Companies Fresh Start Scheme, 2020 (CFSS, 2020)

As Per the Provision of Companies Act, 2013, it is a Mandatory for all companies to do Annual Statutory Compliances By filing the Annual Return and Financial Statements. Apart From this Various other Statements, documents, returns etc. are also required to be filed within prescribed time Limits. Filing Fees for filing such statements, documents, returns etc. are governed by section 403 of Companies Act 2013, read with Companies (Registration Offices and Fees) Rules 2014.

The Ministry was receiving Representations from Various Stakeholders, Requesting for Grant of One Time Opportunity, so that they can complete their Pending Compliances by filing necessary Documents Without paying Additional fees charged due to Delay in completing the compliances from respective due dates.

Vide circular No. 12/2020 dated 30th March, 2020 , The ministry has decided to provides an Opportunity to file There Pending compliances Without and Additional Fees. So that the companies registered in India can make a fresh start on a clean slate.

1. Major Benefits of Companies Fresh Start Scheme, 2020

> Only Normal Fees is to be paid for filing of belated documents during the tenure of CFSS, 2020.

> Immunity is granted from initiating prosecution or proceedings for imposing of penalty in such on Account of Such Delay.

> An opportunity is also Given to Inactive companies to declare their companies as “Dormant Company” U/s 455 of the act by filing a simple application at a normal fee. It will enable the inactive companies to remain on register of Companies with least compliance requirement.

2. Applicability of CFSS-2020

> The scheme will be applicable from 1st April 2020 to 30th September 2020.

> Any defaulting Company can take benefit of this Scheme.

> Defaulting Company means a company defined under companies act 2013 and which has made default in filing of any of the documents, statements, returns etc. including annual statutory documents with MCA-21

3. Manner of Payment of Normal Fees & Seeking immunity from Proceedings and prosecution under CFSS, 2020

> Only normal fee is to be paid by the Defaulting Company  at the time of filing of belated documents and no additional fee shall be payable.

> When Filing is completed then immunity will be provide to such company that no prosecution or proceedings for imposing penalty will be initiated against such company associated  to such delay filing of belated documents.

> It is important to clarify that immunity will be granted only with respect to such delay filing of belated documents  and not with respect to any other consequential proceedings including any proceedings involving interest of any stakeholders or any other person qua the company or its directors or Key Managerial person would not be covered by such  immunity.

4.  Withdraw of appeal before filing application for immunity Certificate under CFSS 2020.

> If any appeal has been filed by the defaulting company or by its officer in default against any notice issued or complaint filed or an order passed by a court or adjudicating authority against the defaulting company for violation of provisions of Companies Act,1956, and/ or Companies Act  2013.

> The Applicant before filing an application for grant of immunity certificate, withdraw the appeal and furnish proof of such withdrawal along with application.

5. Cases where appeal could not be filed but order of adjudicating authority was passed

> In all those cases where due to delay associated in filing, penalties were Imposed by an Adjudicating officer under the act and no appeal has been filed by the company or its officer against such order before regional director u/s 454(6) of Companies Act, 2013 on date of commencement of scheme.

> In cases, where last date of filing of appeal falls between 1st March, 2020 to 31st May, 2020 (both days included) then an additional period of 120 days will be allowed with effect from such last date to all the companies or their officers to furnish

> During such additional period, prosecutions for non-compliance of order of adjudicating authority shall not be initiated as far as it is related to delay associated in  filing of any document, statement or return.

6. Application for issuance of immunity under

> The application for seeking immunity may be made electronically in the form CFSS 2020. After closure of such scheme, and after documents are taken on file, or on records or approved by designated authority as the case may be.

> Such application can’t be filed after expiry of 6 months from date of closure of scheme and. No fee shall be charged for CFSS-2020 form.

> Provided also that no immunity shall be granted in following cases:

a. Where matter of any appeal is pending before the court of law and in case of management dispute of the company, pending before any court of law or tribunal; or

b. If any court has ordered conviction in any matter; or

c. An order imposing penalty has been passed by adjudicating authority but no appeal has been preferred against such order of Adjudicating authority, before this scheme came into force

7. Cases Where CFSS (2020) Will Not Apply.

  • Scheme shall not apply in the following cases

a. To companies against which action for final notice for striking off name u/s 248 of the Act  has already been initiated by designated authority; or

b. Where company has already filed application for Striking off the name; or

c. To Companies which have amalgamated under the scheme of arrangement or compromise; or

d. Where application have already been filed for obtaining Dormant  status under section 455 of companies act, before this Scheme ; or

e. To Vanishing Companies; or

f. Where any increase in authorized share capital is involved (Form SH-7) and also on charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9)

8. Effect of Immunity

  • After granting immunity, designated authority concerned  shall withdraw the prosecution pending if any before courts and proceedings of adjudication of penalties under section 454 of the act.
  • In respect of defaults against which immunity has been so  granted shall be deemed to be have been completed without any further action on the  part of designated authority.

9. CFSS, (2020) Scheme for Inactive Companies.

  • Defaulting Inactive companies while filing there Due Documents under CFSS, 2020 and can simultaneously, either:

a. Apply to get themselves declared as Dormant Company by filing e- form MSC-1 at a normal fee or

b. Apply for striking off the name of the company by filing e- form STK-2 by paying the fee payable.

10. Defaulting Companies if not opt this Scheme.

  • The Designated Authority will take Necessary actions under the act against the companies who have not availed this scheme and are in default in filing these documents.

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Qualification: Student - CA/CS/CMA
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March 2021