Company Law 

Settlement Scheme, 2010

Easy Exit Scheme,  2010
 
 
Is the Ministry of Corporate Affairs concerned about
 “defaulting company” means a company registered under the Companies Act, 1956
and a foreign company falling under section 591 of the Act, which has made a default in
filing of documents on the due date(s) specified under the Companies Act, 1956 and rules
made there under;  and
 “defunct company” means inactive company existing in the Registers of ROC ?
 
It is felt by the Ministry so, then  it came out on 25.05.2010 with panacea in
 the scheme called “‘Company Law Settlement Scheme 2010″ for the defaulting
companies and
 the scheme called  ‘Easy Exit Scheme- 2010’  for the defunct companies.
  
Both the schemes will be in operation from 30 May 2010 to 31 August 2010.
 
The observations of Ministry of Corporate Affairs on “defaulting companies” are :
 that a large number of companies are not filing their due documents timely with the
Registrar of Companies and also
 there are many companies, who have not increased their paid up capital up to the
threshold limit provided in sub-section (3) and sub-section (4) of Section 3 of the
Companies Act, 1956.
 
And the very Ministry came out with following observations on “defunct companies” as
follows:
 It is stunning to note that the total number of defunct companies are 23185.
 The anxiety of the Ministry is clear when it said that the steps ( it has taken to
implement the scheme ) include conducting seminars and workshops involving all
stakeholders, to sensitize the scheme and advertisements in newspapers, banners, etc. All
facilities have been provided to receive the applications and process the same electronically
and also
 ‘Easy Exit Scheme- 2010’ has a simplified procedure to enable defunct companies to
exit from the Register of Companies. 
 
Now, what image does the Ministry of Corporate Affairs want to project by these steps?  
 
What does it want to derive from identifying the default companies and defunct companies,
ignoring conveniently the functionalism of Registrar of Companies?    
 
Is the ROC not empowered to act periodically and take action, proactively?    
 
Has the approach of ROC to Defunct Companies or Default Companies ever been
encouraging to become them compliant or exit from the Register of Companies?
 
Why has the ROC been silent for quite a long period, till the number of defunct companies
reach to this staggering figure?    
 
Hope, let not the ROC be inactive anymore.
 
It is hilarious to read following conclusion of the Ministry:
 
Action Post Closure of Scheme:
At the conclusion or the Scheme, the Registrar shall take necessary action
under the Companies Act, 1956 against the companies who have not availed
this Scheme and are in default in filing of documents in a timely manner.
 
Is the Registrar of Companies not empowered, prior to this to take action under the
Companies Act, 1956 against the companies both Defunct and Default?
 
Due to various economic reasons, may be valid from the situations undergoing by the
concerned default companies or  defunct companies, there might be lapses in observing the
rules and provisions of the Companies Act, 1956.   Let us not think that there was no effort
from these companies to get regularized and be compliant.
 
It is unfortunate that the Ground reality is very harsh to digest how rigmarole are our
procedures in the case of  the default companies to  become  compliant by filing
of documents on the due date(s) specified under the Companies Act, 1956 and rules made
there under and even to exit from the Registrar of  the ROC.
   
 
Helpless are our professionals in voicing the same on concerned forums, in turn causing
irreparable loss to our economic wealth.
 
Let the Ministry ignore the time limit, proposed for these Both schemes that the same will
be in operation from 30 May 2010 to 31 August 2010 and put the sincere efforts at every
ROC.

“Due to various economic reasons, may be valid from the situations undergoing by the
concerned default companies or  defunct companies, there might be lapses in observing the rules
and provisions of the Companies Act, 1956.   Let us not think that there was no effort from these
companies to get regularized and be compliant.
 
It is unfortunate that the Ground reality is very harsh to digest how rigmarole are our procedures
in the case of  the default companies to become  compliant by filing of documents on the due
date(s) specified under the Companies Act, 1956 and rules made there under and even to exit
from the Registrar of  the ROC.
   
 
Helpless are our professionals in voicing the same on concerned forums, in turn causing
irreparable loss to our economic wealth.
 
Let the Ministry ignore the time limit, proposed for these Both schemes that the same will be in
operation from 30 May 2010 to 31 August 2010 and put the sincere efforts at every ROC.”
 
I requested to ignore the time limit and encourage all the subject entities to take part in the
process.
 
 
On 03.12.2010, Government of  India, Ministry of Corporate Affiars, issued a General Circular
No.6/2010. It says:
 
“In order to give an opportunity  to the defunct companies, for getting  their  names strike off
from the Register of  Companies, the Ministry had  launched a Scheme namely, “Easy Exit
Scheme, 2010” under Section 560 of  the Companies Act, 1956 during May-Aug, 2010. A large
number of  companies availed this scheme. However, on huge demands from corporate  sector,
the Ministry has decided to  re-launch the Scheme as, “Easy Exit
Scheme, 2011” under Section 560 of the Companies Act, 1956.
 
The Scheme shall come into force on the 1st January, 2011 and shall remain in force up to 31st
January, 2011.”  
 
It is good to see the re-launch the scheme.  
 
We need to re-look at the following points:
 
“(iv) Scheme not applicable to certain companies: - The Scheme does not cover the following
companies namely:-
 
(e) companies where inspection or investigation is ordered and being carried out or yet to be
taken up or where completed prosecutions arising out of such  inspection or
investigation  are pending in the court;
 
(f) companies where order under section 234 of the  Companies Act,1956  has been issued by the
Registrar and reply thereto is pending or where  prosecution if any, is pending in the court;
 
(g) companies against which prosecution for a non-compoundable offence is pending in court;
 
(h) companies accepted public deposits which are either outstanding or the company is in default
in repayment of the same;
 
(i) company having  secured loan ;
 
(j) company having  management dispute;
 
(k) company in respect of which filing of documents have been stayed by court or
Company  Law Board (CLB) or Central Government or any other competent authority; 
 
(l) company having dues towards income tax or sales tax or central excise or banks and financial
institutions or any other Central Government or State Government Departments or authorities
or any local authorities.”
 
If  the MCA be a bit more proactive, a review about above points, would be effective enough.