Director Disqualification : Condonation of Delay Scheme, 2018
Director Disqualification
As per Companies Act, 2013, Section 164 pertains to disqualification for appointment of director. Under sub-section 164(2) (a), a person who has been a director with a company that has not filed financial statements or annual returns for three consecutive financial years will face disqualification.
The relevant extract of the provision under the aforesaid section(s) are as follows:
No person who is or has been a director of a company which
(a) has not filed financial statements or annual returns for any continuous period of three financial years; or..
shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.
The Ministry has struck off names of 2,17,239 companies from the records as on September 22 as these have not been carrying out business activities for a long period and have also defaulted on compulsory filings while more such companies are likely to face action.
It has been informed that as on September 22, a total of 3,19,637 directors have been identified and flagged as disqualified under Section 164 (2) (a) of theCompanies Act, 2013. Also these disqualified directors were barred from accessing the online registry and a list of such directors was published on the website of MCA.
Whereas, as a result of above action, there have been a spate of representations from industry, defaulting companies and their directors seeking an opportunity for the defaulting companies to become compliant and normalize there operations.
Whereas, certain affected persons have also filed writ petitions before various High Courts seeking relief from the disqualification.

Director Disqualification : Condonation of Delay Scheme, 2018

Whereas, with a view to giving an opportunity for the non-compliant, defaulting companies to rectify the default, in exercise of its powers conferred under sections 403, 459 and 460 of the Companies Act, 2013, the Central Government has decided to introduce a Scheme namely “Condonation of Delay Scheme 2018” [CODS-2018] as follows.
The scheme shall come into force with effect from 01.01.2018 and shall remain in force up to 31.03.2018.[Stakeholders may take a note that MCA has extended date of Condonation of Delay Scheme 2018 upto01.05.2018.]
Applicability: – This scheme is applicable to all defaulting companies (other than the companies which have been stuck off/ whose names have been removed from the register of companies under section 248(5) of the Act). A defaulting company is permitted to file its overdue documents which were due for filing till 30.06.2017 in accordance with the provisions of this Scheme.
In the case of defaulting companies whose names have not been removed from register of companies,-
i) The DINs of the concerned disqualified directors de-activated at present, shall be temporarily activated during the validity of the scheme to enable them to file the overdue documents.
ii) The defaulting company shall file the overdue documents in the respective prescribed eForms paying the statutory filing fee and additional fee payable as per section 403 of the Act read with Companies (Registration Offices and fee) Rules, 2014 for filing these overdue documents.
iii) The defaulting company after filing documents under this scheme, shall seek condonation of delay by filing form e-CODS attached to this scheme online on the MCA21 portal.
The fee for filing application e-form CODS is Rs.30,000/- (Rs. Thirty Thousand only).
The DINs of the Directors associated with the defaulting companies that have not filed their overdue documents and the e-form CODS, andthese are not taken on record in the MCA-21 registry and are still found
to be disqualified on the conclusion of the scheme in terms of section 164(2)(a) read with 167(1)(a) of the Act shall be liable to be deactivated on expiry of the scheme period.
In the event of defaulting companies whose names have been removed from the register of companies under section 248 of the Act and which have filed applications for revival under section 252 of the Act up to the
date of this scheme, the Director’s DIN shall be re-activated only NCLT order of revival subject to the company having filing of all overdue documents.
Scheme shall apply for certain documents, which are mentioned below:
1.) Form Number 20B/MGT-7- Form for filing company having share capital.
2.) Form 21A/MGT-7- Particulars of Annual return for the company not having share capital.
3.) Form 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL, AOC-4, AOC-4(CFS), AOC (XBRL) and AOC-4(non-XBRL) -Forms for filing Balance Sheet/Financial Statement and profit and loss account.
4.) Form 66 – Form for submission of Compliance Certificate with the Registrar.
5.) Form 23B/ADT-1- Form for intimation for Appointment of Auditors.

Stakeholders may please take note that Condonation of Delay Scheme (CODS, 2018) e-form would be deployed on 26th February 2018 for filing purposes. www.mca.gov.in
Format of the form can be downloaded from below mentioned link:

Form CODS 2018

You May Also Refer:
The Companies (Registration Offices and Fees) Amendment Rules, 2018
Commencement of Companies Amendment Act 2017
How to start a gold loan company in just 20 days

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