Govt launches de-registration scheme for defunct cos

According to an estimate, around 20-30 per cent of the 5.5 lakh companies in India are defunct as there is no activity being carried on by them. The scheme is targeted at these companies, which will now be able to get their names removed from the register at a relatively lower cost. Moreover, the entire process will be completed within 37 days, which is far less than the normal time of around 4-6 months.

Samir Biswas, regional director, DCA, said that he expected around 48,000 companies to avail of this scheme in the western region. To make the scheme more successful, he plans to launch prosecution proceedings against a few PSUs as well as public limited companies which have defaulted in filing their annual returns with the ROC.

Such prosecution proceedings will send a clear message – follow the rules or prepare for the consequences. Also, it will instill fear in the minds of the promoters of such defunct companies who earlier took advantage of the laxity of the ROC.

The scheme, which will last for a period of 60 days from September 28 to November 20, aims to kill two birds with one stone. It will not only generate revenue for the government, but will also decrease its burden by substantially reducing the number of companies in the register.

Biswas denied reports that CLSS 2000 has been extended till November 20 for all companies. Any company which makes an application for getting its name struck off under section 560 has to ensure that all its annual returns have been filed with the ROC.

However, there are many companies which have not yet done so, which will prevent them from availing of the scheme. Therefore, the CLSS scheme has been extended for those companies which will avail of the Fast Track Section 560 Scheme as well.

Although this scheme has many advantages, it does not do away with procedural hassles altogether. It requires a company to get a tax clearance certificate from the income tax, excise and sales tax departments. Further, statutory auditors have to certify that the company is not doing any business and has no dues payable to the government, banks or financial institutions.

After this, two affidavits stating that the company is not doing any business, has no dues payable to the government and that the directors are jointly and severally liable for any dues which may come to light after the submission of application, have to be produced.

According to a Mumbai-based chartered accountant, the scheme will be a huge success due to its simplicity. However, these companies will face some troubles while dealing with the other government departments whose permission is required for availing of this scheme.