AIBE: Companies Act
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This article is written by Tushar Verma, Geeta Institute of Law, currently enrolled in the Ace your Internship course at Lawsikho


Condonation of Delay Scheme 2018 came into existence on 29th December 2018 so as to provide one final opportunity to the directors of the defaulting companies who due to the reason of non-filing of financial statements and annual returns were held liable and disqualified. The default with the registrar of the companies continues for three years.

What would be considered as default?

The default is considered to happen when the directors for three years consecutively fail to file financial statements or annual returns with the registrar (MCA21). They shall no longer be able to access the online registry and a list of such directors will be published on the website of the ministry. As the result of above actions, directors filed a writ with the High Court to get stay on this decision.

What are the Documents/Compliances mandatory for the company to file?

In relation to the registrar

  • The holding of the board meeting is necessary for the companies within 30 days of the incorporation. Minimum 2 meetings in each half year.
  • E-form MGT-7 filing of an annual return within 60 days of holding of the AGM for the period of 1st April to 31st March.
  • Financial statement of the year in E-form AOC-4 showing balance sheet and profit and loss account of the company.
  • Every financial year director has to disclose his interest in the entity by filing the form MBP-1
  • Every year director has to file in each financial year with the company disclosure of non-disqualification.

    Non- Registrar Compliance

  • Filing periodic returns.
  • Filing of income tax return (taxed with 30% and education cess extra)
  • Regulatory assessment under various laws like environmental laws, labour laws, money laundering act etc.
  • Quarterly TDS returns.

Condonation of Delay Scheme 2018

Legal framework prior to the scheme

Earlier before this scheme, Ministry of company affairs had launched a scheme called company law settlement scheme, 2014. The purpose of this scheme was to provide similar results. The scheme was applicable to defaulting companies enabling them to file belated documents. Fees and increased quantum of punishment were introduced in that scheme. In the new scheme, the government has launched a more strict action to identify approx. 3,00,000 directors associated with the defaulting companies.                      

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Disqualification of directors

Disqualified and aggrieved directors made certain representations to Ministry of Corporate Affairs and also approached National Company Law Tribunal and High Courts for a stay. On listening to all representations regarding the stay, the central government has introduced the Condonation of Delay scheme 2018 serving as the last opportunity to the directors of the company to make their mistakes good and regularising the compliance before 31 March 2018.

The above deadline was then extended to 30th May 2018

Background of the Scheme

  • Legally, companies registered under companies act 2013 are required to file annual returns and financial statement with the Ministry of corporate affairs on portal neglecting to which is an offence.
  • Whereas, if we talk about Rule 14 of the Companies (appointment and qualification) rules, 2014 disqualification must be informed by all the directors of the company.
  • About 3,09,614 companies were identified in September 2017 who were in default of not filing of annual returns and financial statements on the ministry online portal. As far as the provisions of section 162(2) read with 167(1)(a) is concerned these directors were barred from using the ministry website and their names were published on the website too.
  • So as to provide these directors with another and final opportunity central government exercising its powers under section 403, 459, 460 of the companies act, 2013 decided to introduce “the Condonation of Delay scheme 2018”.  

Relevant points in regards to Condonation of Delay Scheme 2018

The applicability of the scheme is to companies which are in default (other than those companies whose names had been struck off from the registrar of the companies under Section 248(5) of the Companies Act 2013. If you are the company whose name is still not struck down from the registrar of the companies then:

  • The DIN numbers of the directors which were disabled previously will be temporarily enabled so that directors could file the documents.
  • The company in default must pay out statutory fees prescribed as per the Section 403 of the Companies Act 2013 read with Companies (registration offices and fees) Rules, 2014 for filling these overdue documents.
  • Application fees for filing the E-form CODS shall be Rs. 30,000/- (nominal for the defaulting directors)
  • Those directors whose name is not found by the MCA21 registry records but are involved in the default, they shall not be able to reactivate their DIN numbers and would not be able to appoint as directors of any company. (A Nice step taken by the government)
  • In case the defaulting companies whose name have been struck down under the provision of Section 248 and 252 of the companies act, 2013.

Filing of the annual returns as provided under Condonation of Delay Scheme 2018

As provided by the central government from 1st January 2018 to 30th April 2018 the defaulting companies can file following documents which include annual returns and the appointment of the auditor:

  • For the intimation of the appointment of the auditor Form, 23B/ADT-1 shall be filled by the company.
  • Companies having share capital must file form 20B/MGT-7 for annual returns disclosure.
  • If the company is not having share capital than the filing of annual accounts can be done in Form- 21A/MGT-7.
  • For submission of compliance certificate to the registrar fill form- 66.
  • For filing of the balance sheet and profit and loss account form 23ACA, 23AC, 23ACA-XBRL, AOC-4 (Non-XBRL)AOC-4 (CFS) and AOC-4( in- XBRL).

What should directors keep in mind in connection with the Condonation of delay scheme?

Directors must keep in mind following points so as to comply with the above scheme which are as follows:

  1. Disqualified directors shall have the opportunity to revive or reactivate their DIN number for a specific period and they have to fill all the necessary overdue forms due to which their default arises. If the director is unable to make good his default than he shall be disqualified for the period of 5 years.
  2. The DIN numbers of the directors associated with the defaulting companies if found still overdue and not compliant with the scheme shall remain deactivated for the rest of the period scheme continues.
  3. If the names of the defaulting companies are removed from the register of the company under section 248 of the act and who have filed for the revival of the company under section 252 of the act up to the date of the scheme director’s DIN shall be re-activated only on the orders of NCLT subject to company have filed all the overdue documents.


Directors are advised to ensure timely compliance with filing documents regarding their company so as to reduce these kinds of hassles. The compliance procedure is not too costly but the penalties for ignoring will cause you huge penalties and even lead to imprisonment. So as to dodge the cost of compliance, companies are reluctant to hire a CA or accountant. This may not prove to be a wise decision for these companies. Directors are the managers of the company and taking this thing into consideration government can lift the corporate veil and can punish the man behind which can be seen in the Condonation of the delay scheme 2018. This is a praisable step by the Ministry in regulating the procedures of the companies.


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