The CCFSS Scheme introduced by the Ministry of Corporate Affairs allows companies to regularize delayed statutory filings by providing substantial relief from additional filing fees. Companies that have not prepared financial statements for earlier years may now finalize the accounts, convene a board meeting, hold the Annual General Meeting (AGM), and file pending forms such as AOC-4 and MGT-7/MGT-7A under the Scheme. However, holding the AGM now for past financial years does not cure the statutory default under Section 96 of the Companies Act, 2013 , which mandates that AGM must be held within six months from the end of the financial year and the gap between two AGMs should not exceed fifteen months. Since the AGM was not held within the prescribed time, the company is already in default and may face penalties under Section 99. While the Scheme offers relief from additional filing fees (often up to 90%), companies may still need to apply for compounding of offence for the delay in holding AGM.
1. BACKGROUND OF THE ISSUE
Many Companies, particularly inactive or non‑operational Companies, have not prepared their Financial Statements for several years and therefore could not hold their AGMs. With the introduction of the CCFSS Scheme, such Companies now intend to prepare pending Financial Statements, hold AGM for past years, and file pending forms such as AOC‑4 (all types) and MGT‑7/MGT‑7A.
2. REQUIREMENT OF HOLDING AGM – SECTION 96
Under Section 96(1) of the Companies Act, 2013 every Company must hold an Annual General Meeting within six months from the end of the financial year and the gap between two AGMs shall not exceed fifteen months. If AGM is not held within this time, the Company is in default of Section 96.
3. PENALTY FOR FAILURE TO HOLD AGM – SECTION 99
If a Company fails to hold AGM in accordance with Section 96, the Company and every officer in default may be liable to penalty which may extend up to ₹1,00,000 and in case of continuing default an additional penalty of ₹5,000 per day may be imposed.
4. WHETHER THE SCHEME GIVES IMMUNITY FROM SECTION 96
The CCFSS Scheme primarily deals with delayed filing of forms and provides relief in the form of reduction or waiver of additional filing fees. However, the Scheme does not grant immunity from violations such as failure to hold AGM. Therefore, default under Section 96 continues to exist even if filings are completed under the Scheme.
5. PRACTICAL SCENARIO
For example, if a company has not prepared financial statements for multiple financial years and no AGM was held, the company may now prepare the accounts, hold AGM and file the pending AOC‑4 and MGT‑7 forms under the Scheme. While the company may benefit from reduced additional fees, the default of Section 96 still remains.
6. COMPOUNDING OF OFFENCE
Since the default under Section 96 has already occurred, the company may need to file an application for compounding offence and pay the fine as may be determined by the competent authority.
7. BENEFIT AVAILABLE UNDER THE SCHEME
The company may still take benefit of the Scheme by filing pending statutory forms such as AOC‑4 and MGT‑7/MGT‑7A with significant reduction of additional filing fees, which may go up to 90%. This results in substantial financial relief where filings are delayed by multiple years.
8. RECOMMENDED COMPLIANCE APPROACH
Step 1 – Finalize financial statements for pending years.
Step 2 – Convene Board Meeting to approve financial statements and AGM notice.
Step 3 – Hold AGM even if delayed.
Step 4 – File AOC‑4 and MGT‑7/MGT‑7A under the Scheme.
Step 5 – Apply for compounding of offence for violation of Section 96 read with Section 99.
CONCLUSION
Companies that have not prepared financial statements for earlier years may hold AGM now and subsequently file statutory forms pending to avail the benefits under the CCFSS Scheme. However, such action does not remove the default under Section 96 of the Companies Act, 2013. The company and its officers may still be liable for penalty under Section 99 and may be required to seek compounding of the offence.
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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).
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How does current UDIN generation in the above case works. Since UDIN will be generated today how can we take the benefit of CCFS..??