Defaulter Companies Status

Overview :Those companies are marked as defaulter companies that have not filed their balance sheet or annual returns for prolonged periods. Due to continuous defaults in balance sheets or annual compliance filing, such companies get error messages on the MCA portal while trying to upload e-forms for essential compliances. Delve into ‘Defaulter Company Error Message’ and how to rectify defaulter status with this blog.

The companies that have not filed their balance sheet or annual return consecutively for a few years in India are known as defaulter companies. MCA website regularly publishes the list of defaulter companies, Defaulter Company Secretaries list and the list of Defaulter Directors in India. If these companies try to file forms on the MCA website then the website displays an error message prohibiting the filing of forms by the defaulter company or any related company.

Defaulter Company Error Message

As discussed above, the continuous default in filing of balance sheet or annual return of a company can lead to an error message on the MCA website while trying to upload e-forms pertaining to the defaulter company or any other related company having common Directors. The following error message is displayed:

“The Director signing the eform is also a director of a defaulting company which has not filed due balance sheet and/or annual return. Hence the director is not allowed to file this form. Such a defaulting company is required to file all the balance sheets, annual returns first, and then only the director will be allowed to sign the eform for filing.”

Additionally the MCA website also publishes the names of the company, directors and company secretary as defaulters. Hence, the best practice is to complete the required compliances within the stipulated time.

Defaulting Director

The directors of a company that has not filed its annual returns or balance sheet are defaulter directors and consequently they are not allowed to file any form for any company with the MCA.

Rectifying Defaulter Status

In order to become an active company again and remove the defaulter status of the company, the company will be required to file all the overdue balance sheets and annual returns.

Conclusion

Indian Companies failing to file their balance sheet and annual compliances continuously for the last few years are labeled as defaulter companies. With this blog, now you understand how to remove defaulter company/director status to be marked as an active company and director in India. Therefore, it's often advisable to stay compliant to avoid such penalties.