Corporate Affairs Ministry asks disqualified directors to ensure compliance or face action

The registrar of companies (RoCs) is in the process of identifying and flagging directors who have been disqualified for non-filing of financial statement or annual return for three continuous years starting from 2015-16.

The corporate affairs ministry has asked disqualified directors to file their pending statutory returns and ensure compliance or else face regulatory action. As part of larger crackdown on companies suspected to be shell entities, the ministry had disqualified many individuals from holding directorship till compliance with regulatory requirements is fulfilled.

The registrar of companies (RoCs) is in the process of identifying and flagging directors who have been disqualified for non-filing of financial statement or annual return for three continuous years starting from 2015-16.

All the defaulting directors are cautioned to file their pending statutory returns and do necessary compliance as per provisions of the law or that action would be initiated, according to a communication posted on the ministry's website.

"The director identification numbers (DINs) of such directors are not allowed to be used for filing any e-forms on MCA21 portal," it added.

Statutory filings under the Companies Act are submitted to the ministry through the MCA21 portal.

Lakhs of companies have been deregistered in recent years and a significant number of directors of have been disqualified.

Sandeep Jhunjhunwala, director at Nangia Andersen LLP, said the ministry has cautioned such directors to complete required statutory compliances or face the wrath of the law.

"This is definitely aimed at instilling a culture of compliance, increasing investors' confidence and most significantly, tightening the noose on defaulting directors.

"Rulings from various high courts against a spate of writ petitions filed earlier, had made clear than Sec 164(2)(a) disqualification would apply for disqualifying the directors of the company, if it fails to file annual returns for three financial years, beginning April 1, 2014," he noted.

Refer:www.moneycontrol.com/