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CondonATion of delAy SCheme 2018 – neW yeAr GifT To STruCk off ComPAnieS by roC
Whereas, as a result of above action, there (c) a company is not carrying on any busi-
have been a spate of representations from ness or operation for a period of two
industry, defaulting companies and their immediately preceding financial years
directors seeking an opportunity for the and has not made any application
defaulting companies to become compliant within such period for obtaining the
and normalize operations. status of a dormant company under
section 455,
Whereas, certain affected persons have also
filed writ petitions before various High Courts he shall send a notice to the company and all
seeking relief from the disqualification. the directors of the company, of his intention
to remove the name of the company from the
Despite all of this, MCA has notified this Scheme
with a sole intent to provide an opportunity register of companies and requesting them to
to only non-compliant, defaulting companies send their representations along with copies
to rectify their default by completing their of the relevant documents, if any, within a
annual filings overdue upto 30-6-2017 in a period of thirty days from the date of the
limited window period from January 1, 2018 to notice.
March 31, 2018. There has been no reference ** ** **
made to disqualification of directors (except (6) The Registrar, before passing an order
for a few indirect references) and, hence, the under sub-section (5), shall satisfy himself
view of the MCA seems to be very clear that that sufficient provision has been made for
this Scheme is for defaulting companies or the realisation of all amount due to the
it is alternatively good to say that directors company and for the payment or discharge of
which have been disqualified shall stay that its liabilities and obligations by the company
way for the time being. Relevant para for within a reasonable time and, if necessary,
this in the Scheme is reproduced below:
obtain necessary undertakings from the
Whereas, with a view to giving an opportunity managing director, director or other persons
for the non-compliant, defaulting companies in charge of the management of the company:
to rectify the default, in exercise of its powers Provided that notwithstanding the undertakings
conferred under sections 403, 459 and 460 referred to in this sub-section, the assets of
of the Companies Act, 2013, the Central the company shall be made available for the
Government has decided to introduce a Scheme payment or discharge of all its liabilities and
namely “Condonation of Delay Scheme 2018” obligations even after the date of the order
[CODS-2018] as follows.
removing the name of the company from the
This write up is focussed on analysis of this register of companies.
Scheme as well as highlighting the gaps in the (7) The liability, if any, of every director,
Scheme which lack clarity and are, therefore, manager or other officer who was exercising
grey areas under the Scheme.
any power of management, and of every
2. Relevant provisions of law member of the company dissolved under
sub-section (5), shall continue and may be
248. (1) Where the Registrar has reasonable enforced as if the company had not been
cause to believe that— dissolved.
(a) a company has failed to commence its ** ** **
business within one year of its incor- 167(1) The office of a director shall become
poration ; vacant in case—
2
(b) [Omitted] .
3
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January 20 To January 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 41 u 39
