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Co amnesty scheme comes into force today

Our Bureau

NEW DELHI, May 31

THE Company Law Settlement Scheme, announced by the Minister of Law, Justice and Company Affairs, Mr. Ram Jethmalani, on May 16 in the Lok Sabha, will come into force on Thursday and will be valid up to August 31.

The amnesty scheme, which involves an applicant company or its officers, seeks to make a declaration to the relevant Registrars of Companies (RoCs) that within a stipulated time, the company should apply with necessary fees seeking relief from prosecutio n and compounding of the period of delay in filing annual balance-sheets, profit and loss accounts and other documents under the Companies Act.

During 1999 alone, out of the 5,16,100 companies in existence, 2,60,530 annual returns and 2,70,961 balance-sheets were filed, an official release said. The compliance level for these two documents was around 50 per cent. This means that more than five l akh prosecutions would have to be launched by the Government. Already 38,603 cases are pending in various courts for violation of the Company Law as on March 31, 1999.

The scheme is intended to permit defaulting companies to file all pending documents on payment of a lumpsum amount based on the period of delay so that the system of corporate governance begins on a clean slate and the investment climate emerges healthie r.

The Government has sought the cooperation of the three premier corporate institutes _ ICAI, ICSI, ICWAI _ in making the Company Law Settlement Scheme a success. It has also sought the cooperation of the captains of industry and all professional bodies to use their good offices to ensure that individual companies come forward and take full advantage of the one-time offer.

The Government has already declared that after the expiry of the three-month period on August 31, 2000, the Department of Company Affairs (DCA) will come down with a heavy hand on erring companies. Fines imposed, thereafter, will be increased to 10 times the current amount.

The scheme is intended to fetch about Rs. 100 crores, which will be used to modernise the works of DCA and streamline its operations, including all the 20 RoC offices.