Company Law Settlement Scheme, 2014 - CLSS
THE Companies Act requires companies to file annual documents (Annual Return and Financial Statements) on the MCA2 electronic registry within prescribed time limits. These annual documents are considered very important in the context of an up-to-date Registry. It is observed that a large percentage of companies have not filed their statutory documents making them liable for penalties and prosecution for such non-compliance.
The Companies Act, 2013 lays down a stricter regime for the defaulting companies with higher additional fees. The quantum of punishment has been enhanced under the new Act vis-a-vis the earlier Act i.e. Companies Act, 1956. A specific provision for enhanced fine in case of repeated default has also been included in the form of section 451 of the Act. Additionally, the provisions of section 164(2) of the Act providing for disqualification of directors in case a company has not filed financial statements or annual returns for any continuous period of three financial years has been extended to companies.
The Ministry has received representations from various stakeholders requesting for grant of transitional period/one-time opportunity to enable them to file their pending annual documents to avoid attract ton of higher fees/fine and other penal action, especially disqualification of the Directors prescribed under the new provisions of the Act.
In order to give such an opportunity to the defaulting companies to enable them to make their default good by filing these belated documents, the Central Government has decided to introduce a Scheme namely “Company law Settlement Scheme 2014" [CLSS-2014] condoning the delay in filing the above mentioned documents with the Registrar, granting immunity for prosecution and charging a reduced additional fee of 25% of the actual additional fees payable as per section 403 read with Companies (Registration Offices and Fee) Rules, 2014 for filing those belated documents under the Companies Act, 1956/2013 and the Rules made thereunder.
In addition, the scheme gives an opportunity to Inactive companies to get their companies declared as 'dormant company' under section 455 of the Act (Chapter XX1X) by filing a simple application at reduced fees.
The scheme shall come into force on the 15th August 2014 and shall remain in force up to 15th October, 2014.
MoCA General Circular No. , Dated: August 12, 2014