COMPANY LAW SETTLEMENT SCHEME, 2010

[Mr. M. GOVINDARAJAN]

INTRODUCTION:

A company is to be registered under the Companies Act, 1956. The company has to file various returns and submit documents under the provisions of the Companies Act, 1956 within the stipulated period. Failure to file return or submit documents will lead to additional fee and also for prosecution in some cases. Now returns are to be filed electronically which is helpful for the stakeholders to know the information much faster than before. Sec.3 (3) of the Companies Act, 1956, after amendment taken place during the year 2000, provides that every private company, existing on the commencement of the Companies (Amendment) Act, 2000, with a paid up capital of less than one lakh rupees shall, within a period of two years from such commencement enhance its paid up share capital to one lakh rupees. Similarly Sec. 3(4) provides that every public company, existing on the commencement of the Companies (Amendment) Act, 2000 with a paid up capital of less than five lakh rupees shall, within a period of two years from such commencement enhance its paid up capital to five lakh rupees. There are many companies not increasing the threshold limit.

SCHEME:

In order to give an opportunity to the defaulting companies to enable them to make their default good by filing belated documents and to become a regular compliant in future, the Ministry, in exercise of its powers under Section 611(2) and Sec. 637(b) of the Companies Act, 1956 introduced a scheme namely 'Company Law Settlement Scheme, 2010' condoning the delay in filing documents with the Registrar, granting immunity from prosecution and charging additional fee of 25% of actual additional fee payable for filing belated documents under the Companies Act, 1956 and the rules made there under.

APPLICABILITY:

Any 'defaulting company' is permitted to file belated documents. The term 'belated company' is defined under the scheme as a company registered under the Companies Act, 1956 and a foreign company falling under Sec. 591 of the Act, which has made a default in filing of documents on the due date(s) specified under the Companies Act, 1956 and the rules made there under. This scheme shall come into force on the 30th May, 2010 and shall remain in force up to 31st August, 2010. This scheme shall not apply to companies against which action under Sec. 560(5) has been initiated by the Registrar of Companies.

This scheme is not applicable to the filing of documents for incorporation or establishment of place of business in India or where specific order for condonation of delay or prior approval under the provisions of the Companies Act, 1956 is to be obtained from the Company Law Board or the Central Government or the Court or any other competent authority is required.

PROCEDURE:

* Any defaulting private company or public company which has not increased its paid up share capital up to the threshold limit of rupees one lakh and rupees five lakhs respectively shall file its documents to increase their paid up capital to the threshold limit under the scheme and thereafter would be allowed to file other belated documents.

* The defaulting company shall pay statutory filing fees as required along with additional fee of 25% of the actual additional fee standardized under Sec.611(2) of the Companies Act, 1956 payable on the date of filing of each belated document;

* If the defaulting company had filed any appeal against any notice issued before the competent court for the violation of provisions under the Act in respect of which application is made under this scheme, the applicant shall before filing an application for the issue of immunity certificate, withdraw the appeal and furnish such proof of withdrawal of the appeal along with the application;

* The application for seeking immunity in respect of belated documents filed under the scheme may be made electronically in the form annexed to this scheme, after closure of scheme and the document(s) are taken on file, or on record or approved by the Registrar of the Companies as the case may be, but not after the expiry of six months from the date of closure of the scheme. No fee shall be paid on this form;

* The designated authority shall consider the application and upon being satisfied shall grant the immunity certificate in respect of documents filed in the scheme. The designated authority under this scheme is the Registrar of Companies having jurisdiction over the registered office of the company;

* After granting the immunity certificate, the Registrar concerned shall withdraw the prosecution(s) pending if any before the concerned Court(s).

* At the conclusion of the scheme, the Registrar shall take necessary action under the Companies Act, 1956 against the companies who have not availed this scheme and are default in filing of documents in a timely manner.