Companies Fresh Start Scheme, 2020
Relevant Date ⇒ MCA Circular dated 30.03.2020
Enforceability ⇒ w.e.f 01.04.2020 till 30.09.2020
Purpose of the Circular
Relevant Section ⇒ Section 403 & 460 of CA, 2013
1. To give opportunity to the defaulting Companies and to enable them to file the belated documents in the MCA-2 1 registry,
2. The Central Government in exercise of powers conferred under section 460 read section 403 of the Companies Act, 2013 has decided to introduced a Scheme namely “Companies Fresh Start Scheme, 2020 (CFSS, 2020).
3. CFSS, 2020 condoning the delay in filling the-
a. Annual return,
b. Financial Statements,
c. Various other statements,
e. Returns etc with the registrar.
4. Insofar as it relates to charging of additional fees, and granting of immunity from launching of prosecution or proceedings for imposing penalties on account of delay associated with certain fillings.
5. Only Normal fees for filling of documents in the MCA-21 registry will be payable in such case during the currency of CFSS-2020 as per the provision of Section 403 and Section 460 of the Companies Act, 2013.
An Opportunity for Inactive Companies
1. CFSS, 2020 gives an opportunity to inactive Companies to get their Companies declared as “Dormant Company” U/s 455 of the A t by filing a simple a simple application at a normal Rate.
2. This enable inactive Companies to remain on the register of the Companies to remains on the register of the Companies with minimal Compliance requirements.
How to make payment of normal fees for filling belated documents and seeking immunity?
1. Every defaulting company shall be required to pay normal fees as prescribed under the rules on the date of filling of each belated documents and no additional fees shall be payable.
2. Immunity from the launch of Prosecution or proceedings for imposing penalty under the Act pertains to any delay associated with the filings of belated documents.
3. Any other consequential proceedings, including any proceedings involving interest of any shareholder or any other person qua the Company or its directors or KMPs would not cover by such immunity.
Withdrawal of Appeal
1. If the defaulting Company, with respect to any statutory filing under the Act, or its officer in default, as the case may be, has filed any appeal against any notice issue or complaint filed or an order passed by a Court or by adjudicating authority under the Act, before a competent Court or authority for violation for provision of the Companies Act, 1956 & Companies Act, 2013, in respect of which the application is made under the scheme, the applicant shall before filing an application for issue of immunity certificate, withdraw the appeal and furnish proof of such withdrawal along with the application.
Special measures for cases where the order of the Adjudicating authority was passed but the appeal not filed.
In all cases where due to delay associated in filing of any document, statement or return etc. in MCA registry, penalties were imposed by an adjudicating officer under the Act, and no appeal has been preferred by the concerned company or its officer before the Regional Director under Section 454(6) as on the date of the commencement of the scheme, the following would apply-
a. Where the last date for filing the appeal against the order of the adjudicating authority falls between 01.03.2020 to 3 1.05.2020, a period of 120 additional days shall be allowed w.e.f such last date to all companies and their officers for filling the appeal before the concerned Regional Director.
b. During such additional period as stated above, prosecution under section 454(8) for non-compliance of the order of the adjudicating authority, insofar as it relates to delay associated in filing of any document, statement or return, etc, in MCA-21 registry shall not be initiated against such companies or their officers.
Application for issue of immunity in respect of document(s) filed under the Scheme.
1. The application for seeking immunity in respect of belated documents filed under the Scheme may be made electronically in the form CFSS-2020,
2. After closure of the scheme and after the document(s) are taken on file, or on record or approved by the Designated authority as the case may be but not after the expiry of six months from the date of closure of the scheme.
3. There shall not be any fee payable on this form.
4. This immunity shall not be applicable in the 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.
5. No that shall be provided in case any court has ordered conviction in any matter, or an order imposing penalty has been passed by the adjudication authority under the Act, and no appeal has been preferred against such orders of the adjudicating authority, as the case may be, before this scheme has come into force.
Order by designated authority granting immunity from penalty and prosecution
1. Based on the declaration made in the form CFSS-2020, an immunity certificate in respect of documents filed under this Scheme shall be issued by designated authority.
Non- Applicability of the Scheme
a. Companies against which action for final notice for striking off the name u/s 248 of the Act has already been initiated by the designated authority.
b. Where any application has already been filed by the Companies for action of striking off the name of the company from the register of companies;
c. To companies which have amalgamated under a scheme of arrangement or compromise under the Act;
d. Where applications have already been filed for obtaining Dormat status under section 455 of the Act before this Scheme.
e. Vanishing Companies,
f. Where any increase in authorized capital is involved and charge related
Effect of immunity
After granting the immunity, designated authority concerned shall withdraw the prosecution pending, if any, before the concerned court and proceedings of adjudication of penalties under section 454 of the Act, other than those referred in second proviso to sub-paragraph (vii) of paragraph 6 of this scheme, in respect of default against which immunity has been granted shall be deemed to have been completed without any further action on the part of the designated Authority.
Scheme for inactive Companies
The defaulting inactive companies while filing due documents under CFSS, 2020 can either-
a. Apply to get themselves declared as Dormant Companies under section 455 of the Companies Act, 2013 by filling form MSC-1 at the normal fees on the said form .
b. Apply for striking of the name of the company by filing form STK-2.
Particulars to be mentioned in Form CFSS-2020 Scheme for inactive Companies
1. Address of the ROC
2. CIN of the Company,
3. GLN of the Company, if any,
4. Details of the documents filed under the CFSS-2020, with proper SRN
5. Details of any appeal file by the defaulting Company-
6. Details of if any prosecution against the company or its officer in respect of belated documents filed under the scheme.