As we all are aware that Ministry of Corporate Affairs (MCA) in strict action mode since last 2 years and have strike off large no of Companies on its own motion and disqualified their directors for being a director for five years, just because of non-filing of due Statutory Annual Returns for continuously last 3 financial years. Consequently, the large no of Companies have sound business track as well as law compliant background are also stuck just because of same directorship of any one disqualified director in those companies and due to which their compliances are also on stake.
As a result of this, the Cost of Compliances of those Company is much costlier than normal company just because of heavy additional fees as applicable under Section 403 of the Companies Act, 2013 therefore the need has been arise to come up with the detailed scheme by giving an additional chance to make their default good, accordingly, the various stakeholder has requested to the Ministry for grant of one time opportunity to file the all requisite belated documents/returns etc.
In order to consider the request and representation of various stake holder, the Government has come up with a new scheme called as COMPANIES FRESH START SCHEME, 2020 (CFSS-2020) for initial period of 6 months i.e. 01.04.2020 till 30.09.2020 vide its General Circular No.12/2020 on the 30th day of March, 2020. This is opportunity to all defaulted companies to file the all belated documents as fresh started documents without any additional fees. This is the third time, when Government introduce such kind of scheme/opportunity on the request of various stakeholder, as in the year of 2014 and 2018, the Ministry had already introduced a such kind scheme with different names like Company Law Settlement Scheme, 2014 and CODS Scheme 2018. The detailed procedure of COMPANIES FRESH START SCHEME, 2020 (CFSS-2020) is as below mentioned:
COMPANIES FRESH START SCHEME, 2020 (CFSS-2020)
Definition
“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 (AOC-4 & MGT- 7) on the MCA-21 registry on due time.
“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;
Applicability
This Scheme shall be applicable on any “Defaulting Company” and shall be commenced from 01st of April, 2020 till the 30th September, 2020 and permitted to file all belated documents which were due for filing without any Additional Fees except two documents and out of which, some permitted documents are as follows:
- Annual based Forms:
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- Annual Return -MGT-7
- Financial Statements – AOC-4
- Event based Forms:
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- INC-22A (Active Company Tagging Identities and Verification (ACTIVE))
- 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)
- Two Exceptions which is out of purview of this Scheme:
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- Increase in Authorised Share Capital (SH-7)
- Charger related documents (CHG-1, CHG-4, CHG-8 and CHG-9)
Benefits/Effect of CFSS Scheme
- Condonation of all Additional fee for filing of Belated documents;
- Granting of Immunity from the Prosecution;
- Granting of Immunity from the Proceedings for imposing penalty;
- 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)
Non Applicability of CFSS Scheme
- To Vanishing Companies.
- 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.
- Companies which have already filed STK-2 for strike off of Company with ROC.
- Companies which have amalgamated.
- Companies which has already filed application for obtaining Dormant Status.
- Company having any appeal which is pending before the Court of law.
- Company having management disputes and pending before any Court of law or Tribunal.
- 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
- 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.
Procedure
1. The defaulting company shall file their overdue documents/returns/other statements as well as statutory Annual Filing documents such as Financial Statements and Annual Returns in respective prescribed e-Forms by paying the normal statutory filing fee without any additional fee as payable as per section 403 of the Act read with Companies (Registration Offices and fee) Rules, 2014 within due immunity period.
2. The Defaulting Companies shall file the Form CFSB-2020 after making all default good as well as 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 is no filing fees of Form CFSB-2020.
3. The Form CFSB-2020 is entirely self-declaration-based form. After submission of Form CFSB-2020 and on the basis of self-declaration made by Director, the ROC will issue Immunity Certificate.
Scheme for inactive Companies
Companies can simultaneously apply:
- 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
- for striking off the name of the company by filing e-Form 5TK-2 by paying the fee payable on form STK-2.
Disclaimer: This write up is intended to start academic discussion on significant circular under Companies Act, 2013. It 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.
I am hopeful that this write up would be of some help w.r.t. your professional working and endeavors under Companies Act, 2013. Kindly share your opinion and if anyone have query then pls mail @ csjayenderjain2018@ gmail.com or inbox here.
Author Bio
A private company delayed in filing INC 20A. However, the same was filed with delay of 61 days. the company received adjudication order imposing penalty for late filing. in this case, is the company required to file the appeal within the extended time, then withdraw the appeal and apply for immunity under CFSS?