ection 403 of the Companies Act, 2013 provides that any document required to be submitted, filed or registered under the Act shall be submitted, filed, registered or recorded within the time specified in the relevant provision on payment of such fee as prescribed under the Companies (Registration Offices and Fees) Rules, 2014. While the time within which any document shall be filed or submitted is governed by the respective section, the fees to be filed along with the document is governed by Section 403.
Apart from the normal fees payable along with any documents at the time of its submission with relevant authorities, Section 403 also provides the additional fees that is payable in case any particular document is filed beyond the prescribed period of time. Currently the both the normal fees i.e. payable along with any documents is prescribed based on the capital of the Company and additional fees is based on the number of the days by which the form is delayed at the time of filing. Even in case of additional fees, there is a standard fee beyond a particular period of delay, no matter how long that period be.
The Companies (Amendment) Act, 2017 seeks to revitalize Section 403 by revamping the entire provision with a clear objective of ensuring timely compliance and to deter shell companies and habitual defaulter from the surviving the tide of time. The amendments make the section more meaningful and impactful. Some of the amendments proposed are outlined below:
Drastic increase in Additional Fees
The additional fees structure in case of forms related to Financial statement and Annual Return is intended to be brought on the lines similar to that of LLP. The additional fees in case of filing of Financial Statement and Annual Return beyond the prescribed statutory time shall be not be less than Rs. 100 /- (Rupees One Hundred) per day as opposed to the current slab based structure. The Government has reserved its right to provide a higher per day additional fees and it can also provide different fee structure for different classes of companies.
This is one of the major changes that is proposed in the Companies Act, 2013. The objective of this change is majorly to deter shell companies from have a long existence without undertaking the required annual filling every year. The fees of Rs. 100 /- (Rupees One Hundred) per day will hit such kind of companies very hard as it will bring a huge difference in their payment liability.
For example, in case of delay of 30 days, the additional fees prior to proposed amendments was Rs 400 (normal fee is assumed to be Rs 200) but after the amendment , it will be Rs 3000. So, the additional fees will increase to 15 times of the normal fees.
With respect to Forms other than those related Financial statement and Annual Return, the prescribed additional time of 270 days for filing any documents has been done away with and further even in respect of additional fees payable on such forms, the Government may different fees for different classes of the Companies. Based on this amendment, it is proposed that the Schedule of Fees will also be amended, to provide a more stringent regime of additional fees and different structure will be provided different classes of the companies.
The icing on the cake is the fact that where there is default on two or more occasions in submitting, or filing any document, the same can be submitted or filed on payment of a higher additional fee, which will be prescribed but shall not be lesser than twice the additional fee payable in normal circumstance. So, in case you done delayed filing for any form, then in case of delayed filing of the same form, thereafter, you will be charged a higher additional fee i.e. not less than twice the amount of normal additional fees.
Default starts as and when statutory timelines are missed
Currently failure to submit, file, register or record any document, fact or information before the expiry of the period specified in the relevant section, is not treated as a default liable for the penalty or punishment provided under this Act for such failure or default, in case the document or fact or information is filed within the additional time period prescribed under Sub-section (1) of Section 403 on the payment of additional fees. This provision acts as major face saver for companies, who fails to file any document within the prescribed period provided in the relevant section, since the Registrar of Companies can’t take cognizance of the said default until the expiry of additional period of two hundred seventy days.
The aforesaid picture is about to change on coming into of the Companies (Amendment) Act, 2017. As per the proposed amendment, the default will arise as soon as the prescribed time period in the relevant section is missed even if the document, fact or information is filed on payment of additional fees. The default will trigger as soon as the statutory deadlines are missed.
For example, if a return of allotment is not filed within 30 days of allotment, then default of the relevant provisions of the Act under which the said return is required to be filed will trigger immediately on completion of 30 days and not the expiry of the additional 270 days.
The changes proposed in Section 403 will definitely promote self-compliance in order to avoid hefty additional fees. Further it will also test the ability of shell companies to survive for a longer period without undertaking the necessary filings of Financial Statement and Annual Return, every year.