Government set to provide relief for disqualified directors

Government set to provide relief for disqualified directors
21/12/2017 , by , in News/Views

The government will provide a 3- month window to defaulting companies to submit their annual filings starting January 1, a move that will come as a relief for hundreds of disqualified directors. The ‘Condonation of Delay Scheme’ would be in force from January 1 to March 31, 2018, according to government officials.

The scheme would be notified in a couple of days, one of the officials said.
As part of clamping down on illicit fund flows, the corporate affairs ministry has disqualified more than 3.09 lakh directors of companies which failed to submit annual filings for a long time. Following the move, concerns were raised that many directors of genuine companies have also been disqualified. Besides, some individuals moved courts against their disqualification.

The ministry’s latest scheme would provide a 3-month window for the defaulting companies to make their filings starting from January 1. As per a draft circular, the Director Identification Numbers (DINs) of the disqualified directors that have been de-activated would be “temporarily activated” during the scheme period.

After submitting the filings under the scheme, a company concerned would have to file a separate form seeking condonation of the delay along with a fee of Rs 30,000, it added.
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, as per the draft circular.

The decision to come out with the scheme follows various representations, including from the industry, seeking an opportunity for the defaulting companies to comply with the requirements. Till November 30, as many as 2.24 lakh companies had been deregistered.This would be the second time that the ministry is coming out with such a scheme after the Companies Act, 2013 came into effect from April 1, 2014. In 2014, the ministry had come out with a Company Law Settlement Scheme that also defaulting firms time to make their filings.

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