MCA on receiving representations from various stakeholders has introduced a Scheme namely CFSS -2020 through its General Circular No. 12/2020 dated 30th March, 2020, in furtherance to the Circular No. 11/2020 dated 24th March, 2020.

Purpose of the Companies Fresh Start Scheme, 2020:

  • This Scheme has enabled the defaulting companies a onetime opportunity to complete their pending compliances by filing the necessary documents in the MCA-21 registry without being subject to higher additional fees and granting immunity from launching of prosecution or proceedings for imposing penalty, condoning the delay associated with certain filings.
  • The scheme gives an opportunity to inactive companies to get their companies declared as dormant Company under section 455 of the Act by filling a simple application at a normal fee. The applicable provisions enable the inactive company to remain on the register of the companies with minimum compliance requirements.

Powers Conferred to Central Government:

In exercise of powers conferred under section 460 read with section 403 of the Companies Act, 2013

Period of Enforcement of the Companies Fresh Start Scheme, 2020:

Enforced from 1st April, 2020 to 30th September, 2020

Applicability of Companies Fresh Start Scheme, 2020 to Companies:

Any Defaulting company, which has made a default in filing of any of the documents, statement, returns, etc. including annual statutory documents on any given date in accordance with the provisions of this scheme.

Manner of Payment of normal fees Seeking Immunity:

  • Every Defaulting company shall pay normal fees as provided under the Companies (Registration offices and fee) Rules, 2014 without requirement of paying any additional fees.
  • Immunity to the defaulting company from the launch of prosecution and proceeding for imposing penalty under the Act pertains only to the delay associated with the filings of belated documents. Any other consequential proceedings including any proceedings involving interest of shareholders or any other person qua the company, directors and key managerial personnel would not be covered.For example, under section 42(8), every company is required to file a return of allotment within the period provided therein. However, the proviso to section 42(4) also requires that the utilization of money raised through private placement shall not be made unless the return of allotment has been filed in the registry. In this case, immunity shall be available only in respect of the proceedings for imposing penalty on account of delay in filing the return of allotment.

Withdrawal of Appeal against any prosecution and proceeding for imposing penalty for issue of Immunity certificate:

If the defaulting company has filed any appeal against any notice issued or complaint filed or an order passed by a court or by an adjudicating authority under the Act in respect of which the application is made under this scheme, such appeal shall be withdrawn and furnish the proof before filing an application for issue of Immunity certificate.

Measures where the order of Adjudicating Authority was passed but the appeal could not be filed before the Regional director (R.D.) as on the date of commencement of the Scheme:

  • Where the last date for filing the appeal under Section 454(6) falls between 1st March, 2020 to 31st May, 2020(both days included), an additional period of 120 days shall be allowed with effect from such last date for filing appeal before R.D. , to all companies and officers.
  • During such additional period, prosecution U/s. 454(8) for non-compliances shall not be initiated against such companies or their officers.

Application for Issue of immunity:

The Application for seeking immunity under the scheme(CFSS 2020) may be made electronically in the CFSS-2020 form without any fee,  after the closure of the scheme and after the document are taken on file or on record or approved by authority but not after the period of six months from the date of closure of the scheme. Two Provisos:

  • This immunity shall not be applicable in the matter of any appeal pending before the court of law and in case of management disputes before any court of law or tribunal.
  • No immunity, if any court has ordered conviction in any matter or an order imposing penalty has been passed by an Adjudicating authority under the Act and no appeal has been preferred, before this scheme came into force.

Based on the declaration made in the CFSS-2020 form, an immunity certificate shall be issued by designated authority.

Non Applicability of Companies Fresh Start Scheme, 2020 to companies in certain cases:

This Scheme shall not apply:

  • In respect of companies against which action under Section 248(section 560 of Companies Act 1956) of the Act has already been initiated;
  • Any application filed by the companies for action of striking off the name of the company from the Registrar of companies;
  • Amalgamated under a scheme of arrangement or compromise under the Act;
  • Filed applications for obtaining Dormant status U/s. 455 of the Act;
  • Vanishing Companies);
  • Increase in Authorized Capital is involved(Form SH-7) and Charge related documents( CHG-1, CHG-4, CHG-8, CHG- 9)

Effect of Immunity:

After the immunity is granted, the concerned Designated Authority shall withdraw the prosecution(s) pending, if any, before the concerned Court(s) and the proceedings of adjudication of penalties U/s. 454 of the Act.

Companies Fresh Start Scheme, 2020 for inactive companies:

The defaulting inactive companies, while filing due documents under CFSS-2020 can simultaneously, either:

  • Apply to get themselves declared as Dormant Company U/s. 455 by filing e-form MSC-1; or
  • Apply for striking off the name of the company by filing e-form STK-2.

Action after conclusion of Companies Fresh Start Scheme, 2020:

The Designated Authority shall take strict action against the companies who have not availed this scheme and are in default in filing the documents in a timely manner.

Definitions for Companies Fresh Start Scheme, 2020:

  • “Act” means the Companies Act, 2013 and Companies Act, 1956 (where ever applicable);
  • “Company” means a company as defined in clause (20) of section 2 of Companies Act, 2013;
  • “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 annu8al statutory documents on the MCA-21 registry;
  • “Designated authority” means the Registrar of Companies having jurisdiction over the registered office of the company;
  • “Inactive Company” means a company as defined in Explanation (i) to sub-section(1) of section 455(1) of the Companies Act, 2013;

FAQs on Companies Fresh Start Scheme (CFSS), 2020

List of Forms Applicable under CFSS, 2020

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April 2021