When is a Company Accorded Defaulter Status?

Companies can be accorded defaulter status if they fail to file their annual returns. This article will help you understand more on the subject and also brief you on how one can rectify the defaulter status.

Those companies are accorded as defaulter companies in India which do not file annual return or balance sheet for a few years consecutively.

The MCA site reflects the names of the defaulted directors and defaulted company secretaries.

In case, one tries to file a form in the name of the defaulter company; then the MCA message shows an error message. Here is a brief on the characteristics of a defaulter company.

Error Message of MCA website for the Defaulter Company

When a company continuously shows defaults in the filing of the annual returns of a company, then the uploading of the e-forms in MCA site is restricted for that particular company. There is an error message that is reflected which reads as follows:

“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 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.”

Along with the above, the MCA site publishes the names of the defaulter Directors, Company and Company Secretary in the MCA website so that everyone can see that.

So, it is wise to complete all the required compliances timely to avoid undesirable consequences.

Related: What is the Penalty for Late Filing of Annual Return of Company

Defaulting Company Director

The defaulting directors are ones who haven’t filed their balance sheet or the annual returns consequently. The defaulter directors are non-eligible to file any kind of form for any company on the MCA website.

Process of rectifying Defaulter status

If a defaulter director is keen in rectifying their defaulter status, then the concerned company has to file all the overdue annual returns and the balance sheets.

After the completion of the filing of the balance sheets and the annual returns and making them up to date; the defaulting status of that concerned company is removed, and the company is announced as active.

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