Condonation of Delay Scheme for Defaulting Companies

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Condonation of Delay Scheme for Defaulting Companies

Vide general circular no. 03/2021 dated 15th January 2021, the Ministry of Corporate Affairs introduces the scheme for condonation of delay. The Scheme applies to the companies which are restored, under provisions of section 252 of the Companies Act, 2013, on the Register of Companies between the period 1st December 2020 to 31st December 2020.

The details of the Scheme for condonation of delay is briefly explained in the current article.

Background and objective of the Scheme

The Ministry of Corporate Affairs introduced Companies Fresh Start Scheme 2020, vide General Circular No. 12/2020 dated 30th March 2020. Basic features of the scheme are explained here-

  • As per the scheme, the defaulting company is permitted to file belated documents/ returns on payment of normal fees only. In other words, under the Scheme, the defaulting company was not required to pay additional fees payable on delay in filing of the respective documents/ returns.
  • The scheme was effective from 1st April 2020 to 30th September 2020.

Vide General Circular No. 30/2020 dated 28th September 2020, on account of COVID-19 pandemic, the duration of the scheme was extended from 30th September 2020 to 31st December 2020. In nut-shell, the scheme was ineffective from 1st January 2021.

Noticeably, against the orders of the striking off the name of the company, an appeal can be preferred under section 252 before the National Company Law Tribunals. Various favorable orders were passed by the National Company Law Tribunals during the month of December 2020 restoring the name of the company.

Due to the proceedings in process, such companies were not able to take the benefit of the Companies Fresh Start Scheme 2020. Accordingly, such companies get liable to pay additional fees for delay filing of belated documents/ returns.

In order to enable the specific defaulting company, to avail the benefit of the Companies Fresh Start Scheme 2020, the Ministry of Corporate Affairs introduced a new Scheme for condonation of delay. The said scheme is briefly explained below.

Scheme for condonation of delay

Applicability of the Scheme for condonation of delay-

The Scheme is applicable only if the following conditions are satisfied-

  1. Company has filed an appeal, under section 252, against striking off the name before the National Company Law Tribunal; and
  2. The order restoring the name of the company is passed by the National Company Law Tribunal during the month of December 2020.

Benefit available under the Scheme for condonation of delay-

The eligible company can file all the e-forms by paying normal fees as per the Companies (Registration Offices and Fees) Rules, 2014. Here, as per the scheme, the defaulting companies are not liable to pay any additional fees payable on account of delay in filing of respective documents/ e-forms.

Notably, the following forms are not covered within the Scheme-

  • e-Form SH-7, wherein, there is an increase in authorized capital, and
  • Charge related documents filed in e-Form CHG-1; e-Form CHG-4; e-Form CHG-8 and e-Form CHG-9.

In nut-shell, as a benefit, the defaulting companies are allowed to file the documents/ forms belatedly without payment of any additional fees.

Effective period of the Scheme for condonation of delay-

The Scheme for condonation of delay is effective from 1st February 2021 till 31st March 2021.

Meaning thereby that the defaulting companies are required to file all the pending documents/ e-forms within 31st March 2021.

Synopsis of the Scheme for condonation of delay

Particulars Details
Applicability of the Scheme Companies restored by the National Company Law Tribunal between 1st December 2020 to 31st December 2020.
The effective date of the Scheme The scheme is effective from 1st February 2021 to 31st March 2021.
Benefit available under the Scheme The eligible companies are not required to file any additional fees leviable for the delay in filing of documents/ forms.

 

Post by poonamgandhi

CA Poonam Gandhi is a Chartered Accountant and a Lawyer. With a wide practice experience and deep understanding of different laws and taxes, she has been an independent professional writer in the field of taxation, finance and laws.