Financial Daily from THE HINDU group of publications
Tuesday, Jul 27, 2004
Financial Daily from THE HINDU group of publications Tuesday, Jul 27, 2004 |
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Corporate
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Regulatory Bodies & Rulings ICSI suggests measures for smooth exit of defunct cos Richa Mishra
New Delhi , July 26 THE Institute of Company Secretaries of India (ICSI), while suggesting measures to make the exit for defunct companies easier, has said that a company should be required to attach only its latest balance sheet and not those of the previous years for which it had not filed with the Registrar of Companies (RoCs). According to industry sources, "Lack of clarity pertaining to various provisions of the scheme proved to be a major hindrance for the successful implementation of the scheme. Though the scheme required attaching the latest balance sheet, some of the RoCs were asking for the previous balance sheets, leading to confusion among the companies. Besides, the whole process was very time consuming. " The Ministry of Company Affairs (MCA) sought inputs from the ICSI for devising a more user-friendly procedure for striking off defunct companies, since there were few takers for its Simplified Exit Scheme (SES), 2003. The scheme was meant to help the promoters of dead and dormant companies erase their names from the RoC list and escape the mandatory filings of returns each year. In fact, while taking note of the SES issued by the MCA, the Naresh Chandra Committee II felt that the solution should be permanent, and in law. It also felt that the scheme should be such that, it does not take a company more than four months to exit. One of the major problems faced by companies was the requirement that the application for availing SES should be accompanied by an affidavit of at least two directors, sworn before a magistrate or an executive magistrate.
The institute suggested that under the new scheme, affidavits attested by the notary public should also be accepted. Further, once a waiver letter relating to share application money and unsecured loan/miscellaneous payables as appearing in the latest balance-sheet is given by the director concerned, it should be treated as loan/liability being written off, and the balance sheet should be treated as a nil balance sheet, ICSI said. For the directors of a defunct company who are not residents of India, affidavits signed by them and duly attested by a competent authority as provided under the Companies General Rules may be accepted, it said.
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