Time to come out from defaulter list – Company Law Settlement Scheme (CLSS) 2014

I often seen many Companies have not filed their Annual Returns and Balance sheet with Registrar of Companies for several years, especially startups have created company and not done anything other than registering a Company. As the delay increases, the Ministry of Corporate Affairs (MCA) includes in defaulter list and places in their website a list of defaulting companies/Directors/secretaries. Such defaulted Directors cannot file forms with Registrar. To come out from a defaulter list, one has to file returns with Registrar. To file returns, company has to pay hefty fees to MCA.

What is CLSS?

It is an opportunity given by the MCA for all defaulting companies who have defaulted in filing their annual Reports, Financial Statements and related Documents due for filing on or before 30th June 2014.

All pending returns can be filed with discounted fees before 15th October 2014.

Companies can file their annual return forms by availing following benefits:

• Pay only 25% of payable additional fee. Example: If the additional fees payable by company is Rs.5000/-, under the CLSS scheme company has to pay only Rs.1250/-!!!

• Exemption from paying penalty.

• Directors will not be considered as disqualified for reappointment even if they have failed to    file financial statements or Annual returns for any continuous period of three financial years.

• Scheme applicable for forms like annual Returns, B/s Filing, Secretarial Compliance, certificate filing.

• Company can have simultaneous benefit of either going for “Dormant” status OR go for striking off (closing) by just paying 25% of actual fees.

What is the consequences of non compliance of filing annual return :

• Penal and prosecution: Section 92 read with 137 of the Companies Act 2013 provides for penalty at Rs. 1000 per day extending up to Rs. 10 Lacs and also Imprisonment of directors up-to a term of 6 months.

• Disqualification of Directors: Also Section 164(2) provides for Disqualification of Director if the company has not filed annual returns for 3 or more consecutive years. 

I hope all the defaulting companies will make use of this scheme to avoid consequences as mentioned above under Companies Act, 2013.

 Please click here to download circular on Company Law Settlement Scheme (CLSS) 2014

Company Law Settlement Scheme (CLSS) 2014 scheme further extended up to 31-12-2014 Refer extension vide General Circular No. 44/2014 dated 14-11-2014.

Please follow and like us: