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In Furtherance to its Circular No 11/2020, dated 24th March 2020 & in order to provide the opportunity to the defaulting companies to make a fresh start by filing all the belated documents Scheme has been introduced namely the Companies Fresh Start Scheme, 2020 notifying in Vide Circular No. 12/2020 dated 30th March 2020 of Ministry of Corporate affairs.

The Central Govt. in the exercise of its Powers U/s 460 Read with  Section 403 of Companies Act 2013 has decided to introduce this Scheme (CFSS-2020) for Condoning the delay in filing the required documents with Registrar of Companies, the scheme is relating to charging of the non-additional fees and providing immunity From the Prosecution or Imposing Penalty on delay on statutory Filing with Registrar of Companies. Under the said CFSS-2020 scheme only the normal fees will be chargeable for Filing of the documents as per the Provision of Section 403 Read with Companies (Registration offices and Fee) Rules, 2014.

Scheme Companies Fresh Start Scheme, 2020

1. The Scheme Shall Applicable from April 1st, 2020 to September 30th, 2020.

2. Applicability: The Said Scheme is Applicable to any Defaulting company, Defaulting companies are permitted to file the belated documents, which are due for filing on any given date in accordance with the provision of this Scheme.

Defaulting Company defined Under CFSS-2020

“defaulting company” means a company defined under the. Companies Act, 2013, and which has made a default in the filing of any of the documents, statements, returns, etc including annual statutory documents on MCA-21 Registry.

3. Manner of Payment Under Scheme: The Defaulting companies required to Pay Normal Fees as prescribed under Companies (Registration offices and Fee) Rules, 2014, there will be no additional fees payable on the date of filing of belated documents.

4. Immunity Under Scheme: There shall be Immunity to a defaulting company from the launch of prosecution or proceedings for imposing a penalty, pertain to delay associated with filings of belated documents.

The Immunity will be provided only to the penalties or prosecution associated with the late filing Additional Fees, any consequential proceeding including proceedings related to the interest of any person/director/KMP/shareholder are not covered under the Immunity under this CFSS-2020 Scheme

For better Understanding, if Company Files Form MGT-14 after 300 days, then the immunity will be granted only for additional fees of filing of Form MGT-14, however Consequential Proceedings Such as Condonation of Delay is required to do before filing the Form.

5. Withdrawal of Appeal: If a Defaulting company or Any of its Officer has filed any appeal against any notice issued/complaint filed/order passed by any court or adjudicating authority under act, then the applicant company has to withdraw such appeal before filing an application for Immunity & shall file the Proof of Withdrawal along with the application for immunity.

6. Measures for Cases where order passed but appeal could not file: When any appeal is pending to be filed before the Concerned Regional Director, against any order passed or penalty imposed by the adjudicating authority as on the date of commencement of the scheme,

  • where the Last date of filing of Appeal falls between 1st march 2020 to 31st may 2020, a period of 120 additional days shall be allowed to file an appeal from the date of the last date of Filing of appeal as specified in the order.
  • In such additional period, no prosecution shall be initiated for the Non-compliance of the order passed by adjudicating authority, against the company and its officers.

7. Application for issue of Immunity under Scheme: Application for seeking immunity shall be made in E-FORM CFSS-2020 after Closure of Scheme and Documents Taken on File/on record/approved by the authority, within SIX months from date of closure of the scheme. No Fees were payable on this form.

No Immunity will Be Applicable:

  • If any appeal is pending before any court of Law or in Case of management disputes of the company pending before Court or tribunal,
  • Also, if any appeal is pending to be filed, before the commencement of the Said Scheme, against the order passed by court or penalty imposed by adjudication.

8. Immunity Certificate: Based on the declaration made in E-Form CFSS-2020, the designated authority issues the immunity certificate under this scheme.

9. Non-Applicability of Scheme: The Said CFSS-2020 Scheme is Applicable to all Except below mentioned:

  • Companies against which Final notice of “Strike off” Under Section 248 already initiated by Designated authority:
  • Where the company has already filed the application for Strike off with Registrar of Companies
  • Companies which have amalgamated under the Scheme of arrangement or compromise under the act;
  • Where a company has already filed the Application for obtaining Status of Dormant Company U/s 455 of the act;
  • Vanishing companies
  • Forms Regarding Increasing In Authorised Capital Form SH-7, Charge Related forms, CHG-1, CHG-4, CHG-8, & CHG-9.

10. Effect of Immunity: After Granting the Immunity, the designated authority shall withdraw the prosecutions pending, if any, pending before the Concerned Court and Proceedings of adjudication of penalties, other than those whose order is already passed, in respect of default against which immunity has been granted shall be deemed to have completed without any further action on part of the Designated Authority.

Scheme for Inactive Companies:

This Scheme also provides the Opportunity to inactive companies of getting their companies declared as Dormant Company under Section 455 or Declared as Strike off the name under Section 248 of the Act by making simple application with the normal fees.

The Defaulting inactive companies can also opt to

1. Apply status of Dormant company u/s 455 of Companies Act, 2020 by filing form MSC-1 at a normal fee for minimal Statutory Compliance

2. Apply for Strike off of Company by filing form STK-2 with normal fees.

Action against Companies:

In the Conclusion of the Scheme, the designated authority shall take the necessary action under the companies who have not availed this scheme and are in default in filing of these documents in a timely manner.

Source: https://taxguru.in/company-law/companies-fresh-start-scheme-2020.html

FAQs on CFSS-2020 Scheme:

LINK:  https://taxguru.in/company-law/mca-faqs-cfss-2020-llp-modified-settlement-scheme-2020.html

Disclaimer: The article is based on the relevant provision and as per the information existing at the time of preparation & best of my knowledge, the author shall not be liable for any direct or indirect results from this article. In case any Clarification required, communication can be made at Csjaikishanwadhwani03@gmail.com.


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July 2024