New Delhi, April 1, 2018

Defaulting firms have been given more time to submit their filings under the companies law, with the government extending the Condonation of Delay Scheme till April 30.

Following requests from various stakeholders, the Corporate Affairs Ministry has extended the deadline for the scheme, which ended on March 31.

The scheme, announced initially for a three-month period starting from January 1, was introduced in the wake of the crackdown on companies allegedly being used as conduits for illicit fund flows as well as those registered entities that have not been carrying out business activities for long.

As part of the clampdown, the ministry had disqualified more than 3.09 lakh directors of companies which failed to submit annual filings for a long time. Subsequently, there have been concerns in certain quarters that action might have also been taken against genuine firms. Against this backdrop, the three-month window was provided for the defaulting companies.

In a communication dated March 28, the ministry said that on consideration of requests received from various stakeholders, the scheme has been extended up to April 30, 2018.

Under the scheme, the Director Identification Numbers (DINs) of the disqualified directors that have been de-activated would be “temporarily activated” during the scheme period. After submission of the filings, a company concerned would have to file a separate form seeking condonation of the delay along with a certain fee.

In case of defaulting companies whose names have been removed from the register and have filed applications for revival, DINs of the directors concerned would be re-activated subject to NCLT order and other conditions.

Last December, Corporate Affair Secretary Injeti Srinivas had said that since so many people were affected, the government felt that some resolution was required without compromising the fight against illegal activities.

“The scheme is not open for directors of struck off companies. They can come only when they (those companies) are restored through the NCLT,” he had said.

Since implementation of the Companies Act, 2013 from April 1, 2014, this is the second time that the ministry has come out with such a scheme. In 2014, there was a Company Law Settlement Scheme that also gave defaulting firms time to make their filings.

At the end of February, there were more than 11.5 lakh active companies in the country, as per official data.

[The Hindu Business Line]