Good Day All, Today, Hereby we discuss and understand one time opportunity to the defaulting companies and to enable them to file the belated documents in MCA-21 registry under a scheme named as “Companies Fresh Start Scheme, 2020”
Companies Fresh Start Scheme, 2020 (‘CFSS Scheme’)
(Came into effect vide circular no. 12/2020 and 13/2020 on 30.03.2020)
BASIC THUMB RULE OF THE SCHEME – “Immunity will be provided to defaulting companies only in case of belated filings by waiving off additional fees however where proceedings involving the interest of any shareholder or its director, or key managerial person or any other person belonging to the company than immunity shall not be provided”.
REASON TO INTRODUCE THIS SCHEME:-
The ministry gives one time opportunity to the defaulting companies and to enable them to file the belated documents in the MCA-21 registry, the central government in exercise of powers conferred under section460 read with section 403 of the Companies Act, 2013 and decided to introduce this scheme.
APPLICABILITY
This Scheme shall be applicable to any “Defaulting Company” and shall be commenced from April 01, 2020, till September 30, 2020, and permitted to file all belated documents which were due for filing without any additional fees include “Inactive company”.
“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 (AOC-4 & MGT- 7) on the MCA-21 registry on due time.
“Inactive Company” 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.
FEATURE OF CFSS SCHEME
(A) All necessary documents including annual documents of the company can be filed with normal fees only, as additional fees are waived off.
(B) Inactive company can also take the status of “Dormant Company u/s 455” by filing a simple application in form MSC-1 or can also apply for striking off the name by filing e-form STK-2 with normal fees.
(C) The Scheme grants immunity to the companies in relation to proceeding for imposing an additional penalty is only against delayed filings in MCA registry and it doesn’t provide immunity to any proceedings involving interests of shareholders or any other person qua the company or its Directors or KMP means not against any substantive violation of the law.
(D) It further clarifies that where penalties were imposed by an adjudicating officer due to delayed filing, and no appeal has been made before the Regional Director then
(i) If the last date for filing the appeal falls between March 01 to May 31, 2020, an additional 120 days shall be allowed for filing the appeal, and
(ii) During this additional period, no prosecution shall be initiated against the company or its officers, insofar as it relates to delay in filing.
CFSS 2020 WILL NOT APPLY TO THE FOLLOWING:
- Where an action for striking-off has already been initiated by the Designated Authority or STK-2 for strike off of Company with ROC has been filed by the companies;
- Companies which have amalgamated;
- Companies which has already filed an application for obtaining dormant status;
- To Vanishing Companies;
- Where an increase in authorized capital is involved (Form SH-7) and all charge related documents (CHG-1, CHG-4, CHG-8, and CHG-9);
- 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;
- In case 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.
- To avail, the benefit of the scheme existing directors of defaulting companies has to compulsorily file form “DIR 3” KYC otherwise disqualifies from this scheme.
- Only the companies whose status is “Active” will be eligible to take the benefit of the scheme. If the status of the Company is not Active then the company has to file form ‘INC-22A’ at the earliest otherwise, the company not able to get these opportunities.
PROCEDURE FOR AVAILING THE CFSS SCHEME:
(A) Scheme for defaulting Companies:
1. The defaulting company shall file their overdue documents/returns/other statements as well as statutory Annual Filing documents such as Financial Statements and Annual Returns in respective prescribed e-Forms by paying the normal statutory filing fee without any additional fee as payable as per section 403 of the Act read with Companies (Registration Offices and fee) Rules, 2014 within due immunity period.
2. The Defaulting Companies shall file the Form CFSS-2020 after making all default good, as well as all filed document, are taken on file or on record or approved by the Designated authority as the case may and after the closure of the Scheme but not after the expiry of six months from the date of closure of the Scheme. There are no filing fees for Form CFSS-2020.
3. The Form CFSS-2020 is an entirely self-declaration-based form. 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 the designated authority.
(B) Scheme for Inactive Companies:
The scheme gives an opportunity to inactive companies to get their companies declared as Dormant Company under section 455 of the Companies Act, 2013 by filing e-form MSC-1 at a normal fee on a said form;
(Or)
May file e-form STK-2 for striking off the name of the company by paying the fee payable on form STK-2.
(Kindly note that the Company until and unless is operative in nature for the very purpose it has been incorporated under the applicable laws of the land, otherwise, the management would be required either to apply for a Dormant status or Apply for suo motu strike off for the said Company & LLP during the said period of the CFSS 2020 scheme itself.)
NOTE
1. The Ministry has uploaded the list of 78 “Eligible Forms” in the public domain which waives off additional fees for belated filings which comprises of e-forms under the Companies Act 2013, Companies Act 1956 and LLP’s.
2. The MCA has earlier introduced Company Settlement Schemes in the year
Once the Scheme is over, the Designated Authority has the power to initiate all necessary action against companies who have not availed this scheme and are still doing in default in filing documents, and the weeding out exercise begins on the other end.
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Author Bio
Is this scheme applicable for the companies, whose name has been struck off by the ROC due to non filing of Returns.