Home >> Blog >> Remediless Directors of Struck off Companies again started approaching High Court for relief (Cod scheme 2018 extended up to 30th April 2018)
22 Apr 2018

Remediless Directors of Struck off Companies again started approaching High Court for relief (Cod scheme 2018 extended up to 30th April 2018)

It shall be recalled that the Ministry of Corporate Affairs of India (MCA) vide notifications in September 2017 had disqualified many directors and strike off names of many companies from the Register of Registrar of Companies, for failure to file MCA annual returns/annual financial statements, MCA had de-activated the Director Identification Number (DIN) of Directors who were disqualified. Hence, the disqualified Directors were not able to file the overdue annual returns or any other forms with the MCA. Feeling remediless, the disqualified directors of “struck off” companies have again started approaching High Court to seek suitable directions.

Ministry of Corporate Affairs (MCA) has launched Condonation of Delay Scheme, 2018 (CODS-2018) whose effective period is extended to 30th April 2018 which was originally effective upto 31st March 2018.

Pursuant to this Scheme directors who are disqualified, are now provided with an opportunity to regularise compliance and avoid disqualification for a period of 5 years, by filing MCA eCODS Form 2018. The defaulting Company after filing the annual filings, has to seek condonation of delay by filing Form eCODS.

From 1st January 2018 to 30th April 2018, the DIN of all disqualified Directors will be temporarily re-activated. Through this window, the disqualified Directors by using the Condonation of Delay Scheme can regularise non-compliance and disqualification. However, this scheme is not applicable to the Struck off Companies under section 248(5) of the Companies Act, 2013.

The following are the options available to the companies to restore their names as well as removal of disqualification of Directors:

OPTION-1

Company to make necessary application before National Company Law Tribunal (NCLT) for revival of the name of the Company stuck off followed by filing of the pending audited financial statements and annual returns with the ROC. Thereafter, Company has to seek condonation of delay with the RoC by filing Form eCODS and approval of which will result in removal of the Directors disqualification.

In case the approval is not granted, the Members of the Company should appoint new director(s) and file the pending annual returns/financial statements with ROC, after the new director’s names are updated in the MCA website. After completion of annual filing, an application for removal of disqualification of directors shall be filed in Form DIR-10.

OPTION-2

The defaulting struck off company may seek revival of Company’s name from NCLT and further may seek relief before Hon’ble High Court, through a Writ Petition with respect to granting immediate stay on the disqualification. After revival of company name, the Company can file pending annual returns/financial statements with RoC. 

Conclusion

At the conclusion of the Scheme, the Registrar of Companies may take all necessary actions under the Companies Act, 1956/ 2013 against the companies who have not availed themselves of this Scheme and continue to be in default in filing the overdue documents.

Further, the recent changes made in the Companies Act 2013 by way of Companies Amendment Act 2017 and other notifications issued by the Ministry, it can be concluded that there will be no scope for the defaulting Companies to remain registered under the provisions of the Act.

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