Brief Summary of Companies Fresh Start Scheme, 2020:
-Companies Fresh Start Scheme, 2020 Provides opportunity to defaulting Companies to make a fresh start on a clean slate.
-It is a one-time opportunity all pending compliances by filing necessary documents in the MCA-21 registry without being subject to higher additional fees on account of any delay.
-Main benefits include – Condonation of Delay w.r.t. additional fees and granting of immunity from launching of prosecution / proceedings for imposing penalties on account of delays.
-It also gives an opportunity to Inactive Companies to get themselves declared as ‘Dormant Company’ by filing a simple application at a normal fee.
-Only normal filing fees prescribed under Companies Act, 2013 to be payable during the currency of this scheme.
Details of Companies Fresh Start Scheme, 2020
|3.||Important Definitions||1. Defaulting Company: Means a Company which has made a default in filing any of the documents, statement, returns, etc. including annual statutory documents on the MCA-21 Registry.
2. Inactive Company: Means a Company defined in Explanation (i) to sub-section (1) of section 455(1) of the Companies Act, 2013.
3. Act: Means Companies Act, 2013 or Companies Act, 1956.
|4.||Applicability of this Scheme||Any Defaulting Company is permitted to file belated documents which were due for filing on any given date in accordance with the provisions of this scheme.|
|5.||Manner of Payment & Seeking of Immunity under this Scheme||Manner of Payment:
– Pay normal fees while filing each belated document.
– Fees prescribed under Companies (Registration offices and Fee) Rules, 2014.
– No additional fees shall be payable.
Seeking of Immunity:
– Immunity from launch of prosecution / proceedings for imposing penalty shall be provided ONLY TO THE EXTENT such prosecution / proceedings pertain to any delay associated with filings of belated documents.
– NO IMMUNITY from any consequential proceedings.
U/s 42(8), every Company is required to file a return of allotment within the time prescribed. Proviso to this section requires that utilization of money raised through private placement shall not be made unless the return of allotment has been filed with the registry. Now the immunity under this scheme will be available to the extent of condoning the delay in filing of return of allotment. No immunity will be available on default of utilization of money raised through private placement prior to filing the return of allotment.
|6.||Withdrawal of Appeal||With respect to any Statutory Filing under the Act;
– If the Defaulting Company or its Officer in Default has filed any appeal against any notice / order of court or authority in respect of which an application is made under this scheme; then
– The Applicant shall withdraw such Appeal and furnish proof of such withdrawal before making application of Immunity under this scheme.
|7.||Cases where Penalty is imposed but Appeal is not yet filed:||– Where the last date for filing appeal against the order of adjudicating authority falls between 1st March, 2020 to 31st May, 2020: A period of additional 120 days with effect from such last date shall be allowed to file Appeal before concerned authority.
– During such additional period, Prosecution for non-compliance of the order passed insofar it relates to delay in filing shall not be initiated.
|8.||Immunity||– Application for Immunity to be made electronically.
– It should be made after closure of the scheme and after documents are taken on record or approved by the Designated Authority but before 6 months from the closure of this Scheme.
– No Immunity if appeal before the court of law or tribunal.
– No immunity if an order imposing penalty has already been passed and no appeal is filed against such order.
|9.||Scheme Not To Apply in Certain Cases||a. Companies where action of final notice for striking of name u/s 248 is already initiated;
b. Where application has been filed by Companies for action of striking of the name from Register of Companies;
c. Companies amalgamated under a scheme of arrangement or compromise;
d.Where application is already filed for obtaining Dormant Status;
e. To Vanishing Companies;
f. Where any increase in authorized share capital is involved (Form SH-7) and also charge related documents (CHG-1, CHG-4, CHG-8, CHG-9)
|10.||Effect of Immunity||After granting of immunity, the designated authority concerned shall withdraw the prosecutions pending, if any.|
|11.||Scheme For Inactive Companies||Two options available:
a. Apply to get registered as a Dormant Company by filing MSC-1 with normal fees; or
b. Apply for striking off name of the Company by filing STK-2 with normal fees.
Companies have numerous compliances to comply with year round. This scheme brings relief to many Defaulting Companies and Officers with respect to Additional Fees due to delay in Compliance filings. Every Defaulting Company can save a lot of Penalty Cost if benefits are availed under this scheme. This is a Welcome Move by the Government of India & MCA.