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Condonation of Delay Scheme

2018 – New year gift to struck off

companies by RoC

Introduction

1. The existence of non-operative companies took the entire country
by storm when the Registrar of Companies (“RoC”) had suo moto
struck off the defaulting companies and declared the defaulting
directors’ of such companies as disqualified directors. Since, then it
was the buzz of the town on how to remove such disqualifications
and whether such an action by the Government was valid under the
principles of natural justice and right of being heard.

The authorities were clear on debarring as many as 3,09,614 directors
due to their acts of defaults but the huge number of cases filed with DhEErAJ KUMAr
the Tribunals and High Courts’ for providing an opportunity to remove ShArMA
such defaults, forced the government to rethink and, consequently, Associate,
to revise its decision, thereby giving a cheerful new year gift to Vinod Kothari & Company
all such defaulting companies in the form of the Condonation of
Delay Scheme, 2018 (“CODS 2018’ or “the Scheme”) subject to the
1
conditions laid therein.
The Scheme has been notified by the government on December 29,
2017 (to be effective from January 1, 2018). It clearly lays down in its
introduction that Ministry of Corporate Affairs (MCA) had received
numerous representations from industry, defaulting companies and
disqualified directors seeking an opportunity to become compliant
in the eyes of law and that several disqualified directors had
also approached different High Courts to seek relief from such
disqualification. Relevant paras in the Scheme are reproduced below:
Whereas, MCA in September 2017, identified 3,09,614 directors associated
with the companies that had failed to file financial statements or
annual returns in the MCA21 online registry for a continuous period
of three financial years 2013-14 to 2015-16 in terms of provisions
of section 1.64(2) r/w 167(1)(a) of the Act and they were barred
from accessing the online registry and a list of such directors was
published on the website of MCA.

144 January 20 To January 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 41 u 38