Directors of disqualified firms get time till June to file annual results

Directors of companies who were disqualified for failure to file annual results as required by law under the government's drive against ''shell companies'' may get some reprieve with the ministry of corporate affairs giving over 3,00,000 disqualified directors another chance to file financial results.

It has now been decided that these disqualified directors may get a 3-month breather to file pending documents. The disqualification of these directors will be temporarily lifted during the three months to enable them file the required documents.

Companies whose registrations have been cancelled for non-compliance of norms may now file for a pardon (or condonation of delay) from January, till 30 June. During this period, the disqualification of their directors will be temporarily lifted so that they are able to file their documents.

The government had, in September, taken action against 2 lakh firms, which were not compliant with provisions of the Companies Act.

These included those which appeared to be of shell structures and the others that failed to file their financial returns for the past three years.

''The companies that do not appear to be working cannot subscribe to the scheme. They will first need to revive the company and show that they are in a working condition and get an approval from the National Company Law Tribunal (NCLT) to meet other compliances,'' sources told the paper.

The companies which have not filed their returns but look to be functional will be allowed to submit their pending documents. After this procedure, the firms and the directors will be able to get relief from the restrictions, the sources added.

As per the MCA directive, 309,614 directors were barred from serving on the board of any company for the next five years. Any digital signatures by these directors on annual reports, financial results and other company documents were not to be accepted by RoC.

''The companies that do not appear to be working cannot subscribe to the scheme. They will first need to revive the company and show that they are in a working condition and get an approval from the National Company Law Tribunal (NCLT) to meet other compliances,'' said one of the two people cited earlier.

''The defaulting companies which had not filed their returns for some reason or the other but otherwise look to be functional would be allowed to submit their pending documents. After submitting pending documents these companies and their directors will be able to get relief from the strictures,'' this person added.

According to the circular, those firms and directors who do not avail the scheme will remain disqualified and the MCA will take further action against them under the Companies Act provisions, 1956/2013.

This move has come about after many directors have filed court cases. Over 500 publicly traded firms share directors with suspected shell companies.