The Ministry of Corporate Affairs (‘MCA’) has introduced ‘COMPANIES FRESH START SCHEME 2020’ (CFSS-2020) to enable all companies registered in India to make good of any filing related defaults irrespective of the duration of default and make a fresh start as a fully compliant Indian entity.
Companies Act 2013, requires all Companies to file various statutory documents, financial statements and Annual Returns, within the stipulated timelines to the Registrar of Companies. Various companies who were unable to file these documents/statements/Returns for any reasons have been given an opportunity to condone the delay by launch of CFSS-2020. According to CFSS-2020, no additional fees will be charged for filling these documents and immunity will be provided to the officers of these defaulting companies against imposing penalties and initiating prosecution.
Advantages for defaulting companies under the CFSS-2020:
1. This Scheme proposes to grant immunity for any prosecution or proceeding against the company for imposing any penalty on account of delay in filing documents.
2. The defaulting company may file all belated documents including annual returns to MCA by paying nominal fees (without including Additional Fees) as per Companies (Registration Offices and Fees Rules, 2014)
3. The Scheme also requires the company/applicant who proposes to avail CFSS-2020 to withdraw any appeal initiated against any prosecution launched/proceedings filled or any order passed by a court or by any adjudication authority under the Act.
4. The company or officer may file e-Form “CFSS-2020”, to seek immunity in respect of belated returns within 6 months of closure of the scheme and documents are taken on records.
5. The Scheme provides the Company or officers additional 120 days to file an appeal before the regional director against the prosecution order passed by the competent court or adjudicating authority if the last date of filing appeal falls between 1st March 2020 and 31st May 2020.
Immunity shall be unavailable in the following cases:
1. Where conviction ordered passed by a court or adjudicating authority & no appeal prefers by the company or officers before the scheme came in enforce;
2. Matter or appeal relating to companies management disputes.
Non Applicability of Companies Fresh Start Scheme, 2020
1. The company made an application for striking off the name of the company from ROCs;
2. Companies amalgamated under the scheme of compromise & arrangement;
3. Vanishing Companies;
4. The company has filed an application for obtaining the dormant status under section 455 of The Companies Act, 2013 ;
5. Final notice for striking off the name of the company under section 248 of The Companies Act, 2013 has already been issued by the Registrar;
6. Filling of Documents related to Increase in Authorized share capital (Form SH-7), Charge related documents (CHG-1, CHG-4, CHG-8 & CHG-9 ).
Scheme for Inactive Companies
According to Companies Act 2013, Inactive Companies means a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years. CFSS-2020 provides an opportunity to the inactive company to convert into a dormant company under Section 455 of the Companies act, 2013 by filing e-Form MSC-1 with nominal fees & help these companies to remain on ROCs register with minimum compliance requirements.
1. The LLP Settlement Scheme allows the defaulting LLPs to file belated documents which were due for filing till August 31, 2020 without any additional fee till September 30, 2020.
2. The scheme also provides immunity from prosecution by the Registrar for such defaults. The defaulting LLP shall mean LLP registered under the LLP Act, 2008 which has made a default in filing of documents on the due date(s) specified under the LLP Act, 2008 and rules made there under.
3. This Scheme shall not apply to LLPs which have made an application in Form 24 to the Registrar, for striking off its name from the register as per provisions of Rule 37(1) of the LLP Rules, 2009. On the conclusion of the Scheme, the Registrar shall take necessary action under the LLP Act, 2008 against the LLPs which have not availed this Scheme and are in default in filing of documents as required under the provisions of LLP Act, 2008 in a timely manner.