The Ministry of Corporate Affair issued the circular dated 24th March, 2020, having General Circular No. 11/2020 relaxing any additional payment payable by the company on late filing of e-Forms to ROC to provide relaxation to the corporate world causing devastating circumstances created by COVID-19 causing a global pandemic.
MCA in furtherance of the above circular issued new circular dated 30th March, 2020, vide General circular number 12/2020. Through this circular MCA provided the amnesty scheme to the Indian Corporate.
The government by exercising the power granted to it under section 460 to be read along with section 403 introduced the scheme to be called as “Companies Fresh Start Scheme, 2020”. The scheme provides for condoning the delay in filing of the different e-forms including Annual Return etc.
The scheme provides for relaxation from payment of additional fees and protects from launching of prosecution and proceeding for imposing a penalty on account of late filing of e-Forms under the Companies Act, 2013. For any e-Form filing under this scheme, only normal fees will be charged.
The scheme also provides an opportunity for the inactive company to convert itself to dormant company and remain on the register of the Company with minimum compliance requirement.
“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.
The scheme will be effective from 1st April, 2020, to 30th September, 2020, and will be applicable for all the companies. However, the scheme shall not apply in the following cases;
As per MCA, Vanishing Company means a company satisfying the following conditions:
When the company will file form they need to pay only normal fees. It is to be noted that immunity from prosecution and proceeding for imposing of penalty is limited to prosecution or proceeding for the penalty that may be launched due to non or late filing of e-Form.
The scheme does not provide any immunity from proceeding that may be launched under the Companies Act, 2013 due to default in any other section. All the consequential proceeding including proceeding involving the interest of shareholders, directors or all the other stakeholders qua company will continue.
Circular also provides the example demarcating against what immunity is provided and against what immunity is not provided. As per the example provided in the Circular; every company required to file a return of allotment within the period provided under section 42(8) i.e. 15 days further Section 42(4) also provides that utilization of fundraised through private placement to be made only after return of allotment is made to ROC. Now, the immunity under the scheme shall only be available in respect of proceeding imposition of the penalty for not filing of return of allotment that is default of Section 42(8) but not on default of utilization of fund i.e. default under Section 42(4).
In case of Company which has made any application in the competent court and or authorities against the notice issued or complained filed or order passed by the court on due to default under Companies Act, 2013 or 1956, such company shall first withdraw such application and then make an application for grant of immunity certificate and such application shall be furnished with the proof of withdrawal of such application.
If the Company already received the order from Adjudicating Authority due delay in filing of different e-Form and no appeal has been made by the Company or its officer in default as on date of commencement of scheme i.e. 1st April, 2020, the following will apply;
Application to be made in e-Form CFSS-2020 within 6 months from the end of the scheme i.e. 30th September, 2020, once the e-forms filed during amnesty period is filed, taken on record and or approved as the case may be.
Further, it is provided that immunity shall not be applicable in the following cases;
No immunity shall be provided in the following cases;
and no appeal has been made against such order of the Court or Adjudication Authority before this scheme has come into force.
Once the immunity is granted all the prosecution pending will be withdrawn, however, no immunity will be granted as mentioned in the above case.
For the inactive companies, they can either file MSC-1 at normal fees and obtain the status of the dormant company or can apply for strike off their name by filing form STK-2.
Nishant Mishra | Contact: [email protected]