In order to provide relief to law-abiding Companies and Limited Liability Partnerships (LLPs) from the COVID 19 impact, the Ministry of Corporate Affairs (MCA), has introduced the ‘Companies Fresh Start Scheme, 2020‘ and revised the ‘LLP Modified Settlement Scheme, 2020.

Both schemes provide a one-time waiver of additional filing fees for delayed filings by the companies or LLPs with the Registrar of Companies (ROCs) during the period starting from 1st April, 2020 upto 30th September, 2020.

About “LLP Modified Settlement Scheme, 2020”:

Applicability:  The Scheme is applicable to all defaulting LLP for the forms which were due for filing until 31st August 2020.

Note: “Defaulting LLP” means LLP registered under the Limited Liability Partnership Act, 2008 which has made a default in filing of documents on the due date(s) specified under the LLP Act, 2008 and rules made there under.

Scheme not applicable : Modified LLP Scheme is not applicable for the LLPs, which has already made an application in Form 24 to the Registrar, for strike off its name from the register as per the provisions with Rule 37(1) of the LLP Rules, 2009.

Benefits:

1. The defaulting LLPs may file forms till 30th September,2020, till then No Additional fees will be charged to file forms i,e pay only applicable normal fees.

2. The defaulting LLPs, which have filed their pending Forms till 30th September, 2020 and made good the default, shall not be subjected to prosecution by Registrar for such defaults.

About “Companies Fresh Start Scheme, 2020”:

Applicability: The Scheme is applicable to all defaulting Companies for the forms which were due for filing. Also, MCA officers stated in the webinar that the Foreign Company which has Branch or Liaison office in India can also file Forms that are required to be file under Chapter 22 of the Companies Act, 2013.

Scheme not applicable:

1. Companies against whom action for final notice for striking-off the name has been initiated under Section 248 of the Act

2. Companies which have already filed application for striking-off name under Section 248 of the Act

3. Companies which have been amalgamated under scheme of arrangement or compromise

4. Companies which have filed application for obtaining status of ‘dormant company’ under section 455 of the Act

5. Vanishing companies

Note: ‘Vanishing Company’ means a company, registered under the Act or previous company law or any other law for the time being in force and listed with Stock Exchange which has failed to file its returns with the Registrar of Companies and Stock Exchange for a consecutive period of two years, and is not maintaining its registered office at the address notified with the Registrar of Companies or Stock Exchange and none of its directors are traceable.

Forms, returns etc., can be filed under this Scheme

All forms including annual forms like AOC-4, MGT-7 can be filed under the Scheme except:

1. Documents related to increase in authorised share capital (Form SH-7)

2. Charge related Forms (CHG-1, CHG-4, CHG-8 and CHG-9)

Benefits:

1. The defaulting Companies may file forms till 30th September, 2020, till then No Additional fees will be charged to file forms i,e pay only applicable normal fees.

2. The Scheme also provides an opportunity to the inactive company to convert into a dormant company under section 455 of companies act, 2013 by filing form MSC-1 with nominal fees & help the inactive companies to remain on ROCs register with minimum compliance requirement.

3. Immunity from prosecution to the extent of default connected with non-filing of form and from proceedings related to adjudication of penalty under Section 454. However there are circumstances under which immunity is not available under the scheme:

  • Where any appeal in respect of matter for which immunity is being sought, is pending before any court of law;
  • Where any management dispute is pending before any court of law or tribunal;
  • Where the court has ordered conviction in the matter and no appeal has been filed, before coming into force of this Scheme; and
  • Where penalty has been adjudicated under Section 454 of the Act and no appeal has been filed, before coming into force of this Scheme

Also, Immunity will be provided to defaulting companies only in case of belated filings by waiving off additional fees. However where proceedings involving 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”.

For instance: Section 42(8) of Companies Act 2013 states that, every company is required to file PAS-3 (Return of allotment) within specified time period. But section 42(4) also states that utilization of money raised through private placement shall not be made unless return of allotment is filed. So, immunity under CFSS only provided on account of filing of delay in return of allotment, not in case of utilization of money raised through private placement prior to filing of return with ROC.

List of eligible forms can be accessed at the below given link:

https://taxguru.in/company-law/list-forms-allowed-filed-cfss-2020-llpss-2020.html

FAQ relating to CFSS 2020:

Q 1. Whether a company which have been marked as “under CIRP” or “under liquidation” in MCA21 registry can take benefit of the Scheme?

Ans:  Yes, such type of company can file its belated forms through appointed Insolvency Resolution Professional or Resolution Professional, as the case may be.

Q 2. Whether belated forms MGT-14 or INC-28 can be filed without condonation of the Central Government under the Scheme?

Ans: There is no change in procedure. Therefore, forms MGT-14 and INC-28 cannot be filed without condonation of the Central Government as of now unless the MCA removes the technical requirement of providing the SRN of INC-28 in respective forms which are being filed beyond the prescribed period.

Q 3. Whether Active Non-compliant Company i.e Company which has not filed INC -22A can opt for this scheme?

Ans: As per this scheme, filing of Active form is allowed. Thus company is required to file INC-22A without additional fees and then proceed for further filings

Q 4. Whether the immunity is automatic?

Ans: The application for seeking immunity in respect of belated documents filed under the scheme may be made electronically in the Form CFSS-2020

Q 5. Whether form CFSS-2020, is required to be filed form all forms filed during the Scheme beyond the due date?

Ans: Yes, Form CFSS-2020 is mandatory to file 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 closure of the Scheme but not after the expiry of six months from the date of closure of the Scheme. There is no filing fee of Form CFSS-2020.

Q 6. What is Certificate of immunity?

Ans: The certificate of immunity is specifically required in case where prosecution has been initiated against any company and its officers before any court under the Act or where proceeding for adjudication of penalty has been initiated under Section 454 of the Act but it is advisable that the certificate should be obtained in all cases, so that immunity can be availed against any future prosecution or adjudication of penalty proceedings.

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. In no event shall the author of the article shall be liable for any result arising out of or in connection with the use of the information.

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