Companies Fresh Start Scheme 2020| Unique Window Of Opportunity For Defaulting Companies
Upon the COVID-19 outbreak which has shaken the entire world Ministry of Corporate affairs has given light to the ‘Defaulting Companies’ to combat with economic disruptions and also to make a fresh start on a clean slate, In furtherance to its General Circular No. 11/2020 dated 24th March, 2020 & vide its General Circular No. 12/2020 dated 30th March, 2020 by notifying “Companies Fresh Start Scheme, 2020”
> Synopsis of Companies Fresh Start Scheme-2020:
| Legal provision: | The Central Government in exercise of its power u/s 460 of the Companies Act, 2013 read with section 403 has decided to introduce a scheme namely “Companies Fresh Start Scheme, 2020“, by allowing a One-time condonation of delay in filing statutorily required documents with the Registrar. |
| Tenure of the Scheme | 1st April, 2020 up to 30th September, 2020. |
| Scheme Applicable To:
|
Defaulting Companies: Any “defaulting company” is permitted to file belated documents, which were due for filing on any given date in accordance with the provisions of this Scheme.
“Defaulting Company” means a company defied under the Companies Act, 2013, and which has made default in filing of any documents, statement, returns etc. including annual statutory documents on the MCA-21 registry. |
| Payment of Fees as per
Companies Fresh Start Scheme-2020: |
The defaulting Companies may file forms by making payment of normal fees as prescribed under the Companies (Registration offices and Fee) Rules, 2014 on the date of filing of each belated document and no additional fee is payable. |
| Seeking Immunity under the scheme: | Immunity shall be granted to defaulting companies from launch of prosecution and proceedings for imposing penalty to the extent to delay associated with the filings of belated documents. |
| Withdraw of Appeal: | If a company has filed an appeal against any notice issued or complaint filed or an order passed by a court or by an adjudicating authority regarding statutory filing under the Act, then the company shall before filing an application for issue of immunity certificate, withdraw such appeal and furnish proof of withdraw of appeal along with application. |
| In case order is passed but appeal could not be filed: | When any order regarding delay associated in filing of document, statement or return etc. and penalties were imposed by an adjudicating officer and appeal is not filed until 1st April 2020 and the last date of appeal falls between 1st March 2020 and 31st May, 2020, then additional period of 120 days i.e. until 28th September, 2020 shall be given for filing an appeal before the concerned RD.
Also, No prosecution regarding non-compliance of order of adjudicating authority shall be initiated against the company during such additional period. |
| Application for Issue of Immunity: | Application for seeking immunity regarding belated documents filed under the scheme shall be made in e-Form CFSS-2020 after closure of the scheme and documents are taken on file or on record or approved by Designated authority but before six months from closure of the scheme.
NO FEES PAYABLE FOR FILING THE FORM. |
| Exception from Obtaining Immunity: |
No immunity shall be provided if: 1) An appeal is pending before the court of law and in case of management disputes pending before the court of law or tribunal. 2) An order of conviction has been passed by court or an order imposing penalty has been passed by adjudicating authority and no appeal has been filed before this scheme came into force. |
| Issue of Immunity Certificate: | Designated authority shall issue Immunity certificate in respect of documents filed under the scheme based on declaration made in Form CFSS-2020. |
| Scheme Applicable to: | All forms that are in the list of Eligible hosted by Ministry of Corporate Affairs on MCA Portal.
Link for the same is: http://www.mca.gov.in/Ministry/pdf/CFSS2020_02042020.pdf |
| Scheme not Applicable to: | i. Company against which final notice of strike off has already initiated by designated authority.
ii. Company filed an application for striking off the name of the company from register of companies. iii. Companies amalgamated under a scheme of compromise and arrangement. iv. Company filed application to obtain dormant status. v. Vanishing Companies. vi. Where Companies are marked as “under CIRP or liquidation”. |
| Effect of Immunity | After granting the immunity, the Designated authority concerned shall withdraw the prosecution(s) pending, if any, before the concerned Court(s) and the proceedings of adjudication of penalties under section 454 of the Act, other than those in which order conviction in any matter or order imposing penalty has been passed, in respect of defaults against which immunity has been so granted shall be deemed to have been completed without any further action on the part of the Designated authority. |
| Scheme for Inactive Companies: | When Defaulting Inactive Companies files due documents under the scheme, then it can simultaneously, either:
i. Make an application for obtaining dormant status in form MSC-1 at a normal fee. ii. Make an application for striking off the name of the company from register of companies in form STK-2 at a normal fee. |
| Upon Conclusion of Scheme: | The Registrar shall take necessary action under the Companies Act, 2013 against the companies which have not availed this Scheme and are in default in filing of documents as required under the provisions of Companies Act, 2013 in a timely manner. |
> IMPORTANT TIMELINES:
| Commencement of Scheme on | 01st April, 2020 |
| Scheme Shall remain in force Up to | 30th September, 2020 |
Source:
1. https://taxguru.in/company-law/companies-fresh-start-scheme-2020.html
2. https://taxguru.in/company-law/covid-19-special-relief-measures-companies-llp.html
FAQs:
Below FAQs seek to answer some common questions asked with reference to the following Scheme:
Q. 1 What is Companies Fresh Start Scheme-2020?
Ans: It is a One-time opportunity to make Fresh or clean start Scheme for filing statutorily required documents/forms of Companies which were due for filling by paying normal fees and no additional fees per form with the Registrar of Companies.
Q.2 Tenure of Scheme?
Ans: 1st April, 2020 to 30th September,2020
Q. 3 Scheme Applicable to?
Ans: Only to defaulting companies.
Defaulting companies/ Non-Compliant companies means those companies who have failed to file any documents, statement, returns etc. including annual statutory documents.
Q. 4 Additional fees during the Scheme?
Ans: No additional fees payable on filing any forms under the scheme.
Q.5 To whom the immunity is granted?
Ans: Immunity shall be granted to any defaulting company who has filed belated documents under the scheme i.e. only for those forms that will be filed in CFSS duration i.e. 01/04/2020 to 30/09/2020.
Q. 6 When the Immunity is granted?
Ans: After filing application of immunity after the closure of scheme but before six months from closure of the scheme.
Q. 7 Application of Immunity is made in which form?
Ans: The application of obtaining immunity regarding belated documents filed shall be made in e-Form CFSS-2020.
Q. 8 Can immunity have granted to all companies?
Ans: Immunity shall not be granted if appeal against order of court or any adjudicating authority is pending.
Q. 9 Scheme Applicable for Which forms?
Ans: All forms that are in the list of Eligible hosted by Ministry of Corporate Affairs on MCA Portal.
Link for the same is:
http://www.mca.gov.in/Ministry/pdf/CFSS2020_02042020.pdf
Q. 10 Scheme is Strictly not Applicable for Which forms?
Ans: Forms related to Increase in authorized capital, Charge related forms and also to vanishing companies, dormant companies, amalgamated companies, also Where Companies are marked as “under CIRP or liquidation” and companies under procedure of strike off.
Q. 11 Can inactive companies file forms under such scheme?
Ans: Yes, Inactive companies can file forms under the scheme.
Q. 12 What are the Consequences if the Defaulting company doesn’t take benefit of Companies Fresh Start Scheme-2020?
Ans: If the Defaulting company doesn’t take benefit of Companies Fresh Start Scheme – 2020, then the said companies have to file forms with additional fees (THAT MAY BE HUGE AMOUNT) in addition to any fee that is normally payable.
OR
Registrar may Initiate Prosecution against Defaulting companies.
Q. 13 What are the Advantages to the Defaulting companies those took benefit of Companies Fresh Start Scheme-2020?
Ans: i. Monetary benefits as Huge amount of Additional fees is waived.
ii. The defaulting companies, which have filed their pending Forms till 30th September, 2020 and made good the default, shall not be subjected to prosecution by Registrar for such defaults.
Q. 14 Is there any fee payable on filing application for immunity in Form CFSS-2020?
Ans: No, there is no fee payable on filing application for immunity in Form CFSS-2020.
Q. 15 Documents, statements or returns upto which date shall be filed under the scheme?
Ans: Documents, statements or returns of a company which are due for filing till 30th September, 2020 can be filed under the scheme.
Q.16 Which type of companies can be covered under definition of defaulting company given under the scheme?
Ans: All companies registered under Companies Act, 2013 or Companies Act, 1956 or any previous Companies Act.
Q.17 Which forms can be filed by an Inactive Company under the scheme?
Ans: An Inactive Company can file Form MSC-1 for obtaining dormant status and Form STK-2 for application of striking off name from register of companies under this scheme.
Q.18 Is it Compulsory to file FORM DIR-3 KYC/ WEB FORM DIR-3 KYC before availing the benefits of the said Scheme?
Ans: Yes, It is Compulsory to File Form DIR 3 KYC/ web form DIR 3 KYC of all the Existing directors of Defaulters Companies before availing the benefit of the said Scheme.
Q.19 Is It compulsory to file Active Form INC-22A?
Ans: Yes, It is compulsory to file Active Form INC-22A. (Once the prerequisite forms are filed for Form INC-22A).
Only the companies whose status is Active will be able to seek the benefit of the scheme.
(Authors are associated with Ahemdabad based CS firm GOVIL RATHI & ASSOCIATES)
Author Bio
Sir,
In the case of a defaulting private company, if it’s both directors are disqualified by ROC then how company will able to file form ADT 1 … because without ADT 1 MGT 07 can’t be filled… it will require SRN of auditor appointment form.
Well drafted article.
It’s helpful and to the point.
A company has not filed annual returns or any document from the last 7 years. Its status is active. Now the company will file all 7 years annual returns under CFSS or it has to file for dormant status. Please clarify