Condonation of Delay Scheme only for bonafide directors: Corporate Affair Secretary Injeti Srinivas

By: | Published: December 25, 2017 4:49 PM

Only bonafide directors will benefit from the proposed scheme that will provide a three- month window for defaulting companies to submit their filings, a senior government official said.

Injeti Srinivas, Injeti Srinivas interview, interview of Injeti Srinivas, bonafide directors condonation of delay schemeInjeti Srinivas. (Photo: IE)

Only bonafide directors will benefit from the proposed scheme that will provide a three- month window for defaulting companies to submit their filings, a senior government official said. The Condonation of Delay Scheme, which would be rolled out by the Ministry of Corporate Affairs, is expected to come as a relief for disqualified directors. It is to be operational from January 1 to March 31, 2018. Corporate Affair Secretary Injeti Srinivas said that since so many people were affected, the government felt that some resolution was required without compromising the fight against illegal activities. “The scheme is not open for directors of struck off companies. They can come only when they (those companies) are restored through the National Company Law Tribunal (NCLT),” he told PTI in an interview. As part of clamping down on illicit fund flows, the corporate affairs ministry has disqualified more than 3.09 lakh directors of companies which failed to submit annual filings for a long time.

Following the move, concerns were raised that many directors of genuine companies have also been disqualified. Besides, some individuals moved courts against their disqualification. The decision to come out with the scheme follows various representations, including from the industry, seeking an opportunity for the defaulting companies to comply with the requirements.

“Unless someone is genuine, they would not come back through this (scheme) route. Many of the over three lakh disqualified directors would have been certainly dummy directors. It (scheme) is designed in a manner that only bonafide directors can come back through this route,” he said.

According to him, special forms are being designed under the MCA 21 system for the proposed scheme and it would be totally human interface free. As per a draft circular, the Director Identification Numbers (DINs) of the disqualified directors that have been de-activated would be “temporarily activated” during the scheme period. After submitting the filings under the scheme, a company concerned would have to file a separate form seeking condonation of the delay along with a fee of Rs 30,000, it added.

In case of defaulting companies whose names have been removed from the register and have filed applications for revival, DINs of the directors concerned would be re-activated subject to NCLT order and other conditions, as per the draft circular.

This would be the second time that the ministry is coming out with such a scheme after the Companies Act, 2013 came into effect from April 1, 2014. In 2014, the ministry had come out with a Company Law Settlement Scheme that also gave defaulting firms time to make their filings.

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