any
private or
public
company that
has not filed for three years its annual
returns or audited
financial statements, and the board's report. The new Act, which came into effect
from April 1, disqualifies such directors for a period of five years, including
the company in which the default has occurred. Private companies were not
included in disqualification provisions under the Companies Act, 1956.
About 13.95 lakh
companies were registered with the Registrar of Companies (RoC) at the end of
March 2014. Of this, about 9.52 lakh companies remain active. Interestingly,
just 25 directors were disqualified under the Companies Act, 1956, till March
25, according to data with the ministry of corporate affairs (MCA). Of these,
16 were disqualified as their companies failed to file annual accounts and
returns, the MCA data showed.
About 25-30% of the
active registered companies would be in default if the new provisions are
applied, says K S Ravichandran, partner, KSR & Co Company Secretaries. Many
private and public companies have not filed returns, statements and reports for
several years.
Under the previous
law, such a draconian provision was applicable only to defaults in public
companies and only if both the returns as well as reports were not filed.
"Taking advantage of such a law, many companies had filed only annual
returns so that their directors would not suffer any disqualification on that
count," Ravichandran says.