders has been received by the Ministry to provide an opportunity to the companies to file the Annual Financial Statements and Annual Return, who has not filed them for last three years. The Scheme will provide a window to the companies in default to file their return and statements.

Condonation of Delay Scheme, 2018

The Scheme has been divided as follow:
 
Eligible Companies: only the existing defaulting companies can avail the benefit under the condonation of delay scheme. The companies which have been striked off by the RoC for the violation of Section 248(5) of the Companies Act cannot avail the benefit under the scheme.

Effective Period: The scheme has been made effective for a period of three months only i,e., from January 1, 2018 to March 31, 2018.

Eligible Forms: The scheme provides for five types of forms for the defaulting companies to file their statements and returns-
Filing of return by company having share capital Form 20B or Form MGT 7
Filing of return by company not having shares Form 21A or Form MGT 7
For filing balance sheet/ financial statement and profit and loss account Form 23AC, ACA, AOC-4, XBRL, NON-XBRL, CFS
For submission of compliance certificate Form 66
For intimating appointment of statutory auditor Form 23B or Form ADT-1

Once the form has been filed by the companies and disqualified directors under this scheme the RoC shall withdraw all the pending cases from the concerned courts against them. There is no prejudice to the section 167(2) of the act for civil and criminal liabilities from this scheme. On Compliance with the scheme the DIN of the directors will be activated once again and their names shall be removed by the Ministry of Corporate Affairs from the list of disqualified directors.

In case of default with the scheme the status of disqualified directors will remain as it is in present. The companies which have been striked off cannot claim benefits under this scheme. They have to follow a lengthier and timely procedure of NCLT. There is no clarification regarding the status of directors of strike off companies who do no wish to continue to do the business or any other alternate way to restore DIN.

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Reviewed by:
Mehak Sharma
Published on 12-Jan-2018
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