Companies Fresh Start Scheme 2020 and Modified LLP Settlement Scheme 2020 Launched by MCA From April 1, 2020 till Sept 30,2020

The ministry of corporate affairs has announced ‘Companies Fresh Start Scheme 2020’ and ‘LLP Settlement Scheme 2020’. Individually the schemes ought to release to make available a chance to companies and LLPs to file any form in default except for instance stated regardless of the period of non-payment and make a renewed start as a compliant entity. This power is exercised under section 460 read with section 403 of the Companies Act 2013 which permits Companies to make a renewed commencement as completely compliant entities through redress any defaults connected to statutory filings, without disbursing the additional fees regardless of the length of the default.

Key topographies of these schemes are:

COMPANIES FRESH START SCHEME 2020

  • This scheme shall endure in dynamism from April 1, 2020 till Sept 30, 2020
  • This scheme smears on a company which has defaulted in filing of any document, statement, return as per the requirement prescribed under the Companies Act 2013.
  • If the Companies failed to file documents within prescribed time than while filling belated documents ,only normal fee would be charged and no additional fee would be levied on such belated filling
  • MCA will grant immunity from launch of any trial or proceeding for the levy of any penalty due to delay in filling the returns with in prescribed time.
  • In case the company or any of its officer in default has trailed any appeal in contradiction of any prosecution launched or proceedings for imposing penalty then the said appeal should first be withdrawn
  • Once the delayed forms are filed and they are taken on record and after the closure of the scheme the company shall apply for an immunity certificate under this scheme.
  • The defaulting inactive companies while filing Form CFSS-2020 can simultaneously apply for the following actions

1. Application for dormant status by filing Form MSC-1 at a nominal fee

2. Application for striking-off the name of the company by filing Form STK-2 and paying the applicable fee.

Exceptions

  • This scheme shall not apply to companies under striking off, amalgamation, dormancy, vanishing companies and where the increase in authorised capital or filing of charge related documents is involved, companies under CIRP or Liquidation.
  • The defaulting inactive companies can file the due documents under this scheme and then either apply to get a dormancy status or apply for striking off the name of the company.
  • Where final notice for striking-off the name of the Company has already been issued by the Registrar.
  • Where the Company has made an application for striking-off the name of the Company.
  • Where the Companies are amalgamated under the scheme of Compromise & Arrangement.
  • Where the Company has applied for the dormant status before the introduction of the scheme.
  • In case of Vanishing Companies – Where the documents are related to Increase in authorised share capital (Form SH-7) and charge (CHG-1, CHG-4, CHG-8 & CHG-9).

LLP Settlement Scheme 2020

  • This scheme shall remain in force only from April 1, 2020 till Sept 30, 2020
  • It applies on an LLP which has defaulted in filing of any document, statement, return, or any other filling as per the Companies act 2013 on MCA portal.
  • The LLP which is defaulting in filling the necessary documents within the time constraint, permitted to file belated documents until August 31, 2020.

Exceptions

  • This scheme shall not apply to LLPs which have made an application for striking off their names.

Both these schemes present a one-time opportunity to all the defaulting companies and LLPs to complete their filings and get immunity from all related prosecutions. An application for pursuing immunity has to be prepared electronically in E-form CFSS-2020 after the closure of the Scheme but not after 6 months from date of closure. Provided that no immunity would be settled for any appeal undecided in the court in contradiction of the management disputes or in case of persuasion ordered previously delivered by a court or adjudicating authority.

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