Fearing hefty hike in late fee, harsher fine, firms rush to file annual returns

CHANDIGARH: The Registrar of Companies (RoC) has witnessed a four-time increase in annual returns filed by firms from the region since Lok Sabha passed the Companies Amendment Bill 2017 on July 27.

This is due to the fact that companies fear harsher penalties proposed in the Bill and are rushing to file the outstanding returns before the bill becomes an Act.

Under the Companies Act, 2013, companies have to file their balance sheets and annual returns with the RoC. In the region comprising Punjab, Haryana and Himachal Pradesh, 36,000 companies are registered with the company registrar.

LATE FEE HIKE

The steep hike in the late fee is one such proposed change. If any company has not filed returns for 2015-16 or for earlier years, under the proposed changes, the late fee per form will be minimum ₹36,500 per year at the rate of ₹100 per day.

At present, the maximum late fee can be ₹3,600. Under the current act, provisions are available for filing annual returns with late fee with an upper limit of 11 times the normal fee.

The normal fee is ₹300 and ₹500, depending on company capital. In case, there is default for two or more years, the late fee will be charged at the rate of ₹200 per day.

This will take the minimum late fee burden on the defaulting companies to ₹1 lakh for two years of default.

NO EXEMPTION FROM PROSECUTION

The amendments also withdraw the 270 days exemption from prosecution currently available to defaulting companies.

The Companies Act 2013 gives prosecution immunity to defaulters for non-filing of returns for 270 days after the last date, October 31.

If the proposed bill becomes an act, the RoC will be allowed to file prosecution case immediately after the last date

PUNISHMENT FOR DIRECTORS

The amended provisions will also punish the directors of the defaulting companies.

If there is a default in filing annual returns for three consecutive years then the directors of the company will be disqualified for directorship of any other company and reappointment to the same company. Of the total registered companies, 31,000 are old companies and due for filling returns to the RoC.

Of these old companies, 6000 are defaulting companies, which have not filed the returns for one or more years.

These defaulting companies are coming forward to file returns after the Lok Sabha passed the amendments. When contacted the Registrar of Companies, Raj Singh, said, “There are three options available for the defaulting companies – file all the outstanding returns, or if the company is inactive then apply for dissolution or apply for dormant status.”