After the success of individual dispute resolution schemes in Indirect tax, Direct tax and LLP now Ministry of corporate affairs have come up with a dispute resolution scheme for companies.
This scheme shall remain active from 01.04.2020 to 30.09.2020.
These scheme covers two types of companies:
- Defaulting company
- Inactive company
“Defaulting company” means a company defined under the Companies Act, 2013 and, which has made a default in filing of any of the documents, statements, returns, etc. including annual statutory documents on the MCA – 21 registry.
“Inactive company” means a company as defined in Explanation (i) to sub section (1) of section 455 of the Companies Act, 2013.
Under this scheme defaulting company shall be allowed to file belated documents with a normal fees for filing belated documents. Against this an immunity shall be granted from prosecution and penalty and such immunity shall be restricted to prosecution or penalty related to late filing of documents.
The immunity shall not cover any other consequential proceeding on director or managerial personnel. For eg: When a company receives any amount for private placements it can only use that money once a return of allotment has been filed. Now the above scheme shall only provide protection from immunity of non filing of return of allotment but if the amount was used before that then no immunity will be provided from such proceeding under this scheme.
The company will have to withdraw any appeal against any prosecution launched or any penalty initiated.
The company will have to make an application for grant of immunity within 6 months from the closure of scheme and after the all relevant documents have been submitted and accepted by the designated authority.
The above scheme can help defaulting inactive companies in 2 ways.
- They can either apply in Form MSC – 1 to get themselves declare as dormant company u/s 455 of the companies act or
- Apply for striking off their name by filing form STK – 2.
The scheme shall not apply in following cases:
- To companies against whom final notice for striking off name u/s 248 of the act has already been initiated.
- Where company has already filed application for striking off the name of the company.
- To companies who have amalgamated under the scheme of arrangement or compromise under the act.
- Where application has been already filed for the status of dormant company u/s 455 of the Act.
- To vanishing company.
- Where any increase in authorized capital is involved and also charge related documents.
Also the immunity under this scheme shall not apply in following situation:
- Where an appeal is pending before court or tribunal regarding management disputes.
- Where court has ordered conviction or order imposing penalty has been passed by adjudicating authority and no penalty has been preferred against such order before this scheme has come into force.
You can read the full scheme HERE.
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