In order to facilitate companies to make a fresh start on a clean state, the Ministry of Corporate Affairs has decided to introduce Companies Fresh Start Scheme (CFSS-2020), vide its General Circular No. 12/2020 dated 30th March, 2020, condoning the delay in filing of certain documents.
Some key features of COMPANIES FRESH START SCHEME, 2020 (CFSS-2020) is discussed as below :
1. Period of CFSS-2020 Scheme:
The Scheme shall remain in force from April 1, 2020 till September 30, 2020.
2. Applicability of CFSS-2020 Scheme :
The Scheme shall be applicable only on “defaulting companies”.
“Defaulting company” means a company defined under the Companies Act, 2013, and which has made a default in filing of any of the documents, statement, returns, etc. including annual statutory documents on the MCA-21 registry .”
Some documents which can be filed are as follows:
> Form DIR 3 KYC/ DIR 3 KYC web
> INC-22A (Active Company Tagging Identities and Verification (ACTIVE))
> Annual Return -MGT-7
> Financial Statements – AOC-4
> INC-20A (Declaration for commencement of business)
> PAS-3 (Return of Allotment)
> ADT-1 (Appointment of Auditor)
> MGT-14 (Filing of Resolutions and agreements to the Registrar)
> DIR-12 (Particulars of appointment of Directors and the Key Managerial Personnel and the changes among them)
Exception:
> E-Form SH-7 only in case of increase in authorized share capital;
> E- Forms CHG-1, CHG-4, CHG-8 and CHG- 9 for creation and satisfaction of Charges
3. Benefits of CFSS-2020 Scheme:
I. The Scheme enables the defaulting companies to file all their pending forms that are required to be filed with the Registrar of Companies by paying normal fees as prescribed under the Companies (Registration Offices and Fee ) Rules, 2014. Thus this is a chance to become compliant, without paying any additional fee.
II. Granting of Immunity from the Prosecution;
III. Granting of Immunity from the Proceedings for imposing penalty;
IV. ROC shall withdrawal the all proceedings of adjudication of penalties u/s 454.
(Note: Immunity from Prosecution and Proceeding shall be provided only to the extent such prosecution or the proceedings for imposing penalty under the Companies Act pertain to any delay associated with the filings of belated documents. Any other consequential proceedings, including any proceedings involving interests of any shareholder or any other person qua the company or its directors or key managerial personnel would not be covered by such Immunity)
4. Cases excluded from the applicability of the CFSS-2020 Scheme:
The Scheme shall not apply in the following cases:
a. Companies against which action for final notice for striking off the name u/s 248 of the act have already been initiated by the Designated Authority.
b. Companies which have already filed an application for striking off;
c. Companies which have amalgamated;
d. Companies which has already filed application for obtaining Dormant Status u/s 455;
e. Vanishing companies;
f. E-Form SH-7 only in case of increase in authorized share capital; and E- Forms CHG-1, CHG-4, CHG-8 and CHG- 9 for creation and satisfaction of charges;
g. Company having any appeal which is pending before the Court of law.
h. Company having management disputes and pending before any Court of law or Tribunal.
i. Companies which are convicted by any Court in any matter and no appeal has been preferred against such orders of the Court before this Scheme has come into force
j. Companies upon which an order passed for imposing penalty by an adjudicating authority under the Act, and no appeal has been preferred against such orders of the Adjudicating Authority before this Scheme has come into force.
5. Scheme for inactive Companies under CFSS-2020 Scheme :
“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;
Such Companies while filing due documents under CFSS-2020 Scheme can simultaneously apply either:
I. to get themselves declared as Dormant Company under section 455 of the Companies Act, 2013 by filing e-form MSC-1 at a normal fee on said form; or
II. get strike off the name of the company by filing e-Form 5TK-2 by paying the fee payable on form STK-2.
6. Procedure under CFSS-2020 Scheme :
1. The defaulting company shall file the pending documents/returns/ forms including statutory Annual Filing documents in respective prescribed e-Forms by paying the normal statutory filing fee within the period of scheme
2. After making all default good and all filed document are taken on file or on record or approved by the Designated authority as the case may and after closure of the Scheme but not after the expiry of six months from the date of closure of the Scheme, the Defaulting Companies shall file the Form CFSS-2020 . There is no filing fees of Form CFSS-2020.
3. On the basis of declaration made in Form CFSS-2020 , the designated authority will issue Immunity Certificate.
7. Author’s Note:
In the year of 2014 and 2018, the Ministry of Corporate Affairs had already introduced such scheme viz. Company Law Settlement Scheme, 2014 and CODS Scheme 2018 respectively. This is a golden chance for defaulting companies to become compliant, by paying the normal statutory filing fee.
Disclaimer: This write up is not intended to be a professional advice therefore Author accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the contents of this write up.
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