Statement of Affairs:

Where winding- up order has been made or the Official Liquidator has been appointed as provisional liquidator by the Court, a statement as regards the affairs of the company in the prescribed form shall be delivered to the Official Liquidator. Such a statement shall have to be verified by an affidavit and shall contain particulars of

(i) the assets of the company stating separately the cash balance in hand and at the bank, negotiable securities;

(ii) its debts and liabilities;

(iii) the names, residence and occupations of the creditors (secured debts being segregated from those considered unsecured) and in the case of secured debts the particulars of the securities given whether by the company or an officer there of, their value and the dates on which they were given;

(iv) the debts due to the company and the names, and residences, and occupations of the persons from whom they are due and the amount likely to be realized on account thereofand

(v) such further or other information as may be prescribed or as the Official Liquidator may required [Section 454 (1)].

The aforementioned statement is required to be made and verified by one or more of the directors and by the person who, at the date of winding-up order or the appointment of the provisional liquidator, as the case may be, the manager, secretary or other chief officer of the company. Also, it may be made by the following persons if the Official Liquidator so requires, subject to the directions of the Court;

(i) who are or have been officers of the company;

(ii) who have participated in the formation of the company at any time within one year before the relevant date;

(iii) who are in the employment of the company or have been so within the said year and are in the opinion of the Official Liquidator, capable of giving the information required;

(iv) who are or have been within the said year, officers of, or in the employment of a company which is, or within the said year was, an officer of the company to which the statement relates [Section 454(2)].

The above mentioned statement is required to be submitted within 21 days of the winding – up order of the appointment of the provisional liquidator, as the case may be, or within such extended time, not exceeding three months, as may be fixed by the Official Liquidator or the Court for special reasons. The persons, preparing the statement and affidavit shall be allowed such costs and expenses incurred in connection therewith as the Official Liquidator may deem reasonable, subject to an appeal to the Court [Section 454 (3) and (4)].

Non-compliance with any of the requirements of Section 454, without a reasonable excuse, shall render the defaulter liable to be punished with imprisonment to the extent of two years or with a fine extending upto ` 1000 per day during which the default continues or with both [Section 454 (5)].

The Court concerned may take cognizance of an offence, mentioned above, upon receiving a complaint of facts constituting such an offence and try the offence itself in accordance with the procedure laid down in the Criminal Procedure Code, 1898 for the trial of summons cases by Magistrates [Section 454 (5A)].

The Statement of affairs must be open to inspection by any one stating himself in writing to be a creditor or contributory. Also he is entitled to a copy thereof or as extract there from. For both inspection and copy or extract, the prescribed fee is to be paid [Section 454 (6)].

(Note: The expression “the relevant date‟ in a case where a provisional liquidator is appointed, is the date of his appointment and in a case where no such appointment is made, the date of the winding-up)

Section 511A extends the provisions of Section 454 to every voluntary winding-up in the same way as they are applicable to a winding-up by the Court. For construing these provisions, references in the Section to (a) the Court shall be omitted; (b) the Official Liquidator or the provisional liquidator shall be construed as references to the liquidator; (c) the „relevant date‟ shall be construed as references to the date of commencement of the winding-up.

The afore-mentioned provisions of Section 454 are intended to enable the liquidator to have information as regards the affairs of a company, so that the liquidator may know something about the property and the assets of the company, the names, addresses and occupations of the creditors, the debts due to the company and the persons from whom they are due. The statement of affairs of the company is intended to afford facility to the liquidator in his management of the company‟s affairs in discharging the company’s obligations, realising its assets, and distributing surplus assets (if any) among its members.

The Ministry of Corporate Affairs has observed that companies are not filing Statement of Affairs (SOA) in time in terms of section 454 of the Companies Act, 1956. This delays the process of liquidation considerably. It has, therefore, been decided vide General Circular No. 56/2011 dated 28th July, 2011 to give the companies and the directors of such companies where winding up orders have been passed by the Hon‟ble Court, one months notice to file SOA before action for blocking their DIN is initiated by the Ministry.

Official Liquidators shall furnish list of all such directors who have failed to furnish SOA (giving their details) to the Ministry on 3rd working day of every month starting from 5th September, 2011 by email to respective RD, ROC, e- Governance Cell and Insolvency Section of this Ministry.

MCA 21 cell in the Ministry would block DIN of all such directors on getting information after approval of the competent authority concerned and intimate the same to all.