In what would be good news for many firms, a scheme is being prepared to avoid criminal prosecution for delay in filing one's balance-sheet with the Registrar of Companies (RoC). The Union ministry of corporate affairs is working on a scheme of compounding, which also modifies the existing charges in this regard for regularising the delay, beside the proposed avoidance of criminal prosecution. It is likely to be rolled out in September and is being discussed with the various regulators. At present, any company which has prepared a balance sheet for a given financial year is bound to file it with the RoC by October of that financial year. Not doing so attracts criminal proceedings under section 610 of the Companies Act, plus a structure of penalties. The proposed scheme is being termed 'Immunity from period of delay in filing returns and prosecution' and meant for all companies, public and private, listed or unlisted, and even subsidiaries or Indian arms of foreign companies operating in India. It is aimed at companies who are functional but have failed to comply with the requirement of mandatory filing of these returns with the Registrar of Companies. The idea is to do two things. One, make the present penalties more lenient. Two, remove the liability for criminal prosecution. One proposal is to offer a 75 per cent. discount on the existing penalty to regularise the non-filing in the stipulated time. This scheme will, however, not apply to companies against which bankruptcy proceedings have been initiated or the Registrar of Companies has started the formalities for striking off the firm as defunct under section 560(5) of the Companies act. Nor apply to companies where non-compliance of proceedings attracts the penalty of imprisonment only, under present law. Another feature of the draft being discussed is that once a company opts for this scheme, the ministry is to advise the Registrar of Companies to withdraw legal suits filed against the company for prosecution. [Source :www.businessstandard.com dated April 15, 2010]
