Firms under IBC: Govt to allow RPS to make filings

The Ministry of Corporate Affairs (MCA) has decided to empower resolution professionals (RPS) to file routine compliances, said a senior government official, in what may bring relief to companies undergoing insolvency struggling with routine filings.

Since powers of the board of directors get suspended as soon as a company is admitted to insolvency, it becomes challenging to make several routine filings.

“The status of the company in MCA master data will reflect if it is undergoing corporate insolvency resolution, liquidation or dissolution. The RP will authorise all filings, including financial statements and annual returns,” the official said.

The MCA will also allow the digital signature of the RP to be “mapped” as the authorised signatory as well, another senior official said.

In its order dated November 22, the Delhi Bench of the National Company Law Tribunal (NCLT) said its direction to the Registrars of Companies (ROC) to update the master data of the corporate debtor so as to inform the public at large about the status of the company which has come under corporate insolvency resolution process had not been complied with.

The RP, who takes charge of the day-to-day matters of a listed company at the Insolvency and Bankruptcy Code (IBC) stage, is not empowered to carry on compliances such as signing and uploading the audited and unaudited financial results.

The order passed in the matter of Sikka Papers the NCLT Bench gave one week’s time to ROC to submit an affidavit on the issue of why the RP is not permitted to upload documents if the board of directors is suspended “by virtue of imposition of moratorium under Section 14” of the IBC. The Bench asked the ROC to clarify the alternative mechanism for uploading the data such as annual accounts.

“These are practical difficulties. Powers of the board are vested in the RP. While the board is suspended, the directors can still sign… however, if they do not cooperate it becomes a hurdle,” said Manoj Kumar, partner, Corporate Professionals.

But even after the process is over, the corporate debtors who had not done the old filings put the new acquirer in a fix. “Unless a company has cleared all its past filings, no new filings can be made,” said Anshul Jain, partner, PWC India.

He also said that once a case is resolved, a new director will assume responsibility, but who would appoint him is not clear as lenders do not have the power to do so.

In the case of one of the biggest non-performing assets referred by the Reserve Bank of India to IBC, the new management had to pull strings at the highest levels of government to get the routine compliances in order.

“The previous company had not made its filings with the ROC for a couple of years before it went into Corporate Insolvency Resolution Process… It made very difficult for the new management to give the company a fresh start for some time,” a person close to the matter said.