In wake of COVID1-9 pandemic, Ministry of Corporate Affairs, Government of India, with a view to provide relief to companies has introduced Companies Fresh Start Scheme, 2020‘ (CFSS-2020). This Scheme offers an opportunity to companies to make good their non-filing related defaults, irrespective of duration of default, and to make a fresh start as a fully compliant entity.

The Scheme has commenced on April 01, 2020 and is in operation till midnight of September 30, 2020. The benefits of the scheme is Immunity from the launch of prosecution or proceedings for imposing penalty shall be provided only to the extent as specified in the scheme and a “one-time waiver of additional filing fees” for delayed filings by the companies with the Registrar of Companies during the period starting from 1st April, 2020 and ending on 30th September, 2020.

Important Definition

Definition and meaning of the key words used in the CFSS-2020 has been shared herein below, to understand the Scheme.

1. Defaulting Company : As per the Scheme a Defaulting Company means a company which has made a default in filing of any of the documents, statements, returns etc. including annual statutory documents on the MCA-21.

2. Inactive Company : As per the explanation of section 455 (1)(i) of Companies Act, 2013 “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;

3. Belated Documents: Please refer Annexure 1 for detail of the e-forms are covered under the scheme.

4. Dormant Companies : As per section 455 of Companies Act, 2013 Where a company is formed and registered under this Companies Act for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company.

5. Vanishing Companies : Vanishing Company is defined in Explanation of under Rule 3 (iii) of chapter XVIII The companies (Removal of Name of Companies from the Register of Companies ) Rule, 2016 that A company would be deemed to be a vanishing company, if it is found to have:

a) Failed to file returns with Registrar of Companies (ROC) for a period of two years;

b) *Failed to file returns with Stock Exchange (SE) for a period of two years (if it continues to be a listed company);

c) It is not maintaining its registered office of the company at the address notified with the Registrar of Companies/ Stock Exchange; and

d) None of its Directors are traceable.

Notes:

i) All the conditions mentioned above would have to be satisfied before a listed company is declared as a vanishing company;

ii) The conditions mentioned at (a), (c) & (d) would suffice to declare a company as vanishing if such company has been de-listed from the Stock Exchange.

6. Designated authority : “Designated authority” for a company as per the Scheme means the Registrar of Companies having jurisdiction over the registered office of the company

Particulars of the Scheme Explanation
Enforcement:

The scheme is effective from 1st April, 2020 to 30th September 2020.

  • 1st April 2020 & 30th September 2020 both days are inclusive.
  • It is one time opportunity for the defaulting companies for a limited period (until it is not extended.)
Applicability:

Defaulting company may file its belated compliance with the MCA within a period of 6 months starting from 01.04.2020 to 30.09.2020 without payment of any additional fees.

Any document, statement, return etc., relating to any period from incorporation of the company till the end of the scheme.
Payment of fee:

Defaulting company shall require to pay normal fees as prescribed under the Companies (Registration offices and fee) Rules, 2014.

No additional fees is required to be paid as the same has been waived of under the scheme. Filing under the scheme requires payment of normal fee.
Benefits of opting Scheme

Immunity:

Immunity from the launch of prosecution or proceedings for imposing penalty shall be provided only to the extent such prosecution or the proceedings for imposing under the Act pertain to any delay associated with the filing of belated documents.

# Any other consequential proceedings, including any proceedings involving interests of any shareholder or any other person qua the company or its directors or key managerial Personnel would not be covered by Such immunity.

Example

Under section 42(8), every company is required to file a return of allotment within a period provided therein. However, the proviso to section 42(4) also require that the utilization of money raised through private placement shall not be made unless the return of allotment has been filed in the registry.

Now the immunity under the scheme shall only be available in respect of the proceedings for imposing penalty on account of delay in filing the return of allotment, but not on account of utilization of money raised through private placement prior to filing of the return with registry.

After filing of all the belated documents in MCA, the Defaulting Company need to withdraw appeal (if any) filed against the Order of Adjudicating Authority before the Regional Director. Then only Defaulting Company would be enable to file e-form CFSS-2020 to get the immunity.

The benefit of this immunity would be that the Designated Authority shall not launch any prosecution or proceedings against the Defaulting company only to the extent related to delay associated with the filing of said E-form (belated documents)

Scope of the immunity not covered If interests of any shareholder or any other person qua the company or its directors or key managerial Personnel are involved.

Example

If AGM has not been held in time. This is violation of law. CFSS-2020 is only to provide immunity for delayed filing. Accordingly, once the AGM is duly conducted after necessary permission om ROC, the filings related to the said AGM can be done during the tenure of CFSS.

Accordingly, violation, if any, has to be cured first. CFSS is there get the filings done uninterrupted.

Withdrawal of appeal against any prosecution launched or the proceedings for imposing penalties initiated.

If the defaulting company with respect to any statutory filing under the Act, or its officer in default as the case may be 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 before a competent court or authority for violation of the provisions under the Companies Act 1956 and/or Companies Act 2013, in respect of which the application is made under this scheme the applicant shall before filing an application for issue of immunity certificate, withdraw the appeal and furnish proof of such withdrawal along with the application.

If the Defaulting Company already file any appeal against any prosecution launched or the proceedings for imposing penalties initiated by the adjudicating authority, in that case before applying for immunity certificate company need to withdrawal its appeal and the proof of withdrawal will be attach in e-form CFSS-2020 for grant of immunity certificate.

It means the Defaulting Company can file the belated documents any time between 1st April, 2020 to 30th September, 2020 during the pendency of the said appeal but to obtain the immunity certificate, the Defaulting Company shall have to withdraw the said appeal in next 6 months i.e. between 1st October, 2020 to 31st March, 2021 and in this period only have to apply for the immunity certificate.

Special measures for cases where the order of the adjudicating authority was passed but the appeal could not be filed

In all cases where due to delay associated in filing of any document, statement or return, etc. in the MCA-21 registry, penalties were imposed by an adjudicating officer under the Act. and no appeal has been preferred by the concerned company or its officer before the Regional Director under section as on the date of commencement of the Scheme, the following would apply:-

(a) Where the last date for filing the appeal against the order of the adjudicating authority under section 454(6) falls between the 1st March, 2020 to 31st May, 2020 (both days included), a period of 120 additional days shall be allowed with effect from such last date to all companies and their officers for filing the approval before the concerned Regional Directors;

(b) During such additional period as stated in (A) above, prosecution under section 454(8) for non-compliance of the order Of the adjudicating authority, insofar as it relates to delay associated in filing of any document, statement or return, etc. in the MCA-21 registry shall not be initiated against such companies or their officers;

where no appeal against the order of penalties imposed by adjudicating authority has been preferred by the company and the last due date for filing the appeal falls between 1st March, 2020 to 31st May, 2020 (both days included).

  • 120 additional days will be allowed by the authority to file the Appeal and no further action or proceedings will initiate against Defaulting Company. It will be assumed by authority that company might opt the scheme and make default good.
  • After closure of the scheme adjudicating authority will check if company not opt the scheme than the action against company according to the earlier order would be initiated.
Effect of Immunity

After granting the immunity, the Designated authority concerned shall withdraw the prosecution(s) pending, if any, before the concerned Court(s) and the proceedings of adjudication of penalties under section 454 of the Act, other than those referred in the second proviso to sub-paragraph (vii) of paragraph 6 of this Scheme, in respect of defaults against which immunity has been so granted shall deemed to have been completed without any further action on the part of the Designated authority;

Intimation need to given by the company in the e-form CFSS-2020 regarding any prosecution is pending in court against the company and its officers in respect of belated documents. Based on this intimation Immunity will be granted by way of withdraw of pending prosecution against the company except only where:

  • In case any court ordered conviction in any matter
  • Or an order imposing penalty has been passed and no appeal has been preferred against such order before enforcement of this scheme.
Scheme for Inactive Companies

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

a) apply to get themselves declared as Dormant Company under section 455 Of the Companies Act, 2013 by filing e-forms MSC-I at a normal fee on said form; or

b) apply for striking off the name of the company by filing e-Form STK-2 by paying the fee payable on form STK-2.

If the company don’t wish to change its inactive status so it can either opt for dormant status by filing MSC-1 or it can also strike off its company name from ROC by filing STK-2.
Scheme not to apply in certain cases

  • to companies against which action for final notice for striking off the name u/s 248 of the Act (previously section 560 of Companies Act, 1956) has already been initiated by the Designated authority;
  • where any application has already been filed by the companies for action of striking off the name of the company from the register of companies;
  • to companies which have amalgamated under a scheme of arrangement or compromise under the Act;
  • if the applications have already been filed for obtaining Dormant Status under section 455 of the Act before this Scheme;
  • to vanishing companies;
  • Where any increase in authorized capital is involved (Form SH7) and also charge related documents (CHG-1, CHG-4}, CHG-8 and CHG-9);
A company against which Final notice for the Strike off has been issued by the Designated Authority. Final Notice is a notice which is issued for the strike off purpose and placed on the official website of the MCA and published in the Official Gazette for the information of the general public.

A Company who has voluntarily filed an application for the for strike off its name from the Register of Companies

Amalgamated Companies

Companies Fresh Start Scheme

FAQ’s

Q.1 Whether this scheme is applicable delayed forms with respect to foreign companies like forms FC-3, FC-4 etc.

Yes, it is applicable for delayed forms with respect to foreign companies like forms FC-3, FC-4 for branch office and liaison office.

Q.2 Can a Company whose directors are disqualified take benefit of CFSS-2020?

Yes, the Company can avail benefit of CFSS-2020.

Firstly, the Company through its promoters will appoint new directors from backend of ROC.

After appointment of new directors, the Company can file forms under this scheme.

Q.3 What is the due date for filing e-Form CFSS -2020?

E-Forms CFSS- 2020 will be filed after the closure of the scheme and after the documents are taken on file or on record or approved by the designated authority as the case may be but not after the expiry of six months from the date of closure of the Scheme(i.e. by March 30, 2021)

Q.4 Is there any fees for filing e-Form CFSS -2020?

No fees shall be payable to file e-form CFSS-2020

Q.5 What if the forms are filed but the CFSS is not filed within March 30th, 2021?

The late fee in the form of additional fees, penalty, prosecution, if any, will be waived for all the forms to be filed within the currency of the Scheme with an assumption that the companies will avail the benefit of the Scheme and will obtain immunity certificate against such forms which have been filed belated. Where the immunity certificate is not obtained by filing CFSS-2020, the benefit of the Scheme cannot be availed and probably such companies will be subjected to payment of additional fees, penalty, and prosecution, if any, as may have been waived.

Q.6 Which are the cases and e-forms cannot avail the benefit of the scheme ?

Cases:

  • Where 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 against such orders of the court or of the adjudicating authority as the case may before this Scheme has come into force.

E-Forms:

E- Form SH-7 [the circular says – in case of increase in authorised share capital –which should have meant that the immunity would be provided for other purposes for which the said form is filed i.e:

ii. Redemption of redeemable preference shares;

iii. Increase in number of members;

iii. Consolidation or division etc.

However, as per the clarification during the webinar on 01-04-2020, organised by ICSI, it was clarified that the immunity is not provided for the entire SH-7, irrespective of the purpose for which it is filed. Also, the list of 76 forms uploaded by the MCA, does not include SH-7 and E-Forms CHG 1, CHG 4, CHG 8 and CHG 9 for creation, modification and satisfaction of charges

Q.7 Why are the charge forms kept out of the ambit of this Scheme?

Filing of charge forms have implication under other laws as well like the Insolvency and Bankruptcy Code, 2016. Accordingly, delay in filing charge forms will not be immunised.

Q.8 What is the modus operandi to avail the benefit of the Scheme?

The Application for obtaining immunity under the CFSS, 2020 has to be made by filing e Form CFSS-2020, (the draft version of the form has been annexed with the MCA Circular 6). As per the draft form and the draft immunity certificate, attached to the Circular, the SRNs of the e-forms against which immunity is to be sought has to be mentioned. Accordingly, the Scheme requires the defaulting companies to clear all their pending filings until September, 2020 by paying the normal fee on the same. Once all pending filings are made good, thereafter, the companies shall have to file e-Form CFSS-2020 within 6 months from the closure of the Scheme (i.e. by March 30, 2021), based on which an immunity certificate in respect of the documents filed, shall be issued by the designated authority

Q.9 Can the benefit of the Scheme be taken by a company undergoing CIRP / Liquidation?

A company undergoing CIRP is required to continue to file requisite forms with the MCA from time to time as against a company under liquidation, which is required to only file the order of liquidation via INC-28. Generally, a company undergoing CIRP has many defaults with respect to filing of forms. Since the Scheme does not disallow companies undergoing CIRP to avail its benefit, such companies can also wash away the delay in filing of forms with MCA through the Scheme

ANNEXURE I

LIST OF FORMS COVERED UNDER CFSS, 2020 and LLP SETTLEMENT SCHEME,2020

S No. Form No. Description
1 23C Appointment of Cost Auditors
2 MR-2 Form of Application to the Central Government for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or over payment to managing director or whole-time director or manager and commission or remuneration to directors
3 ADT-2 Application for removal of auditor(s) from his/their office before expiry of term
4 NDH-2 Application for extension of time
5 DIR-3C Intimation of Director Identification Number by the company to the registrar
6 INC-12 Application for grant of License under section 8
7 MSC-1 Application to ROC for obtaining the status of dormant company
8 DIR-12 Particulars of appointment of directors and the key managerial personnel and the changes among them
9 INC-4 Intimation for Change in Member/Nominee
10 INC-6 One Person Company – Application for Conversion
11 INC-22 Notice of Situation or Change of situation of Registered Office of the Company
12 INC-27 Conversion of public company into private company or private company into public company
13 20B Annual Return
14 21A Annual Return for company having no share capital
15 23B Notice by Auditor
16 23D Information by cost auditor to Central Government
17 23AC Filing balance sheet and other documents with the Registrar
18 23ACXBRL Form for filing XBRL document in respect of balance sheet and other documents with the Registrar.
19 Form 66 Form for submission of Compliance Certificate
20 AOC-4 Form for filing financial statement and other documents with the Registrar
21 AOC-4 CFS Form for filing consolidated financial statements and other documents with the Registrar
22 AOC- 4(XBRL) Form for filing XBRL document in respect of financial statement and other documents with the Registrar
23 ADT-1 Information to the Registrar by company for appointment of auditor
24 ADT-3 Notice of Resignation by the Auditor
25 BEN-2 Return to the Registrar in respect of declaration under section 90
26 CRA-2 Form of Intimation of appointment of cost auditor by the company to Central Government
27 CRA-4 Form for filing Cost Audit Report with the Central Government
28 DPT-3 Return of deposits
29 DPT-4 Statement regarding deposits existing on the commencement of the Act
30 GNL-2 Form for submission of documents with the Registrar
31 INC-5 One Person Company- Intimation of exceeding threshold
32 IEPF-1 Statement of amounts credited to the Investor Education and Protection Fund
33 IEPF-2 Statement of unclaimed or unpaid amounts
34 IEPF-3 Statement of shares and unclaimed or unpaid dividend not transferred to the Investor Education and Protection Fund
35 IEPF-4 Statement of shares transferred to the Investor Education and Protection Fund
36 IEPF-6 Statement of unclaimed or unpaid amounts to be transferred to the Investor Education and Protection Fund
37 IEPF-7 Statement of amounts credited to IEPF on account of shares transferred to the fund
38 IEPF-5 e-verification report Application to the authority for claiming unpaid amounts and shares out of Investor Education and Protection Fund (IEPF) – E-verification report
39 I-XBRL Form for filing XBRL document in respect of cost audit report and other documents with the Central Government
40 MGT-7 Annual Return
41 MR-1 Return of appointment of key managerial personnel
42 MSC-3 Return of dormant companies
43 NDH-1 Return of Statutory Compliances
44 NDH-3 Return of Nidhi Company for the half year ended
45 NDH-4 Application for declaration as Nidhi Company and for updation of status by Nidhis
46 PAS-3 Return of allotment
47 SH-11 Return in respect of buy-back of securities
48 A-XBRL Form for filing XBRL document in respect of compliance report and other documents with the Central Government
49 DIR-3 KYC/Web form Application for KYC of Directors
50 FC-1 Information to be filled by Foreign company
51 FC-2 Return of alteration in the documents filed for registration by foreign company
52 FC-3 Annual accounts along with the list of all principal places of business in India established by foreign company
53 FC-4 Annual Return of a Foreign Company
54 INC-22A Active Company Tagging Identities and Verification (ACTIVE)
55 INC-20A Declaration for commencement of business
56 AOC-5 Notice of address at which books of account are maintained
57 DIR-11 Notice of resignation of a director to the Registrar
58 GNL-3 Particulars of person(s) or key managerial personnel charged or specified for the purpose of sub-clause (iii) or (iv) of clause 60 of section 2
59 INC-20 Intimation to Registrar of revocation/surrender of license issued under section 8
60 INC-28 Notice of order of the Court or Tribunal or any other competent authority
61 MGT-6 Return to the Registrar in respect of declaration under section 89 received by the company
62 MGT-10 Changes in shareholding position of promoters and top ten shareholders
63 MGT-14 Filing of Resolutions and agreements to the Registrar under section 117
64 MGT-15 Form for filing Report on Annual General Meeting
65 Form 27 LLP Form for registration of particulars by Foreign Limited Liability Partnership (FLLP
66 FORM 3 Information with regard to limited liability partnership agreement and changes, if any, made therein
67 FORM 8 Statement of Account & Solvency
68 FORM 15 Notice for change of place of registered office
69 FORM 11 Annual Return of Limited Liability Partnership (LLP)
70 FORM 4 Notice of appointment, cessation, change in name/ address/designation of a designated partner or partner and consent to become a partner/designated partner
71 FORM 5 Notice for change of name
72 FORM 12 Form for intimating other address for service of documents
73 FORM 22 Notice of intimation of Order of Court/ Tribunal/CLB/ Central Government to the Registrar
74 FORM 31 Application for compounding of an offence under the Act
75 FORM 23 Application for direction to Limited Liability Partnership (LLP) to change its name to the Registrar
76 Form 29 LLP Notice of (A) alteration in the certificate of incorporation or registration; (B) alteration in names and addresses of any of the persons authorised to accept service on behalf of a foreign limited liability partnership (FLLP) (C) alteration in the principal place of business in India of FLLP (D) cessation to have a place of business in India

Disclaimer- This article is for informational purposes only and is intended, but not promised or guaranteed, to be correct, complete, and up-to-date. Whitespan Advisory does not warrant that the information contained in this article to be accurate or complete, and hereby disclaims any and all liability to any person for any loss or damage caused by errors or omissions, whether such errors or omissions result from negligence, accident or any other cause.

Please feel free to contact the undersigned in case you require any further information/ clarification on the above article.

Ms. Jaya Yadav
Ms. Trishna Choudhary
Mr. Himanshu Gupta
Jayayadav @ whitespan.in Trishna @ whitespan.in himanshu @ whitespan.in

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