BONANZA FOR DEFAULTING AND DEFUNCT COMPANIES

                        The Corporate Sector has reason to celebrate the launch of two Schemes by the Ministry of Corporate Affairs in the last week of May 2010.   The Company Law Settlement Scheme (CLSS) 2010 is intended for those companies who desire to continue after clearing their track record.  Whereas, Easy Exit Scheme (EES) 2010 is intended for those companies who desire to exit at no cost.

 

                        In the office of ROC, Mumbai, 1,30,519 companies were required to file Annual Returns and Balance Sheets.  Out of which only 66,418 companies have filed Balance Sheet and Profit and Loss Account for 2008-09 and only 66,148 companies have filed Annual Return for the same year.  This roughly gives compliance rate of about 50.88%.  Now those companies who have defaulted,   which account for about 50% of the total companies required to file Annual Return and Balance Sheet, can avail the CLSS 2010.  The Scheme gives a discount of 75% of the additional fee payable for delayed filing.  Thus the scope of CLSS 2010 is very large covering about 50% of the active companies under the jurisdiction of ROC, Mumbai.  These companies should avail this opportunity to clean up their track record.

 

                        The Dormant Companies falling within the jurisdiction of ROC, Mumbai as per the criteria of continuous non-filing of Annual Return and Balance Sheet since 2005-06 come to the extent of 37,969 companies.  These companies have never filed any Balance Sheet and Annual Return continuously since 2005-06.  The number of companies having paid up capital of less than Rs. 1 lac in the case of Private Companies is around 16,481 and Public Companies having paid up capital of less than Rs. 5 lacs is 4,678.  These companies have not raised the paid up capital to the minimum threshold limit prescribed in the Companies (Amendment) Act, 2000.  All such defunct companies and companies having paid up capital of less than the prescribed limit are eligible to avail EES – 2010.  Unlike the earlier Schemes, SES 2003 and SES 2005 where a minimum payment was required to be paid alongwith the application, EES 2010 does not require any payment.  Moreover, in the earlier Schemes there was a requirement to update filing of Balance Sheet upto the period of doing business, whereas under EES – 2010 there is no

 

 

 

 

 

such requirement.   The only criteria is that the company availing EES  2010 should not have done any business or carried  on any business after 01.04.2008.  This is provided in the definition of "defunct company".  This is a golden opportunity for such defaulting companies to exit at no cost and least paper work.  Even companies in which directors have not obtained DIN and Digital Certificate can avail EES 2010 by executing the prescribed documents manually which can be scanned and attached to the e-form digitally signed by the Practicing Company Secretary/Practicing Chartered Accountant or Practicing Cost Accountant. Thus there is no need even to obtain DIN and Digital Certificate for availing EES 2010.

 

 

                        This is a golden opportunity for the defaulting companies as well as defunct companies to set right the records and progress towards appreciable level of compliance rate comparable to any other developed Country. Practicing Company Secretary/Practicing Chartered Accountant may prevail upon their client companies who are eligible for the Schemes to avail this one time opportunity.

           

                       

 

                                                                       (HENRY RICHARD)

                                                               REGISTRAR OF COMPANIES

                                                                MAHARASHTRA , MUMBAI