Background

MCA on 30th March, 2020 has come up with the ‘Companies Fresh Start Scheme 2020‘ (the scheme) to provide an opportunity to the company to make good any previous filing defaults, irrespective of duration without any additional fees. It is a one-time waiver of additional filing fees for delayed filings with MCA. It is a step taken by MCA to allow the Companies to make a fresh start as a fully compliant entity. The scheme shall come in force from 1st April, 2020 and will remain in force till 30th September, 2020.

About the Scheme

Applicability:

Any defaulting company for filing belated documents which were due for filing on any given date.

Defaulting Company: A Company defined under the CA, 2013 and which has made default in filing of any of the documents, statements, returns, etc. including annual statutory documents on MCA registry.

Benefits:

  • No additional fees on delayed filings of any forms with MCA
  • Proceedings for imposing penalty only pertaining to filing of belated documents
  • Immunity from the launch of prosecution

Scheme not applicable to:

  •  Companies against which final notice for Striking off the name initiated,
  •  Companies which voluntarily filed application for Striking off the name
  •  Companies which have been amalgamated
  •  Companies applied for Dormant Status
  •  Vanishing Companies
  •  Increase in authorised capital involved (Form SH-7)
  •  Charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9)

Other considerations

Defaulting companies can file Form CFSS-2020 for application of immunity only after Company withdraws the appeal, if any, filed by itself or by its officers in default, with respect to such statutory filing, against any notice issued or complaint filed or any order passed by the court or by adjudicating authority for violation of the provisions of the Companies Act, 2013 for which application is made under CFSS 2020.

Special measures

In the case where the penalties were imposed by an adjudicating officer under the Act for delay in filing of any documents, statements or returns, etc. on the MCA 21 registry and no appeal has been preferred by the concerned company or its officer before the Regional Director under the provisions of the Act as on the date of commencement of the scheme, the following special measures would apply:

Last date of filing appeal against order of adjudicating authority falls between 1st March, 2020 to 31st May, 2020 (both days included) – an additional period of 120 days shall be allowed from the last date for filing of such appeal.·

During such above stated additional period, prosecution for non-compliance relating to delay in filing of any documents, statement or returns shall not be initiated against such companies or officers.·

Immunity

The scheme also grants immunity from launching the prosecution of proceedings for imposing penalty on account of delay with certain filing.

Seeking immunity: Company has to file an application electronically in Form CFSS-2020 after closure of the scheme and after the documents are taken on file or approved by the designated authority. Application shall not be filed after closure of 6 months from the date of closure of scheme. It shall be noted that no fee shall be payable for filing Form CFSS-2020. Immunity is only against delay in filing of forms on MCA 21 and not against any violation of law.

Cases were Immunity of this scheme not applicable:

– Any appeal pending before court of law

 – In case of management disputes of company pending before any court of law or tribunal

 – Court has ordered conviction in any matters and no appeal preferred before this scheme

– Any order imposing penalty has been imposed and no appeal preferred before this scheme.

Designated authority will issue an immunity certificate to the Company in respect of documents based on the declaration made in the Form CFSS-2020.

Effect of Immunity: Designated Authority shall withdraw the pending prosecution, if any, and the proceedings of adjudication of penalties under Section 454 of the Companies Act, 2013, in respect of defaults against which immunity has been so granted shall be deemed to have been completed without any further action on the part of the Designated Authority.

Conclusion

This scheme has been introduced with an intention that all the old non-compliance cases can use this one time opportunity and streamline their records. The MCA has already initiated the process of considering all the proceedings and non-compliance issues online, that could be the major reason for introduction of this scheme so that the MCA can start the online process afresh with most of the outstanding compliances streamlined by the Companies by taking this one time benefit. However, due to this global pandemic situation of COVID 19, the MCA may consider extension of the date beyond 30 September 2020. However, the MCA should review the same after due course.

Author Bio

Qualification: Student - CA/CS/CMA
Company: Wadhwa & Shah, Chartered Accountant
Location: Mumbai, Maharashtra, IN
Member Since: 03 Apr 2020 | Total Posts: 1

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