1. The Corporate Affairs Ministry (MCA) has come up with the ‘Companies Fresh Start Scheme 2020’ (CFFS 2020) to enable companies make good of any filing-related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity. The scheme has been introduced vide General Circular No. 12/2020 dated 30/03/2020.

2. The scheme shall come into force on 01.04.2020 and shall remain in force till 30.09.2020.

3. Applicability : Any Defaulting Company is permitted to file belated documents which were due for filing on any given date .

3.3. Defaulting Company means a company defined under the Companies Act 2013 and which has made a default in filing of any of the documents , statements returns etc including annual statutory documents on MCA-21 registry.

4. Every defaulting company shall be required to pay normal fees as prescribed under the Companies (Registration Offices and Feel) Rules, 2014 on the date of filing of each belated document and no additional fee shall be payable

5. The scheme contains relief to the companies in a following manner :-

(a) Enable the Companies to file the belated documents  in the MCA-21 registry and condoned additional fees for late filing.

(b) Grant immunity from launching of prosecution or proceedings for imposing penalty

(c) Opportunity for inactive companies to get their companies declared as ‘ Dormant Company ‘

6. Filing of belated documents :Companies Act, 2013 requires all companies to make annual statutory compliance by filing the Annual Return and Financial Statements. Apart from this, various other statements, documents, returns, etc are required to be filed on the MCA 21 electronic registry within prescribed time limits.

6.1. Non compliance/non filing of prescribed returns  attracts fine which shall not be less than Rs. 50,000/- but which may extend to Rs. 5,00,000/-.

6.2. This  scheme enables  Companies to complete their pending compliances by filing necessary documents in the MCA-21 registry including annual filings without being subject to a higher additional fees on account of any delay.

7. Immunity from launching of prosecution or proceedings for imposing penalty : The scheme CFSS 2020 shall provide immunity from the launch of prosecution or proceedings for imposing penalty pertains to any delay associated with the filings of belated documents.

7.1. The application for seeking immunity in respect of belated documents filed under the scheme may be made electronically in the prescribed Form CFSS 2020.

7.2 The said application shall be made not later than 6 months from the date of  closure of the scheme . The date of closure of the scheme is 30.09.2020.

7.3. There shall not be any fee payable on the form for application seeking immunity .

7.4. Immunity shall not be provided for any other consequential proceedings ,including any proceedings involving interest of any shareholder or any other person . Directors or key managerial personnel would not be covered by such immunity. For Example: under sec 42(8) of the companies Act, every company is required to file a return of allotment within prescribed  period provided therein . However ,proviso to sec 42(4) restrains company to utilized money before filing the said return . In this case immunity shall be provided in respect of penalty on account of  filing of return but not against utilization of money.

7.5. The applicant shall withdraw the appeal , if any , has filed against notice issued by Court for violation of the provisions under the Company Act .

7.6. Special measures for cases where the order of the adjudicating authority was passed but the appeal could not be filed : – In case where due to delay of filing the returns , penalties were imposed and order of adjudicating officer was also passed . Appeal  has not been preferred  by the company as on the date of the Scheme .

7.6.1. A period of additional 120 days shall be allowed for filing the appeal before the  concerned Regional Directors if last date of filing the appeal falls between 1st March 2020 to 31st May 2020. During this additional 120 days , prosecution related to non filing of returns shall not be initiated

7.7. Immunity certificate will be issued by the designated Authority based on details furnished in Form for scheme 2020.

8. Opportunity for inactive companies to get their companies declared as ‘ dormant Company The scheme CFSS 2020 provides an opportunity to inactive companies to get their companies declared as ‘dormant company’ under sec 455 of the Act by filing a simple application at a normal fee .

If a company has not filed its annual returns for two consecutive years then such a company will be called as a Dormant Company .A Dormant Company is an excellent opportunity to start a company for a future project or hold an asset/intellectual property without having significant accounting transactions.

9. Non Applicabilty of the Scheme : The scheme shall not apply in following cases :-

(a) The Companies against which  action for striking of the name under sec 248 has already been initiated by the Designated Authorities or the Company itself file an application with the registrar for striking of the name of the Company .

(b) Companies which have amalgamated under a scheme of arrangement or compromise under the Act .

(c) Where applicant has already filed an application for Dormat Status before this scheme.

(d) Vanishing Companies

(e) Where any increase in authorized capital is involved and also related documents.

10. At the conclusion of the Scheme ,the Designated Authority shall take necessary action against the Companies who have not availed the benefit of the scheme and are in default in filing the documents in a timely manner.

Author Bio

More Under Company Law

Leave a Comment

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

Search Posts by Date

April 2021