Swacchh Shelf Companies Abhayaan
There
is no definition given for Shell or Shelf company under Companies Act 2013 and
also no other law/ legislature gives its meaning. As the name suggests, it
means readymade companies with no/ minimal assets and no business operations
done since registration. While, practically, there was a motive behind its
existence i.e. intentional Arrangements to get tax incentives or exemptions but
with time people started using them for illegal fraud intentions like Money
Laundering, Insider Trading, etc. In
order to reduce the fraud through these shelf companies, there was enactment of
Companies Act 2013 for better corporate practices, transparency and Corporate
Compliances. Related Sections which were applicable to shelf companies were Sec
92 and Sec 164 of Companies Act 2013.
What is Sec 92 of
Companies Act 2013?
92. (1) Every company
shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing
the particulars as they stood on the close of the financial year regarding—
(a) its registered office, principal business activities,
particulars of its holding, subsidiary and associate companies;
(b) its shares, debentures and other securities and shareholding
pattern;
(c) its indebtedness;
(d) its members and debenture-holders along with changes therein
since the close of the previous financial year;
(e) its promoters, directors, key managerial personnel along with
changes therein since the close of the previous financial year;
(f) meetings of members or a class thereof, Board and its various
committees along with attendance details;
3[(g) remuneration of directors and key managerial personnel;]
(h) penalty or punishment imposed on the company, its directors
or officers and details of compounding of offences and appeals made against
such penalty or punishment;
(i) matters relating to certification of compliances, disclosures
as may be prescribed;
(j) details, as may be prescribed, in respect of shares held by
or on behalf of the Foreign Institutional Investors indicating their names,
addresses, countries of incorporation, registration and percentage of
shareholding held by them; and
(k) such other matters as may be prescribed,
and signed by a director and the
company secretary, or where there is no company secretary, by a company
secretary in practice:
4[Provided that in relation to One Person Company and small company,
the annual return shall be signed by the company secretary, or where there is
no company secretary, by the director of the company.]
(2) The annual return, filed by a
listed company or, by a company having such paid-up capital and turnover as may be prescribed, shall be
certified by a company secretary in practice in the prescribed form, stating
that the annual return discloses the facts correctly and adequately and that
the company has complied with all the provisions of this Act.
1&2[(3) An extract of
the annual return in such form as may be prescribed shall form
part of the Board's report.]
(4) Every company shall file with the
Registrar a copy of the annual return, within sixty days from the date on which the annual general meeting
is held or where no annual general meeting is held in any year within sixty days from the date on
which the annual general meeting should have been held together with the
statement specifying the reasons for not holding the annual general meeting, with
such fees or additional fees as may be prescribed, within the time
as specified, under section 403.
(5) If a company fails to file its
annual return under sub-section (4), before the expiry of the period specified
under section 403 with
additional fee, the company shall be punishable with fine which shall not be
less than fifty thousand rupees but which may extend to five lakhs rupees and
every officer of the company who is in default shall be punishable with
imprisonment for a term which may extend to six months or with fine which shall
not be less than fifty thousand rupees but which may extend to five lakh
rupees, or with both.
(6) If a company secretary in
practice certifies the annual return otherwise than in conformity with the
requirements of this section or the rules made thereunder, he shall be punishable with
fine which shall not be less than fifty thousand rupees but which may extend to five lakh
rupees.
Exceptions/ Modifications/
Adaptations
1. In case of Specified IFSC Public
Company - Sub-section (3) of section 92 shall not
apply. - Notification Date 4th
January, 2017
2. In case of Specified IFSC Private
Company - Sub-section (3) of section 92 shall not
apply. - Notification Date 4th
January, 2017.
3. In case of Private Company -
Clause(g) of Sub-Section (1) of Section 92 shall apply to private
companies namely:-
4. In case of
Private Company - proviso to sub-section (1) of Section 92 for the
proviso the following proviso shall be substituted, nametv:-
"Provided
that in relation to One Person Company, small company and private company (if
such private company is a start-up), the annual return shall be signed by the company
secretary, or where there is no company secretary, by the
What is Sec 164 of
Companies Act 2013?
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Disqualifications for Appointment of Director
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Notified
Date of Section: 01/04/2014
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164. (1) A person
shall not be eligible for appointment as a director of a company, if —
(a) he is of unsound mind and stands so declared by a competent court; (b) he is an undischarged insolvent; (c) he has applied to be adjudicated as an insolvent and his application is pending; (d) he has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence:
Provided
that if a person has been convicted of any offence and sentenced in respect
thereof to imprisonment for a period of seven years or more, he shall not be
eligible to be appointed as a director in any company;
(e)
an order disqualifying him for appointment as a director has been passed by a
court or Tribunal and the order is in force;
(f) he has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call; (g) he has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years; or (h) he has not complied with sub-section (3) of section 152.
1[(2)
No person who is or has been a director of a company which—
(a) has not filed financial statements or annual returns for any continuous period of three financial years; or (b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.]
(3)
A private company may by its articles provide for any disqualifications for
appointment as a director in addition to those specified in sub-sections (1)
and (2):
Provided
that the disqualifications referred to in clauses (d), (e) and (g) of
sub-section (1) shall not take effect—
(i) for thirty days from the date of conviction or order of disqualification; (ii) where an appeal or petition is preferred within thirty days as aforesaid against the conviction resulting in sentence or order, until expiry of seven days from the date on which such appeal or petition is disposed off; or (iii) where any further appeal or petition is preferred against order or sentence within seven days, until such further appeal or petition is disposed off. |
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So, Sec 92 requires all companies including small Private
Limited, closely held companies to file Annual Returns. Further Sec 164 states
that Directors of that shell companies if fails to file Financial Statements or
Annual Returns of the company for continuous 3 years shall be disqualified to
be Directors for a period of Five years.
Read more on Disqualification of Directors at the link
below;
So,
basically new Companies Act 2013 have come up with strict law wherein false
motives like fraud money laundering etc not allowed. Old Companies Act 1956
used to have no provision for Disqualification of Directors for Private Limited
Companies.
