In order to support and enable companies to focus on taking necessary measures to address the COVID-19 threat, the Ministry of Corporate Affairs (MCA) has rolled out the Companies Fresh Start Scheme (Scheme) vide General Circular No. 12/2020 dated 30th March 2020 to provide one-time opportunity to all companies to complete their pending compliances by filing necessary documents in the MCA-21 registry including annual filings.
In this post, we would like to answer the common queries with regard to the scheme.
1. Which companies can avail the benefit under CFSS Scheme?
This benefit under the scheme can be availed by any defaulting company in respect of a default associated with delay in filing of documents in the MCA-21 registry.
2. What is a Defaulting Company?
It means a company incorporated under Companies Act, 2013 and which has made default in filing of any of the documents, statement, returns, etc. including annual statutory documents on the MCA-21 registry.
3. What is the tenure of the Scheme?
The scheme can be availed between 1st April, 2020 to 30th September, 2020.
4. What benefits are available under the Scheme?
(a) Only normal fees shall be required to be paid for filing of pending documents and no Additional fees shall be chargeable; and
(b) Grant of Immunity from launch of prosecution or proceedings for imposing penalty on account of delay associated with certain filings.
5. Which forms are covered under the scheme?
The list of forms covered under the scheme is available on the MCA website.
6. Which forms are not covered under the Scheme?
The following forms are not covered:
(a) Filing of form SH-7 for increase of Authorised Capital in form SH-7;
(b) Filing of form CHG-1 for making application for Registration of Creation, Modification of Charge (other than those related to debentures);
(c) Filing of form CHG-4 for filing particulars for Satisfaction of Charge;
(d) Filing of form CHG-8 for making application to Central Government for extension of time for filing particulars of Registration of Creation/Modification/ Satisfaction of Charge OR for rectification of omission or misstatement of any particular in respect of creation/ modification/ satisfaction of Charge; and
(e) Filing of form CHG-8 for making application for registration of creation or modification of charge for debentures or rectification of particulars filed in respect of creation or modification of charge for debentures
7. Which companies are not eligible to avail the Scheme?
(a) Companies against which action for final notice of striking off the name under section 248 has been already initiated;
(b) Companies who have already filed the application to the Registrar for strike off of their name from the Register of Companies;
(c) Companies which have amalgamated under the scheme of compromise and arrangements;
(d) Companies who has already filed the application for obtaining the status of Dormant Company; and
(e) Vanishing Companies
8. What is the manner of making application for issue of immunity certificate?
Post- filing of all the documents under the CFSS, 2020, every company shall make an application in Form CFSS-2020 with the concerned Registrar for issue of immunity certificate along with all the necessary attachments.
Based on the application, an immunity certificate in respect of the documents filed under the scheme shall be issued by the concerned Registrar.
The application for grant of immunity shall be filed within 6 months of the closure of the scheme.
9. What is the Pre- condition that need to complied with before making the application for issue of immunity certificate?
The defaulting company shall withdraw any appeal filed against any notice issued or complaint filed or order issued by a court or by an adjudicating authority under the Act or before a competent court or authority, before the commencement of the scheme for violation under the provisions of the Act in respect of belated documents covered by the scheme.
10. In which cases the immunity will not be granted under the scheme?
(a) Matter of any appeal pending before the court of law and in case of management disputes of the company pending before any court of law or tribunal;
(b) Any court has ordered conviction in any matter or an order imposing penalty has been passed by an adjudicating authority under the Act and no appeal has been preferred against such order, before the scheme has come into force; and
(c) Any proceedings consequential to filing of belated documents including any proceeding involving interest of any shareholders or any other person qua the company or its directors or key managerial person
11. What is the effect of grant of immunity under the scheme?
After grant of immunity, the concerned registrar shall withdraw the prosecution(s) pending, if any, before the concerned courts(s) and the 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 have been completed.
12.What benefits are available for Inactive Companies opting for CFSS, 2020?
Apart from availing the benefit of filing of belated documents under CFSS, 2020, the inactive companies can simultaneously:
(a) apply for getting declared as dormant company by filing of form MSC-1; or
(b) apply for strike off of the name of the company by filing of form STK-2.
13. What relaxations are allowed for companies on whom penalties have already been imposed by the adjudicating officer for non-filing of belated returns immediately before coming into force of this scheme?
The following relaxations are allowed:
(a) Where the last date for filing the appeal against the order of the adjudicating authority under section 454(6) falls between the 1st March, 2020 to 31st March, 2020 (both days included), a period of 120 additional days shall be allowed with the effect from such last date to all the companies and their officers for the filing of appeal before the concerned Regional Director; and
(b) During such above-mentioned additional period, prosecution under Section 454(8) for non-compliance of the order of the adjudicating authority, in so far as it relates to delay associated with filing of any document, statement or return, etc. in the MCA-21 registry shall not be initiated against such companies and officers.