Government is set to amend the Companies Act 2013 by bringing some facilitation for ease of doing business. While granting this, it has identified “Discipline” as a fundamental prerequisite.
If you game to follow the law, you would be benefited. Otherwise the match is over for you.
Recently government has struck down its hammer on 1 lakh corporates mainly on account of non-availability of two annual documents on the records of the registrar. These companies were termed as Shell or Khoka companies. It could be argued that how non fling of two annual documents leads to this conclusion, but fact remains that as of today the status of such companies is “struck of” and hence disabled to do any business activity unless revived by the Tribunal Order.
Moving one step ahead it is understood that government is now targeting its gun to the directors of such defaulting companies by identifying them as defaulters on the basis of 3 years continuous non filing of return by their companies. Such directors would then be disabled to function as directors in any present or future companies for a period of 5 years.
While this pertinent action is on, Government is further ready to make a move to close the match. The Companies Amendment Bill 2017 is already accented by the Loksabha in the last week of July and set to get consent of Rajyasabha in near future. Thereafter Government will make all attempts to implement the amendments immediately and will ensure that it will be applicable before due date for filing of annual documents by the Companies for the financial year 2016-17 is commenced.
The new law is designed to withdraw the protection of filing of documents and returns beyond due date till the period of 270 days with the prescribed additional fees. This Shield is protecting the non-compliant companies & its directors from attributing defaults of non-filing to them. The said shield though is there since 2014, has never fascinated willful defaulters to become obedient by doing timely filing. It is observed that majority of the registered companies are not filing their annual documents to the registrar within due date.
The new law will allow late filing but will collect a daily additional fee of Rs. 100/- for filing of annual documents after due date. Though Rs. 100/- looks very small figure, the total when calculated reaches to thousand figure. Otherwise the cost of filing annual documents in time is as meager as Rs. 1200/- .
Recent Government notification has already placed a condition of annual filing compliances on the private companies for availing exemption and privileges. After implementation of amendments in the Companies amendment bill 2017, the condition would be more stricter since it will operate immediately on the next day of the due date of filing annual documents. Once the Company loses its benefits, they are not going to get back the status of “compliant” even if filing is done or default is compounded, since there is no such specific provision for retrieval. There would be difficulties in implementation of this law, since details like date of filing, compounding of defaults etc. is not available in the public domain. Any business friendly law should not be structured in a manner to award life time punishment for a relatively smaller and curable defaults. Hope it would be reviewed soon.
There would be personal threat to directors as well and any recurring default of 3 years in filing annual documents by their companies will eject them from current directorship and will make them disabled to take any directorship till 5 years. This is a ban on them from entering into a corporate world.
Friends, game is set to wipe out all the benefits for non-obedient defaulters. Honeymoon is over and it’s time to buckle up to be compliant with the help of professionals.
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