RECENT STRIKE-OFF NOTICE BY MCA AND ITS IMPACTS ON GENUINE SMALL PRIVATE LIMITED COMPANIES

RECENT STRIKE-OFF NOTICE BY MCA AND ITS IMPACTS ON GENUINE SMALL PRIVATE LIMITED COMPANIES

SMALL PRIVATE LIMITED COMPANIES AFFECTED BADLY DUE TO MCAs STRIKE-OFF NOTICE

Recently , MCA has started to strike-off the companies which has not filed annual accounts and Annual Return for the last 3 years.  So , many small companies which has serious business but failed to file AOC-4 and MGT-7 were the worst affected by the MCA’s action.

FAMILY OWNED PRIVATE LIMITED COMPANIES

These companies are small family owned private limited companies which are carrying on business but with losses or with meager profits. Due to non-availability of consultants , these companies have failed to file their annual returns or annual accounts.

NO PRIOR NOTICE IS SERVED BY MCA

The worst part of the scenario is that MCA has not served any prior notice to these companies well in advance that their company will be struck off if AOC-4 and MGT-7 is not filed within a stipulated time.

Further , these companies have been refrained from the fundamental rights of giving prior notice well-before taking any serious action against them by MCA.

COMPANIES DEFAULT IN FILING AOC-4 & MGT-7

Many of these companies have regularly filing their IT returns and GST returns and for want of filing MCA returns  , these companies have been  stricken off without prior intimation.

These companies are ready to pay heavy penalty running into lacs to MCA to see that company is reactivated by filing MGT-7 and AOC-4.

DIRECTORS WERE NOT ENTITLED TO FUNCTION AS  DIRECTORS IN OTHER COMPANIES IN WHICH THEY ARE DIRECTORS

The worst part of the MCA action is that the DIN number deactivated directors cannot function as directors in other active companies where they are also directors.

COMPANY BANK ACCOUNTS HAVE BEEN FREEZED

Further , company bank accounts also been freezed and these companies cannot initiate any day to day transaction in their bank accounts.

HOW GENUINE COMPANIES HAVE BEEN AFFECTED ?

MCA claims that their action  of strike-off is against shell companies but these have affected many small private limited genuine companies .

For example , in a small family owned private limited companies , there will be only two directors from the family and due to MCAs strike-off process , the whole business will come to a standstill as DIN number of two directors had been deactivated.

ONLY TWO REMEDIES ARE AVAILABLE TO AFFECTED COMPANIES

For Companies which have been stricken off by ROC , only now two remedies are available .

To file a writ petition in the High Court and get a stay order against MCA’s strike-off notice. To produce the stay order to ROC office and get the DIN numbers of the Directors whose DIN number have been reactivated and then filing all the pending forms and make the company to active status.

By inducting a new director and to file all pending forms with MCA process. This is also known as backend process.

Both the above remedies are cumbersome , time consuming and also expensive to genuine small private companies.

SIMPLE PROCEDURE SUGGESTION BY ROC , VIJAYAWADA

When I met ROC , Vijayawada recently , he has informed that he will reactivate the DIN number of one director whose DIN number has been deactivated mainly to file pending forms with ROC and to make the companies to active status for a limited period of 3 days or one week on the basis of an indemnity bond and a declaration.

STAND TAKEN BY ROC ,CHENNAI

However , when I met ROC , Chennai , he has informed me that there is no such procedure available for reactivating the DIN for a limited period mainly to file pending annual forms with MCA.

He has informed me that he can reactivate the DIN number only on the basis of High Court Order or by back end process.

TWO DIFFERENT VIEWS OF ROCs ON A SUBJECT

It is really confusing how two ROCs can have different views on a subject.

According to me , the key solution suggested by ROC , Vijayawada seems to be client friendly , will be cost wise less and not time consuming.

WILL BRING MORE REVENUES TO MCA

Further , it will bring more revenues to MCA as the affected companies will be ready to pay the additional fee Rs 100 per day for filing pending annual forms.

WILL MCA COME FORWARD TO FIND A SOLUTION TO THIS ISSUE

The above procedure will save a lot of genuine private limited companies which have real business and have been impacted by MCAs strike off notice.

Will MCA come forward to advice ROC , Chennai and other ROCs in India to reactivate the deactivated DIN number of a director only for filing pending annual forms for a limited period  ?

This will remove hardships faced by many small genuine private limited companies which have been impacted by recent MCAs strike-off process.

An Early action on the subject will not only bring relief to many small private limited companies and also huge amount of revenue will be likely to be generated for MCAs.

R V Seckar

Practicing Company Secretary

9848915177

rvsekar2007@gmail.com