New Delhi: The ministry of corporate affairs, or MCA, is drawing up an amnesty scheme for companies that haven’t been able to file their annual returns and balance sheets in the 2008-09 fiscal and before that with the Registrar of Companies (RoC) and liable to penalties for missing the deadline.
More than half of all Indian companies haven’t filed the documents for that fiscal, according to MCA data. Firms are required to file balance sheets and annual returns 18 months after their incorporation. These returns are now filed electronically at the ministry’s website. The 22 RoCs across the nation function as MCA’s regional offices, monitoring whether companies are engaged in the activity that they were incorporated for.
Missing deadline: Corporate affairs minister Salman Khursheed said 371,110 firms haven’t filed annual returns for 2008-09. Manoj Verma/Mint
Under the new scheme, the firms won’t need to submit their previous records. “The ministry is designing an amnesty scheme whereby companies that have not filed their returns for more than one year make a one-time settlement with it by paying some penalty. This scheme will be introduced by June-end or July,” said a senior ministry official.
Companies that are not active will have the option of exiting the system, which will help reduce the ministry’s workload, he said.
In 2008-09, there were around 800,000 incorporated firms, of which at least 650,000 were eligible to file their returns. Only 370,000 companies did so.
There are 370,196 firms that haven’t filed balance sheets and 371,110 that haven’t submitted annual returns for 2008-09, corporate affairs minister Salman Khursheed said in the Lok Sabha on Thursday. Returns and balance sheets for 2009-10 are not yet due for filing.
A balance sheet is essentially a financial snapshot of a company’s assets and liabilities over a given period. Annual returns include information on debt, shareholders and directors apart from other details.
The official said that the ministry will help the firms get compensation for legal penalties that were imposed for not having filed the two statements. “What the extent of this redressal will be is still being worked out.”
According to the ministry, the courts imposed a total penalty of Rs64 lakh in 2008-09, Rs88 lakh in 2007-08 and Rs95 lakh in 2006-07. Better monitoring by MCA in the last two years has led to decline in non-compliance. While at least 300,000 firms did not file their statements in 2007-08, 260,000 companies were non-compliant in the year before that. Non-compliance attracts a penalty and criminal proceedings.
Delhi high court advocate S.M. Sundaram, who guides firms on filing returns, said the idea is good but has to be implemented properly.
“Around eight-nine years back also, the ministry came up with a simplified exit scheme but the process was complicated,” he said. “In fact, some provisions allowed companies to doctor and manipulate their returns,” he said, without elaborating.
PTI contributed to this story.