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Thursday, Jan 20, 2005

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Govt plans awareness ads on simplified exit options for cos

Richa Mishra

New Delhi , Jan. 19

THE Government is mulling the idea of `effective advertisement' for promoting its soon-to-be-announced simplified exit-scheme for companies.

Learning from the past experiences, the Ministry of Company Affairs this time around wants to create public awareness about the scheme. It is a user-friendly procedure for striking off defunct companies names from the register of Registrar of Companies offices.

"One of the reasons cited for the failure of the earlier exit scheme, introduced in 2003, has been lack of awareness about the scheme. This time we are considering advertisement for the scheme. It is also being suggested that the names of those companies which are availing the scheme be published," official sources said.

The proposed new exit option for companies is going to be substantially easier. The Ministry is proposing to circulate a draft of the same to its field officers who are going to implement it. This will ensure that there is no hiccup on the implementation front, sources told Business Line.

Commenting on the reasons for delay in announcing the scheme, sources said, "The Ministry wants no grey areas left once the scheme is implemented."

Answers are being sought from the officers concerned on whether companies against whom prosecutions has already been launched for non-filing of returns can avail themselves of the scheme and whether the prosecutions would be withdrawn, sources stated.

The proposed new scheme would allow companies to exit within 60 days. It has also been proposed to do away with the mandatory requirement of filing audited accounts to the registrar of companies for exit. In fact, a mere statement of accounts will do, sources said.

Under the proposed scheme the companies will not have to file an affidavit before a magistrate for the exit. Instead, they can file the affidavit with a notary, to forgo their incorporated status.

Smaller companies along with companies that have not commenced business are likely to be exempted from procedural formalities.

The Ministry has sought views of the professional institutes such as Institute of Company Secretaries of India (ICSI) and the various chambers of commerce.

ICSI in its suggestions for cases where directors of a defunct company is not resident of India, has said that, "it may be provided that affidavits signed by them duly attested by competent authority as provided under the Companies (Central Government's) General Rules may be accepted for the purpose."

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