Companies Fresh Start Scheme, 2020 (CFSS 2020), why introduced?

MCA vide its circular no. 12/2020 dated 30th March, 2020 in addition to circular no. 11/2020 dated 24th March, 2020 clarified about the Scheme.

Issues that led to the birth of CFSS scheme, 2020:

Representations from stakeholders for the grant of one-time opportunity enabling them to complete their pending compliances without higher additional fees.

Detailed CFSS 2020

Defaulting Company shall file an application for issue of immunity certificate electronically under the Companies Fresh Start Scheme, 2020 without any fee payable on the CFSS-2020 Form.

1. Period of Applicability of Companies Fresh Start Scheme, 2020

1st April, 2020 till 30th September, 2020.

2. Applicability of Companies Fresh Start Scheme, 2020

For any Defaulting Company (A company which has made a default in filing of any document, statement, returns etc on the MCA)

3. Non-Applicability of Companies Fresh Start Scheme, 2020

Scheme shall not apply to companies:

  • In the process of Strike Off u/s 248 of the Act;
  • Amalgamated under a scheme of arrangement or compromise under the Act;
  • Filed applications for obtaining Dormant Status u/s 455 of the Act;
  • Vanishing Companies;
  • Charge related documents (CHG-1, CHG-4, CHG-8, CHG-9);
  • Increase in Authorized Capital (Form SH-7);
  • Appeal pending before the Court of Law and Management Disputes pending before any Court of Law or Tribunal;
  • Conviction ordered by Court, or an order imposing penalty passed by an Adjudicating Authority, and no appeal has been preferred order of the Court or Adjudicating Authority, before this scheme has come into force.

4. Manner of Payment of fees and additional fees

Defaulting Company shall pay normal fees prescribed under the Companies (Registration Offices and Fee) Rules, 2014 without any additional fees.

5. Withdrawal of Appeal before filing an application for the Issue of Immunity Certificate

If an appeal is filed by the Defaulting Company against any notice issued or complaint filed or an order passed by a court/adjudicating authority; such appeal shall be withdrawn before filing an application for the Issue of Immunity Certificate.

6.Measures where an Appeal could not be filed against an order of Adjudicating Authority before the Regional Director u/s 454(6) of the Act as on the date of commencement of the scheme

  • Where last date for such appeal falls between 1st March,2020 to 31st May,2020 ; an additional period of 120 additional days shall be allowed for filing appeal before the Regional Directors.
  • During such additional period, prosecution u/s 454(8) shall not be initiated against such companies or their officers.

7.Effect of Immunity

Once the Immunity is granted, the Designated Authority concerned shall withdraw prosecution(s) pending, if any, before the concerned Court(s) and the proceedings of adjudication of penalties u/s 454 of the Act.

8. Scheme for Inactive Company

Defaulting Inactive Companies (As defined in Explanation (i) to sub-section (1) of Section 455 (1) of the Act) while filing due docs under CFSS-2020 can simultaneously either:

1. File E-form MSC-1 (at a normal fee) for declaration as a Dormant Company u/s 455 of the Act, or

2. File E-form STK-2 (at a normal fee) for striking off the name of the Company.

9. Punishment

Necessary action by designated authority against Defaulting Company after 30th September, 2020.

DISCLAIMER: This is a knowledge sharing initiative based upon the relevant provisions. In no event I shall be liable for any direct or indirect result of this Article.

(Author – Deepna Babal, Company Secretary from New Delhi can be contacted at [email protected]).

Author Bio

Qualification: CS
Company: Textile Industry and an Export House
Location: DELHI, New Delhi, IN
Member Since: 11 Feb 2020 | Total Posts: 5

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June 2021