Companies are required to file their financial statements and annual returns within the appointed dates.
In the event that such returns were not filed for a consecutive period of three years, the directors of the company would be disqualified under Sec 164 of the Companies Act 2013.
The MCA has issued an important update in this regard and the same is summarised as an FAQ
What is the content of the recent note from MCA?
The MCA note reads as under
“Please note that the Registrar of Companies(ROCs) are in process of identification and flagging of Directors disqualified under section 164(2)(a) of the Companies Act, 2013 for their default of non-filing of financial statements or annual return for continuous period of three financial years i.e. 2015-16, 2016-17, 2017-18. In this regard all the defaulting directors are hereby cautioned to find the pending statutory returns and do necessary compliance as per provisions of law, otherwise actions will be initiated under section 164 of the Companies Act ,2013 and Rules made thereunder. The DIN of such Directors are not allowed to be used for filing any e-forms on MCA21 portal.’’ ( emphasis supplied )
When does the disqualification arise?
The disqualification may arise when the company has defaulted in filing of the financial statements or annual return for a continuous period of Three financial years (i.e. 2015-16, 2016-17, 2017-18).
What is the impact of this notification?
It appears that the RoC after identification and flagging off would not allow the DIN to be used for filing of any e-forms on the MCA portal
• What precautions are needed?
Kindly ensure compliance in this regard as it appears that there would potentially result in the Directors DIN not being usable for any other companies where there are no such defaults also. This would mean that all financial statements that have not been filed till date should be completed and filed at the earliest
Here are some safeguards in this regard
How to verify that the Director is not disqualified ?
Given the large volume of strike off Companies by MCA ( about 100,000+ Companies due to non-filing of returns), it will be better to countercheck the same
How should the counter check be done ?
• Google search the name of the client company from MCA or from other data providers such as Zauba, Tofler etc.,
• Once the search is done, the name of the Company and the other particulars will appear
• The list of the directors of the Company creates will also appear
• Click on each of the director names
• The other companies where they are the director will appear
• Write to the directors to confirm the compliance specifically and that they are not disqualified
• In each of the companies, there will be a paragraph on the last AGM date and the last financial statements as filed
• Click each of the other companies and ensure that the last filing date of the financial statements is recorded by you
• Check for cases where financial statement or annual return has not been filed continuously for three financial years namely