Simplified Exit Scheme - Clarifications on some issues - Companies Law - 27/2003

General Circular No: 27/2003 F.No. 17/78/2001-C.L.V Government of India Ministry of Finance Department of Company Affairs ********** Shastri Bhavan, New Delhi. Dated the 07th October 2003 To All Regional Directors, All Registrar of Companies Sub: Simplified Exit Scheme - Clarifications on some issues ********* The undersigned is directed to refer to General Circular No: 13/2003 dated 25.3.2003, General Circular No: 15/2003 dated 9.4.2003, General Circular No: 16/2003 dated 17.4.2003 and General Circular No: 17/2003 dated 22.4.2003 regarding Simplified Exit Scheme. Some more clarifications are given in Annexure 'A'. Kindly acknowledge the receipt of this circular. Yours faithfully, Encl: As above (E. Selvaraj) Joint Director (Trg) (Ph: 2338 3452) Annexure 'A' Clarifications on Simplified Exit Scheme, 2003 Issue No: 1: Whether a company seeking striking off under SES should file adopted balance sheets. Clarification: Para 9(ii) of the scheme is amply clear. Audited accounts showing no assets and no liabilities are required to be submitted. Nothing else is sought for, and no further clarification is necessary. Issue No: 2: Whether a company can be struck off if an asset is created after 31.3.2003. Clarification: This is purely a hypothetical situation, which is unlikely going to pass. When a nil audited balance sheet is submitted by an applicant company, it means that the company has no assets. Any company can be restored to the Register should the need arise. Issue No: 3: Whether indemnity bond should be submitted individually by all applicant directors Clarification: Yes, indemnity bonds should be given by all applicant-directors, and at least two applicant directors should furnish the indemnity bond. Issue No: 4: whether changes in para 1(c) of indemnity bond should be carried out in respect of companies that became defunct after carrying out some business after incorporation. Clarification : Para 1(c) of the indemnity bond may be read as under :- "Further the company is not doing/carrying on any business right from the date of its incorporation or for the last ____ (months and years) and the Company is also not intending to do any business or commercial activity as laid down in the main objects of its Memorandum of Association in future". The above clarification is more by way of information than a requirement. Because a nil audited accounts is being submitted, it may not arise in most cases. Issue No: 5: When the ROC will send the report after the scheme is over (para 14 of the scheme) Clarification: ROC will submit his report after 45 days from the expiry of the scheme. Issue No: 6: Whether section 25 company can apply under the scheme. Clarification: No. Under the scheme Section 25 companies cannot apply. Issue No: 7: When the prosecution will be withdrawn. (Para 7 of the scheme) Clarification: Prosecution will be withdrawn after final notice in the Official Gazette for striking off, only in cases where Prosecution is pending for minor offences such as non-filing of balance sheet and other documents. If the prosecution is with respect to any serious offences, especially those carrying punishment of imprisonment, such prosecutions cannot be withdrawn. Issue No: 8: Is there any change regarding publication/periodicity of publication of list of companies in the newspapers (Para 10 of the Scheme) Clarification : As communicated to the RDs/ROCs, O M letter No.Hq/5/2002/ computeristion dated 9/9/2003. Issue No: 9: Which are the institutions covered in the term "financial institution' used in clarification to the issue No. 4 of General Circular No: 16/2003 of Department. Clarification: Copies of the public notice is sent to IBA. The same can also be sent to public financial institutions. Other financial institutions may have to rely on the advertisements being issued in the newspapers. Issue No: 10: Should the word "Any Person(s)" referred to in last para of Annexure D of Scheme be substituted with "Any interested person(s)" or "Any authorised person". Clarification: Yes, the words "any person" referred to in last para of Annexure D be substituted with the words "any interested person in the company". Issue No: 11: Should any publicity be made on the scheme by way of brochures/pamphlets, publications in magazines/TV/Radio etc. Clarification: Yes, publicity should be done, as proposed, but no extra fund can be allotted for it. RDs have to manage with the allotted funds, or by convincing the media, and other institutions, to organize seminars/interviews etc. in public interest. Issue No: 12: Should affidavit be got attested from Notary Public instead of Magistrate. Clarification: Affidavit should be sworn before a Magistrate or an Executive Magistrate and not a Notary. It is further clarified that companies under inspection/investigation, or indicated in "vanishing" companies list or "plantation" company or any company involved in any of the stock market scams will not be covered by Simplified Exit Scheme. ROCs/RDs should refer to the Department if they have any doubt about any company.