Amended Section 403 of Companies Act, 2013 on delayed filing By CS Nikita Snehil | Vinod Kothari & Co.


Dear Professional Colleagues,

Is procrastination a thief of time and money?

Write-up By:

CS Nikita Snehil | Manager | May 15, 2018
nikita@vinodkothari.com | Vinod Kothari & Co.


Well; MCA advises companies by amending Section 403 and fee structure for the delayed filing.

MCA vide its Notification[1] dated May 7, 2018, has enforced the first proviso to clause (i) and clause (ii) of Section 80 of the Companies (Amendment) Act, 2017 that amends Section 403 of the Companies Act, 2013. The notification has been published in Official Gazette and comes into effect from May 7, 2018.

Further, MCA vide its Notification[2] dated May 7, 2018, issued the Companies (Registration Offices and Fees) (Second Amendment) Rules, 2018 (‘Amended Rules’) which provides the additional fees structure for the delay in filing forms by the companies.

This article analyses the impact of the amendment on the delayed filing by companies.

Provisions of Companies (Amendment) Act, 2017

As explained in the CLC Report:

“22.3 The Committee also felt that it may be clarified (in the Rules) that, irrespective of the delay, obtaining condonation of delay is not a pre-requisite to filing a document. It is a separate process under section 460 in respect of all belated filings (refer paragraph 18.2 of Part II of the report also).”

Ministry’s Comment

"2.64. The Ministry on the above suggestion has commented as under:

(iii) The Ministry feels that review of section 403 is necessary to ensure that companies file all documents in the registry within time and delayed filing should be allowed but with higher to very higher additional fees depending upon the nature of document and the size of the company concerned and without any bar from prosecutions for the delayed filing.”

Structure of Section 403

Sub-section (1) – provides for filing the document/ fact/ information within the time specified in the relevant provision on payment of prescribed fees i.e. normal filing fees;

The first proviso to sub-section (1): Where annual filing documents are not filed within the time provided in respective sections, it may be submitted after expiry of the period on payment of additional fee. This fee has been prescribed in Para D of Annexure to Companies (Registration Offices and Fees) Rules, 2014. However, the payment of additional fees is without prejudice to any other legal action or liability under the Act.

Para B & D of Companies (Registration Offices and Fees) Rules, 2014

Pre - Amendment

Post Amendment

B. The following table of additional fees shall be applicable for delays in filing of the forms other than for an increase in Nominal Share Capital.

 

D. (No such para)

B. Following Table of the additional fee shall be applicable for delay in filing of forms other than for an increase in Nominal Share capital or forms under section 92/ 137 of the Act.

 

D. For Forms under section 92 or 137:- (i) In case the period within which a document required to be submitted under section 92 or \137 of the Act expires after 3o/o6/2018, the additional fee mentioned in Table shall be payable.

 

[ii) In all other cases where the belated annual returns or balance sheet/financial statement which were due to be filed whether, in the Companies Act, 1956 or the Companies Act, 2013 the following additional fee mentioned in Table shall be payable:-


Second proviso to sub-section (1) (Not yet enforced):
Where documents other than annual filing documents are not filed within the time provided in respective sections, it may be submitted after expiry of the period on payment of additional fee. This fee has been prescribed in Para B above. However, the payment of additional fees is without prejudice to any other legal action or liability under the Act.
 

Third proviso to sub-section (1) (Not yet enforced): Default on two or more occasions in submitting documents to attract higher additional fee as may be prescribed (nothing prescribed).

Sub-section (2) Liability of the company and its officers in case of delayed filing

Where a company fails or commits any default to submit, file, register or record any document, fact or information under section 403(1), before the expiry of the period specified in the relevant section, the company and the officers of the company who are in default, shall, without prejudice to the liability for the payment of fee and additional fee, be liable for the penalty or punishment provided under this Act for such failure or default.

Accordingly, the amended provisions of section 403 divide the section into two parts, one for annual forms and the second part for forms other than annual filing forms: 

It is pertinent to note that the immunity provided to companies to file within additional 270 days has been done away with. Therefore, any filing beyond timeline specified in the respective section will invite additional fees as well as the condonation of delay.

Also, the default on two or more occasions in submitting, filing, registering or recording of the document, fact or information will attract higher penalty the minimum being twice the additional fee provided in the Act. 

Provisions of the Companies (Registration Offices and Fees) Second Amendment Rules, 2018 (‘Amended Rules’)

MCA has notified the Amended Rules on May 8, 2018, that amends the additional fee structure for the delay in filing of forms by the companies. 

Additional fees for the delay in filing of forms other than for an increase in Nominal Share capital or forms under section 92/137 of the Act:

Sl no

Period of delays

Forms including charge documents

01

up to 15 days (Section139 and 157)

One time

02

More than 15 days and up to 30 days (Section 139 and 157) and up to 30 days in remaining forms.

2 times of normal filing fees

03

More than 30 days and up to 60 days

4 times of normal filing fees

04

More than 60 days and up to 90 days

6 times of normal filing fees

05

More than 90 days and up to 180 days

10 times of normal filing fees

06

Beyond 180 days 

12 times of normal filing fees

Note:

(1) The belated filing of documents/forms (including increasing in nominal capital and delay caused thereon) which were due to be filed whether in Companies Act, 1956 Act or the Companies Act, 2013 Act i.e due for filing prior to notification of these fee rules, the fee applicable at the time of actual filing shall be applicable.]

 Additional fees for the delay in filing of forms under section 92/137 of the Act:

·      In case the period within which a document required to be submitted under section 92 or 137 of the Act expires after 3o/o6/2018, the following additional fee mentioned in Table shall be payable –

Sl no

Period of delays

Additional fee payable (in Rs)

01

Delay beyond the period provided under Section 92 (4) of the Act 

One Hundred per day

02

Delay beyond the period provided under Section 137 (1) of the Act

One Hundred per day

 

·      In all other cases where the belated annual returns or balance sheet/financial statement which were due to be filed whether, in the Companies Act, 1956 or the Companies Act, 2013 the following additional fee mentioned in Table shall be payable:-

Sl no

Period of delays

Additional fee payable (in Rs) up to 30/06/2018

Plus Rs. 100 per day w.e.f. 01/07/2018

 

01

up to 30 Days

2 times of normal filing fees

02

More than 30 days and up to 60 days

4 times of normal filing fees

03

More than 60 days and up to 90 days

6 times of normal filing fees

04

More than 90 days and up to 180 days

10 times of normal filing fees

05

Beyond 180 days

12 times of normal filing fees

Note:

(1) The additional fee shall also be applicable to revised financial statement or board's report under section 130 and 131 of the Act and secretarial audit report filed by the company secretary in practice under section 204 of the Act.

(2) The belated filing of documents/forms including increasing in nominal capital and delay caused thereof which were due to be filed whether in Companies Act, 1956 Act or the Companies Act, 2013 Act i.e., due for filing prior to notification of these fee rules, the fee payable at the time of actual filing shall be applicable]


Condonation of delay

As the immunity of 270 days has been done away with, companies will now have to condone the delay in filing the forms under as per the procedure mentioned in section 460 of the Act read with Rule.

Company Law Committee’s (‘CLC’) suggestion in its Report

Requirement of Condonation

Para 22.2 of the Report provides the following:

“Delayed filings beyond two hundred and seventy days can still be done with the maximum additional fee but the company is also liable for prosecution/penal action. This framework has been specifically mentioned for filings under Section 89 (filing of declaration of beneficial interest), Section 92 (filing of Annual Return), Section 117 (filing of resolutions and agreements), Section 121 (AGM report for listed companies), Section 137 (filing of financial statements) and Section 157 (company to inform DIN of directors to ROC). It is, therefore, being viewed that in respect of delay in filings under any other section (other than the six mentioned above), the company will have to obtain condonation of delay under Section 460(b) and is not eligible for immunity from prosecution/penal action for any delay if condonation is not obtained.”

Para 18.2 of the CLC Report provides the following:

“The Committee discussed that for condonation of delay under Section 460, no e-Forms have been prescribed. The Committee felt that this is required in view of the ease of doing business. Therefore, the Committee recommended that, for this purpose, a single pro-forma application form can be designed and necessary amendment may be made in the Rules.

Further, Para 22.2 of the CLC Report states the following:

“The Committee also felt that it may be clarified (in the Rules) that, irrespective of the delay, obtaining condonation of delay is not a pre-requisite to filing a document. It is a separate process under section 460 in respect of all belated filings”

Therefore, where the Committee justified that mere filing of additional fees will not relieve the company from its liabilities, it also recommended the introduction of specific guidelines and e-form specifically for the purpose of condonation.

Procedure of Condonation of Delay

In the absence of any specific guidelines or process for making the application for condonation of delay, companies shall file the said application in e-form CG-1 (which is used for filing application with the Central Government).

Further, as the said form does not require any specific attachments, companies shall submit the followings:

  1. Documents for which the company is making application for condonation of delay;

  2. Certified true copy of the Board Resolution authorizing for filing the application and appointing authorized representative, if any;

  3. Application with reasons for delay and relief sought;

  4. Other documents/ clarifications, if any.

On the scrutiny of the said form, the CG (i.e., MCA), may grant the Order of Condonation of Delay, subject to the submission of any other documents required by the CG. Thereafter, the Company is required to submit the said order in e-form INC 28 (as per the help-kit of the said form) to the Registrar of the Companies.

Conclusion

Procrastination in filing e-Forms will surely be a thief of time and money. Therefore, the companies will now have to take to strive for timely filing else the same would not only invite additional fees but also condonation of delay. Where the delay is not condoned/ application is not made, this will be specified in the secretarial audit report given in Form MR—3 as well as Certificate in relation to annual return given in Form MGT-8. 

[1] http://www.mca.gov.in/Ministry/pdf/CompaniesAmendmentNoti_07052018.pdf

[2] http://www.mca.gov.in/Ministry/pdf/CompaniesOfficesFeesRules_07052018.pdf

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