The VakilKaro Brief The Update ICSI has formally requested the MCA to allow liquidators to file statutory e-forms during liquidation, highlighting practical compliance issues faced by companies. The Action MCA may need to introduce clear rules or system changes allowing liquidators to handle filings seamlessly during liquidation.
Liquidation Doesn’t Mean Compliance Stops, But right now, the system kind of treats it that way.
Key Takeaways
- The VakilKaro Brief The Update ICSI has formally requested the MCA to allow liquidators to file statutory e-forms during liquidation, highlighting practical compliance issues faced by companies.
- The Action MCA may need to introduce clear rules or system changes allowing liquidators to handle filings seamlessly during liquidation.
- Further, Section 35 gives the liquidator broad authority to manage the affairs of the company during liquidation, including protecting assets and records.
- However, there is no clear system-level or legal clarity on whether the liquidator is authorized to file these forms on behalf of the company during liquidation.
- It has requested the MCA to introduce either regulatory clarity or system-level changes that explicitly allow liquidators to file statutory forms.
The VakilKaro Brief
The Update
ICSI has formally requested the MCA to allow liquidators to file statutory e-forms during liquidation, highlighting practical compliance issues faced by companies.
The Impact
Without clarity, companies are at risk non-compliance and outdated records, creating legal and administrative complications.
The Action
MCA may need to introduce clear rules or system changes allowing liquidators to handle filings seamlessly during liquidation.
Background of the Issue
When a company enters liquidation under the Insolvency and Bankruptcy Code, the focus shifts to winding up its affairs, selling assets, and settling claims. But here’s the problem. Even during liquidation, the company does not disappear legally. It still exists and remains subject to compliance requirements under the Companies Act, 2013. This creates a strange situation where compliance obligations continue, but the authority to fulfill them becomes unclear.
Legal Position Under IBC
Under Section 33 of the IBC, once liquidation begins, the powers of the board of directors and management come to an end. These powers are transferred to the liquidator. Further, Section 35 gives the liquidator broad authority to manage the affairs of the company during liquidation, including protecting assets and records. On paper, this looks sufficient. The liquidator is in control, so compliance should logically continue through them. But in practice, things are not that simple.
Where the Problem Arises
The Companies Act still requires companies to file various forms with the Registrar of Companies. These could relate to basic things like change of registered office, updates in management, or other statutory filings. However, there is no clear system-level or legal clarity on whether the liquidator is authorized to file these forms on behalf of the company during liquidation. Because of this ambiguity, filings often get delayed or are not done at all.
Practical Challenges Faced
ICSI highlighted several real-world issues. For example, if the company needs to shift its registered office due to lease expiry or cost reasons, the change cannot be properly recorded. Similarly, if directors resign, are disqualified, or pass away, the company cannot update its records easily. This leads to outdated information in government records. It also creates problems in communication, because without a valid registered office, the company may not receive official notices or correspondence properly. In short, the system expects compliance, but does not clearly enable it.
ICSI’s Recommendation
ICSI has taken a practical approach. It has requested the MCA to introduce either regulatory clarity or system-level changes that explicitly allow liquidators to file statutory forms. This includes forms like INC-22 and other necessary filings required to maintain proper records. The idea is simple. Since the liquidator is already legally responsible for managing the company, they should also be allowed to handle compliance filings without confusion.
Why This Change Matters?
This is not just a technical issue. It directly affects the efficiency of the liquidation process. If records are outdated or incomplete, it can delay proceedings, create disputes, and complicate coordination with creditors and authorities. Allowing proper filings would ensure transparency, better record-keeping, and smoother resolution of liquidation cases. It also aligns with the broader objective of ease of doing business, which requires clarity and predictability in regulatory processes.
Conclusion
ICSI’s request highlights a real gap between law and practice. While the IBC gives control to the liquidator, the compliance framework under the Companies Act does not fully align with this shift. Until this gap is addressed, companies in liquidation will continue to face unnecessary procedural hurdles. A simple clarification allowing liquidators to file forms could fix a major practical problem and make the liquidation process far more efficient.
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ICSI Urges MCA to Allow Filing of Forms During Liquidation+
The VakilKaro Brief The Update ICSI has formally requested the MCA to allow liquidators to file statutory e-forms during liquidation, highlighting practical compliance issues faced by companies. The Action MCA may need to introduce clear rules or system changes allowing liquidators to handle filings seamlessly during liquidation.