During October, 2017 the MCA had disqualified more than 3 lakh directors of companies who failed to submit their annual filings for 3 or more years.
On December 29, 2017 the MCA has come up with much awaited scheme, named Condonation of Delay Scheme, 2018 for disqualified directors. This scheme would definitely prove to be a ‘saviour’ for the disqualified directors. They can save themselves from disqualification arisen from the defaulting companies.
Key takeaways from the Condonation of Delay Scheme, 2018
- Effective date: This Scheme 2018, will be effective from Jan 01, 2018.
- Validity period of the Scheme: The validity of Scheme, 2018 is for 3 months only which starts from Jan 01, 2018 till March 31, 2018.
- Who can avail of the Scheme: This Scheme, 2018 is available toall the defaulting companies other than the companies which have been stuck off or whose names have been removed from the register of companies.
A defaulting company means as company which has not filed its financials or annual returns for a continuous period of 3 years with MCA.
- Temporarily activation of DIN: During the period of the Scheme, the DIN of disqualified directors will be temporarily activated for filing of the required documents/ E-formson MCA portal.
- Scheme would apply to certain documents/e-forms: MCA has specified the list of e-forms for which the Scheme, 2018 is applicable such as e-from 20B/MGT-7, 23AC, 23ACA, etc.
- How to seek condonation of delay: After filing of the required overdue documents/ e-forms on MCA portal, the defaulting companies have to file the e-CODS form for seeking the condonation of delay.
- Fee for Condonation of Delay: The fee for e-CODS will be Rs. 30,000. SRN (Challan No.) of overdue documents/E-forms has to be mentioned in the e-form CODS. The new-form will be available from Feb 02, 2018.
- Re-activation of DIN: On filing the overdue annual returns and financial statements and form e-CODS 2018, the DINs of the disqualified Directors would be reactivated.
- Consequences of non-filing of overdue documents/ e-forms: The Directors associated with such defaulting companies if they fail to file the overdue documents and E- CODS form with additional fee and penalty till the end of such scheme their disqualification will be made final for a period of 5 years and other penalties as prescribed under Companies Act 1956 and/or Companies Act, 2013 would apply.
This is a onetime opportunity for the disqualified directors to remove their disqualifications from the companies by filing the e-CODS form along with fee of Rs. 30,000. The disqualified directors should make most of this scheme and remove non-compliances relating to non-filing of financials & annual returns.