New fast-track scheme to de-register cos

New fast-track scheme to de-register cos
ENS ECONOMIC BUREAU

NEW DELHI, SEPT 25: The government on Monday announced a fast track exit scheme for defaulting companies who wish to get de-registered from the Registrar of Companies (RoC) under Section 560 of the Companies Act.

"The new scheme, which will be operational from September 28 to November 26, would allow companies which are non-operational to de-register themselves within 37 days compared to the normal 237 days," Union minister for law, justice and company affairs Arun Jaitley told reporters here.

In effect the company law settlement scheme (CLS 2000) which started on June 1, 2000, gets extended till November 26 targeting those companies who are still defaulters and have not availed the scheme till now, he said.

The companies in this category will have to pay 25 per cent more than what the defaulters paid in the pre-August period. He said companies, which have not availed the company law settlement scheme 2000, would also be able to make use of the new fast track scheme.

The procedure, once the companies opt for the exit scheme, would take a total of 37 days of which seven days is for processing the application and 30 days for public to register their objections. As against this, the normal procedure takes 237 days for companies to get de-registered under the Act.

Explaining the scheme's objective, Jaitley said "firstly it provides a fast track exit route and voluntary winding up to companies as well as the government gets rid of the excess baggage of defunct companies which are registered but not doing any business. However, he added that those companies who do not comply and continue to default will be liable for penal action.

The CLS was successful beyond expectations with 1,02,096 companies contributing Rs 109 crore to the exchequer till August 31, 2000. The government netted Rs 112 crore as on September 23, 2000. Of the total 2,54,911 defaulting companies, the scheme was availed by 1,04,700, the minister said.

Jaitley also added that two more international accounting standards - one for segment reporting and another for related party disclosures has been incorporated in the Indian accounting standards. There are 33 accounting standards specified by the Securities Exchange Commission (SEC) of US of which 21 have been formally adopted and the remaining are being examined, he added. This has become important in an environment where Indian companies are being trading globally and are listed on stock exchanges abroad.