Companies Fresh Start Scheme 2020
Ministry of Corporate Affairs (MCA) considered the various representation from stakeholder to provide one time opportunity to make fresh start for company. Company Fresh Start Scheme 2020 provide various benefits to defaulting companies or inactive companies like waiving of penalty or additional fee and immunity from prosecution or proceeding subject to certain conditions. This scheme is applicable from 1st April 2020 to 30th September 2020.
Companies are required to make statutory compliance’s as per Companies Act, 2013 and companies act rules. Statutory Compliance includes the annual return, financial Statements, documents, returns and various other statements etc that are specified, within the specified time limit. Non filing or non compliance of the same resultant into penalties and fines.
Meaning for certain words used in the circular are as follows:
- Defaulting company means a company defined under the Companies Act, 2013, and non complied in filing of any of the documents, statement, returns, etc. including annual statutory documents (AOC-4 & MGT- 7) on the MCA-21 registry within specified time limit.
- Inactive Company means a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years.
CFSS 2020 benefit to Defaulting Companies
- Defaulting companies can now pay only the normal fees as prescribed by the Companies Rules, 2014 for all filings with the MCA 21 registry. In simple words defaulting companies are not required to pay delay filing fee or penalty on late filing.
- Immunity against prosecution and proceedings for imposing penalty only to the extend of such prosecution and proceedings arose due to the delay in filing of belated documents only. For example in case of fund raising through private placement required filing of return of allotment and it also required that such fund cannot be utilised unless return of allotment has been filed with MCA21 registry. In this case immunity under CFSS 2020 is available only in respect to delay filing fee of return of allotment but not on utilisation of money raised through private place before filing of return with MCA21 registry.
- In case there is an existing appeal filed by the company against any notice, complaint or order issued with regard to prosecution and proceedings related to the delay in statutory filing, the following steps are to be followed:-
– Before registering under the CFSS 2020, the appeal filed by the company should be withdrawn and
– Furnish a copy of such withdrawal along with the application as proof.
- Where the order has been passed by the adjudication authority and no appeal has been filed by the company:-
– The company is allowed 120 days to file an appeal before the Regional Director.
– During this period of 120 days, for the non – compliance of the order passed by the court with regard to the delay in filing of any documents for the same shall be condoned and no further action shall be initiated against the company.
- Application for issue of immunity for documents filed under the scheme. Application for immunity for late filed documents within 6 months after the date of closure of the CFSS 2020. No fees to be paid on this particular form.
- Immunity is not available in following three cases:-
– Appeal pending in court, or
– Any case of Management disputes pending before any court of law or tribunal, or
– In case any court has ordered conviction in any matter or An order imposing penalty has been passed and no appeal has been made against such orders.
- Extension granted to file DIR-3/DIR-3KYC: Extended timelines between 1st April 2020 and 30th September 2020 is provided by MCA for the directors’ whose DIN is deactivated to come forward and file DIR-3KYC/DIR-3 KYC-Web. The filing fee of Rs 5,000 will not apply.
CFSS 2020 benefit to Inactive Companies
- To get company declared as dormant company under Section 455 of the Companies Act, 2013 by way of filing of e-Form MSC – 1 with normal fee or we can say without making additional fee or penalty for delay filing.
- To Submit an application by way of filing of e-Form STK – 2 for striking off the name of the company from the Register of Companies.
- Extension granted to file e-Form ACTIVE: An extended timeline between 1st April 2020 and 30th September 2020 is provided by MCA for the ‘ACTIVE non-compliant’ companies to come forward and file e-Form ACTIVE. The filing fee of Rs 10,000 will not apply.
Non-Applicability of the CFSS 2020
- Where the action for final notice of striking off the name as per the Companies Act, 2013 has already been initiated by the Designated Authority.
- Where the company has already filed the Form STK – 2 along with the prescribed fees for the striking off of the name of the company from the Register of Companies.
- Where the companies have been amalgamated under the scheme of arrangement or compromise.
- Where the application for Dormant Status has been filed by way of Form MSC – 1 along with the prescribed fees.
- Vanishing companies.
- Companies that are marked for the Corporate Insolvency Resolution Process or Liquidation.
- Where the following are involved:-
– Increase in the Authorised Capital (Form SH – 7)
– Charge related documents (CHG – 1, CHG – 4, CHG – 8, CHG – 9)
How to get benefit of CFSS 2020
To know more about this scheme contact EAdvisors Company Secretory through email to email@example.com or send a text or whatsapp to +91 9910000833.