Companies Fresh Start Scheme, 2020 (CFSS-2020)

 “Now or Never” opportunity for Non-Compliant Company and struct off Company to Start Fresh:

Introduction

On 30th March, 2020 just day before the closure of the financial year a scheme came in to existence that is called as Companies Fresh Start Scheme, 2020 with intend to give one time opportunity to make good any filing related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity without paying additional fees.

Schemes also contain provision for giving immunity from penal proceedings, including against imposition of penalties for late submissions and also provide additional time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed. However, the immunity is only against delayed filings in MCA 21 and not against any substantive violation of law.

Applicability of Companies Fresh Start Scheme, 2020 (CFSS-2020)

Particulars Comments
Defaulting company The Scheme is applicable on all active companies which is a ‘defaulting company’, i.e. the companies which have any documents which are pending for filing on any given date, as per the provisions of the Scheme.
Active –Non compliant company The Scheme will also allow filing of INC-22A (Active form) without any additional fees. Once the said form is filed and duly taken on record, the rest of the pending forms can be filed.
Struck off and an appeal is pending before the NCLT Only Active companies can take benefit of the Scheme. Accordingly, if the company struck off get revived within the currency of the Scheme, then it will be possible for such companies to take the benefit of the Scheme.
Director KYC updating The Scheme will allow directors whose Din has been marked as deactivated due to non-filing of DIR-3KYC/DIR-3 KYC-Web, to file DIR-3KYC/DIR-3KYC-Web within the currency of the Scheme without filing of any additional fees. Once the Din is activated, rest of the pending forms can be filed.
Company undergoing CIRP / Liquidation A company undergoing CIRP is required to continue to file requisite forms with the MCA from time to time as against a company under liquidation, which is required to only file the order of liquidation via INC-28. Generally, a company undergoing CIRP has many defaults with respect to filing of forms. Since the Scheme does not disallow companies undergoing CIRP to avail its benefit, such companies can also wash away the delay in filing of forms with MCA through the Scheme.

Timelines for Companies Fresh Start Scheme, 2020 (CFSS-2020)

The Scheme shall remain in force from 01-04-2020 till 30-09-2020. All pending filings have to be done within the currency of the Scheme.

E-Form CFSS-2020 is the last step / form to be filed after all the pending forms have been filed, the time allowed for filing e-Form CFSS-2020 is six months from the date of closure of the Scheme i.e until 30th March, 2021.

Why Companies cannot afford to lose this chance?

Q 1. Clean Slate at very minimum cost:

Ans: Getting clean slate at nominal normal return filing fees which otherwise with additional fees not making business sense.

Q 2. Disqualification of Directors:

Ans: If Company have not filed financial statements or annual returns for any continuous period of three financial years and this disqualification will result to their ineligibility to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.

After five years also this black dot on director will continue be there i.e. he is required to inform his disqualification before appointment.

Q 3. Liability of company and Director:

Ans: Even if company become non-compliant or struck off but liabilities will not discharge with respect to any creditor or compliance. Many non-compliance also attract prosecution of directors and officer of the companies

Conclusion

This government has given one time opportunity for all company who is for any reason became non-compliant and wants to start fresh, getting immunity from all consequences for entire previous life of the company.

CA Krunal Shah | Email: cakrunalkshah@gmail.com

Author Bio

Qualification: CA in Practice
Company: Krunal K Shah & Co
Location: Ahmedabad, Gujarat, IN
Member Since: 02 Jun 2020 | Total Posts: 1

More Under Company Law

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

October 2020
M T W T F S S
 1234
567891011
12131415161718
19202122232425
262728293031