TMI BlogClarifications & Extension of SchemeX X X X Extracts X X X X X X X X Extracts X X X X ..... ere in existence and 2,60,530 annual returns and 2,70,961 balance-sheets were filed in the year 1999 alone. The compliance level for these two documents is around 50 per cent. More than five lakhs prosecutions will have to be launched by the Government. Already 38,603 cases are pending in various courts as on March 31, 1999. Experience has shown that disposal of prosecution cases takes considerable time. Courts generally levy a nominal penalty while disposing of cases. The results are not commensurate with the time and effort that go into obtaining orders of the hon ble courts. Experience shows that prosecutions do not really solve the problem of widespread non-compliance. In order to effectively ensure that during the millennium year we start with a clean slate, it is proposed to introduce a scheme called Company Law Settlement Scheme, 2000 . The Scheme would involve the applicant company or the officers to make a declara tion to the relevant Registrar of Companies that within the stipulated time the company will apply with necessary fees seeking immunity from prosecution and compounding of the period of delay involved in filing. The quantum of fees which will have to be paid b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment of Company Affairs. The said amount is proposed to be spent on computerising and modernising the work of the department and streamlining its operations. 2 Circular No. 8 of 2000, dated 24th August, 2000 The Government had announced a scheme, called the Company Law Settlement Scheme, 2000 (CLSS-2000), under which a company may file documents such as balance-sheet, annual return, etc., along with a lump sum fee as indicated in the scheme. However, it has been observed that some of the companies have approached the Registrar of Companies for striking off the names of the compa nies taking the shadow of circulars dated 17th February, 1987 and 19th February, 1991, issued by the department regarding striking off the names. The companies have, however, not filed the annual returns and balance-sheets. It is quite clear that as per section 560 of the Companies Act even in case of companies which come for striking off their names under this section the company should file all the balance-sheets and profit and loss accounts and not only one latest balance-sheet. This is more necessary to ascer tain whether the applicant seeking sanction under section 560 of the Act has met h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000. 4. Now, therefore, in exercise of the powers conferred by clause (b) of section 637B read with section 637 of the said Act, the Central Government hereby extends the Company Law Settlement Scheme, 2000, up to 5 p.m. of 30th September, 2000, with the stipulation that the companies will now have to pay 10 per cent over and above the existing lump sum amounts. 5. The revised lump sum amounts now payable by the companies filing documents under the said Scheme after 31st August, 2000, would be as under : Sl. No. No. of documents Amount payable for delay for period less than three years Amount payable for delay for period more than three years (a) (b) (c) (d) Up to 2 Up to 5 Up to 10 More than 10 (Rs.) 2,750 5,500 8,250 11,000 (Rs.) 3,300 6,600 9,900 16,500 6. The other terms and conditions of the Company Law Settlement Scheme issued on 31st May, 2000, remain unchanged. 5 PIB Press Release, New Delhi, dated 13th September, 2000 In view of the ongoing Company Law Settlement Scheme, 2000, some of the companies which have availed of the scheme by paying one time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from professional bodies/individu als have also been received during the operation of CLSS, 2000. 3. Recognising the urgent need, the Department has decided to launch fast track section 560 scheme with effect from 28th September, 2000. Three different coloured forms have been pre scribed : (a) White coloured form for applicants of CLSS 2000 up to 31st August, 2000 (Fast track I); (b) Pink coloured form for applicants of CLSS 2000 from 1st September to 30th September, 2000 (Fast track II); (c) Blue coloured form for all other applicants who have filed the documents with the Registrars in the past in respect of defunct companies and have sought their names to be struck off. 4. The blue form is for those applicants who file their applica tions after 30th September, 2000, and who wish to avail of the benefit of section 560 Scheme. They will however, be required to pay lump sum fee as per the table given below : No.of documents Amount payable for delay for period less than three years (Rs.) Amount payable for delay for period more than three years (Rs.) (1) (2) (3) Up to 2 Up to 5 Up to 10 M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance. 8 Press Note No. 13 (2000 series), dated 16-11-2000 Fast Track Scheme under section 560, waiving of the requirement for obtaining certificate from various authorities A Scheme namely, the Fast Track Scheme under section 560 of the Companies Act has been launched by this department recently for allowing companies which, due to various reasons have failed to take off, to get their name struck off from the Register of Companies maintained by Registrar of Companies under that sec tion. Details in this regard were issued through Press Note No. 10 of 2000, dated 25th September, 2000 and General Circular No. 10 of 2000, dated 20th September, 2000. 2. Two common problems have been highlighted by the profession als/professional bodies in following the procedure prescribed in this Scheme. 2.1 First one relates to getting the two affidavits prescribed by the Department signed on a stamp paper by a judicial magistrate. It has been represented before the Department that going before the magistrate is not easy for various reasons. The Department has, therefore, considered this matter in detail and a decision has been taken that the affidavit could be signed by magistrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate from the auditor that the company is not doing any business and does not owe any amount to tax authori ties/banks and financial institutions has been submitted. l A clearance certificate of tax dues (from income-tax, sales-tax, excise, etc.), has been attached. Various suggestions/representations have been received by the Department informing the non-applicability of Income-tax Act, Sales Tax Act and Central Excise to those companies which have not done any business since their incorporation or for a fairly long period and problems involved in getting these certificates by such companies. It has, therefore, been decided that in the case of companies which have not done any business since their incorporation as well as for a fairly longer period can give an affidavit along with an indemnity bond in the prescribed form on a stamped paper. 3. Further on the basis of various representations received from companies, professionals, institutes, chamber of commerce, etc. the scheme has been extended by one month. AFFIDAVIT We, the following directors of................Limited, (hereinaf ter called the company ), incorporated on............../......../............. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ..., S/o. Shri ..... residing at ..... and Shri ....., S/o. Shri ....., residing at ....., do hereby jointly and severally declare that: (a) We are the only directors of ..... Limited, a company incorporated on ..... under the Companies Act, 1956, whose regis tered office is situated at ..... (b) That we have made an affidavit dated ..... the ..... duly sworn before notary public affirming that the company ..... Limited, has assets worth Rs. ..... in the form of ..... The company has no liabilities. (c) Further the company is not doing/carrying on any busi ness right from the date of its incorporation and the company is also not intending to do any business or commercial activity as laid down in the main objects of its memorandum of association in future. (d) Thus the company is defunct and is requesting the Registrar of Companies, ..... to strike off the name of the company from the register of companies in terms of section 560 of the Companies Act, 1956. 2. In view of the above, we do hereby undertake in writing: (a) to pay and settle all lawful claims arising out of the striking off of the name of the company. (b) to indemnify any person for any such losses that ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not doing any business and does not owe any amount to tax authorities, banks and financial institutions. Besides, a clearance certificate of tax dues from income-tax, sales tax, excise, etc., was needed. The extension of the fast track exit route for de-registration of defunct companies and waiver of original conditionalities follows various representations from companies, professionals, chambers of commerce and the three premier institutes of chartered, cost and works accountants and companies secretaries of India. So far, more than seven thousand defunct companies have availed themselves of the scheme. With the extension of time and waiver of conditionalities grant ed, the Government hopes that the remaining defunct companies will come forward to avail themselves of the de-registration route. The fast track exit route under section 560 of the Companies Act, 1956, is an off-short of the four-month long Company Law Settle ment Scheme (CLSS) 2000, which ended with a grand success on September 30, 2000, wherein 50 per cent of 2.54 lakh defunct and defaulting companies availed of the CLSS 2000. For the remaining defunct companies, the fast track exit route was resorted to in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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