E-form Active (INC-22A) and Companies Fresh Start Scheme, 2020 (‘CFSS-2020’)
On November 2, 2018, the Government of India has announced various new amendments to the Companies Act, 2013 (‘Principal Act’). These amendments were a continuation of a number of steps the Government of India has taken in the past couple of years, to strengthen the compliance mechanism for Companies incorporated in India, principally to weed out dummy Companies and ensure that financial fraud is eliminated or detected early.
A new Section 12(9) in the Principal Act was inserted, which ostensibly allows the Registrar of Companies (‘ROC’) to weed out a “dummy” or “ghost”Company through physical verification. Section 12(9) allows ROC to physically verify whether a Company is carrying on business or operations by visiting the Registered Office of the Company, and initiating action to remove the name of the Company from the register of Companies if the Company is not carrying on business or operations.
If ROC finds that a Company is not carrying or any business or operations (i.e. not having a business or operating address), then in those cases ROC can visit the Registered Office to verify this fact in some yet to be prescribed manner and initiate removal proceedings if ROC concludes that the company is simply a “dummy” or “ghost” company.
Newly inserted provision of subsection (9) of section 12 of the Principal Act are as under:-
“(9) If the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may cause a physical verification of the registered office of the company in *such manner as may be prescribed and if any default is found to be made in complying with the requirements of sub-section (1), he may without prejudice to the provisions of sub-section (8), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.”.
In view of the provision of sub-section 9 of Section 12 of the Principal Act, a new Rule 25A was also inserted in the Companies (Incorporation) Rules, 2014 by the amendment in the Incorporation Rules.
In this series, the Ministry of Corporate Affairs (‘MCA’) vide its Notification No. 144(E) Dated February 21, 2019 has amended the Companies (Incorporation) Rules, 2014 as the Companies (Incorporation) Amendment Rules, 2019 w.e.f. 25.02.2019. By this amendment, MCA inserted a new Rule namely ‘Rule 25A’regarding Company’s KYC as Active Company Tagging Identities and Verification (ACTIVE). Thereafter, there were lots of changes in the Companies (Incorporation) Rules, 2014 in the year 2019 which has been re-produced herein at the end of this Article. However, we would like to discuss the current position of Company’s KYC as Active Company Tagging Identities and Verification (ACTIVE) which is currently prevail as on date, as under: –
As per Rule 25A of the Companies (Incorporation) Rules 2014,
“25A. Active Company Tagging Identities and Verification (ACTIVE).-(1) Every company incorporated on or before the 31st December, 2017 shall file the particulars of the company and its registered office, in e-Form ACTIVE (Active Company Tagging Identities and Verification) on or before 15.06.2019.
Provided that any company which has not filed its due financial statements under section 137 or due annual returns under section 92 or both with the Registrar shall be restricted from filing e-Form-ACTIVE, unless such company is under management dispute and the Registrar has recorded the same on the register:
Provided further that companies which have been struck off or are under process of striking off or under liquidation or amalgamated or dissolved, as recorded in the register, shall not be required to file e-Form ACTIVE:
Provided also that in case a company does not intimate the said particulars, the Company shall be marked as “ACTIVE-non-compliant” on or after 16th June, 2019 and shall be liable for action under sub-section (9) of section 12 of the Act:
Provided also that no request for recording the following event based information or changes shall be accepted by the Registrar from such companies marked as “ACTIVE-non-compliant”, unless “e-Form ACTIVE” is filed-
(i) SH-07 (Change in Authorized Capital);
(ii) PAS-03 (Change in Paid-up Capital);
(iii) DIR-12 (Changes in Director except in case of;
a) cessation of any director or
b) appointment of directors in such company where the total number of directors are less than the minimum number provided in clause (a) of sub-section (1) of section 149 on account of disqualification of all or any of the director under section 164.
c) appointment of any director in such company where DINs of all or any its director(s) have been deactivated.
d) appointment of director(s) for implementation of the order passed by the Court or Tribunal or Appellate Tribunal under the provisions of this Act or under the Insolvency and Bankruptcy Code, 2016).
(iv) INC-22 (Change in Registered Office);
(v) INC-28 (Amalgamation, de-merger)
(2) Where a company files “e-Form ACTIVE”, on or after 16th June, 2019, the company shall be marked as “ACTIVE Compliant”, on payment of fee of ten thousand rupees”.
Crux of the Provisions of Director KYC: –
1. All Companies incorporated on or before 31st of December, 2017 shall file the particulars of the Company and the address validation of the Registered Office in e-Form INC – 22A on or before the 15th of June, 2019 with ROC.
2. However, there are certain companies that are exempted from filing this e-form:-
-
- Companies incorporated after 01.01.2018;
- Companies struck off from the Register;
- Companies under the process of strike-off;
- Companies under amalgamation;
- Companies under liquidation;
- Companies that are dissolved;
3. Any Company which has not filed its due financial statements under Section 137 or due annual returns under Section 92 or both with ROC shall be restricted from filing the e-form ACTIVE. However, if the Company is under management dispute and the same has been recorded by ROC, then it shall be allowed to file E-Form INC – 22A.
4. Where the Company does not file e-form ACTIVE form by the 15th of June, 2019, it shall be marked as “ACTIVE non-compliant”, and shall be liable for action as per the Section 12(9) of the Principal Act.
5. Further, until the e-Form ACTIVE is filed, ROC shall not record any of the following changes/events pertaining to the Company:-
i) SH – 07 (Changes in Authorised Capital);
ii) PAS – 03 (Changes in Paid-up Capital);
iii) DIR – 12 (Changes in Director except in four cases as mentioned above);
iv) INC – 22 (Change in the Registered Office);
v) INC – 28 (Amalgamation, de-merger).
6. E-Form INC – 22A, if filed within specified date as mentioned in Rule 25A i.e. 15th June 2019, NO FEE is payable. However, fee payable in delayed case is Rs. 10,000/-.
However, where a company files e-Form ACTIVE on or after 16th June, 2019, the Company shall be marked as “ACTIVE Compliant” on payment of fee of ten thousand rupees.
Director of ACTIVE non-compliant Company.
Further, in continuation to strengthen the compliance mechanism for Companies incorporated in India, principally to weed out dummy companies and ensure that financial fraud is eliminated or detected early, there were also amendments in the Companies (Appointment and Qualification of Directors) Rules 2014. By the amendment, a new ‘Rule 12B’ was inserted. MCA vide its Notification No. 368(E) Dated 16th May, 2019 has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 as the Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2019 w.e.f. 16.05.2019. By this Amendment MCA amended Rule 12Bregarding Director of ACTIVE non-compliant Company as under:
“12B. Directors of company required to file e-form ACTIVE.- (1) Where a company governed by Rule 25A of the Companies (Incorporation) Rules, 2014, fails to file the e-form ACTIVE within the period specified therein, the Director Identification Number (DIN) allotted to its existing directors, shall be marked as “Director of ACTIVE non-compliant company”.
(2) Where the DIN of a director has been marked as “Director of ACTIVE non-compliant company”, such director shall take all necessary steps to ensure that all companies governed by rule 25A of the Companies (Incorporation) Rules, 2014, where such director has been so appointed, file e-form ACTIVE.
(3) After all the companies referred to in sub-rule (2) file the e-form ACTIVE, the DIN of such director shall be marked as “Director of ACTIVE compliant company”.
Please note that Companies who have not filed its e-form ACTIVE within specified period mentioned in Rule 25A, the DIN of all the existing directors has been marked as “Director of ACTIVE non-compliant company”. However, these companies can convert their MCA status from “ACTIVE-non-compliant” to “ACTIVE-compliant” and status of DIN of its existing directors from “Director of ACTIVE non-compliant company”to“Director of ACTIVE compliant company” by filing necessary e-form ACTIVE along with prescribed fee.
E-Form INC-22A and “Companies Fresh Start Scheme, 2020 (CFSS-2020)”.
Due to the emerging financial distress faced by most companies on account of the large-scale economic distress caused by COVID 19, there is delay in filing of various forms which are provided under the Act. In view of this, MCA has taken special measures under Companies Act, 2013 and Limited Liability Partnership Act, 2008 in view of the COVID -19 outbreak vide General Circular No. 11/ 2020 dated 24th March, 2020.
In order to support and enable Companies and Limited Liability Partnerships (LLPs) in India to focus on taking necessary measures to address the COVID-19 threat, including the economic disruptions caused by it, some measures have been implemented by the MCA to reduce their compliance burden and other risks. In Para I of the said Circular-
“No additional fees shall be charged for late filing during a moratorium period from 01st April to 30th September 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date, which will not only reduce the compliance burden, including financial burden of companies/ LLPs at large, but also enable long-standing non-compliant companies/ LLPs to make a ‘fresh start’. The Circulars specifying detailed requirements in this regard are being issued separately.”
In view of the special measure provided by MCA vide General Circular No. 11/ 2020 dated 24th March, 2020, a moratorium period from 1st April, 2010 to 30th September, 2020, has been provided by MCA, by which no additional fess shall be charged for late filing during the said moratorium period.
It is submitted that as per Rule 25A of the Companies (Incorporation) Rules 2014, the due date for filing e-form INC-22A was 15th June 2019. Therefore, defaulting company can take the benefit of General Circular No. 11/ 2020 dated 24th March, 2020.
As per relaxation provided by MCA vide General Circular No. 11/ 2020 dated 24th March, 2020, belated e-form INC-22A,can be filed during a moratorium period from 1st April, 2010 to 30th September, 2020, without additional fees for late filing during the said moratorium period.
Further, it is mentioned in the said circular that the Circulars specifying detailed requirements in this regard are being issued separately. In furtherance of the Ministry’s Circular No. 11/2020, dated 24th March, 2020 and in order to facilitate the companies registered in India to make a fresh start on a clean slate, MCA has decided to take certain alternatives measures for the benefits of all companies.
So, MCA came out with a detailed Scheme namely, “Companies Fresh Start Scheme, 2020 (CFSS-2020)” vide Circular No. 12/2020 dated 30th March, 2020. The said CFSS-2020 automatically override moratorium period provided by General Circular No. 11/ 2020 dated 24th March, 2020.
The MCA has uploaded a list of 76 forms (including for companies and LLPs) for which the benefit of the Scheme CFSS-2020 can be availed. E-form INC-22A is also included in the list to avail the benefits under CFSS-2020.
The said CFSS-2020 is applicable between the 1st of April, 2020 and the 30th of September, 2020. Therefore, company will be able to file remaining forms, compliances till 30th September, 2020. The said Scheme CFSS-2020 is a golden opportunity for the defaulting companies to clear their slate and to make good any filling related defaults, irrespective of the duration of defaults, without any additional fees/ penalty / prosecution and make a fresh start as a fully compliant entity.
However, under said Scheme CFSS-2020, there is one additional compliance which a company have to abide by i.e. company has to file a FORM CFSS-2020 after closure of scheme and after the document(s) are taken on file, or on record or approved by the designated authority as the case may be but not after the expiry of six months from the date of closure of the scheme. There shall not be any fee payable on this Form.
Conclusion:Where a company files “e-Form ACTIVE”, on or after 16th June, 2019, the company shall be marked as “ACTIVE Compliant”, on payment of fee of ten thousand rupees”. Therefore, in view of the above, it is stated that company can file belated e-form INC-22A without any additional fee, however, it has to be filed a FORM CFSS-2020 after closure of scheme.
Also, after filing the e-form ACTIVE, the DIN of director of that company shall be marked as “Director of ACTIVE compliant company” from “Director of ACTIVE non-compliant company”
PROVISIONS OF COMPANY’S KYC SINCE 2019: –
A new Sub-section 9 was inserted in Section 12 of the Companies Act, 2013 by the Companies (Amendment) Ordinance,2018 Dated 02.11.2018 [thereafter Inserted by the Companies (Amendment) Ordinance,2019 dated 12.01.2019 as Companies (Amendment) Ordinance 2018 is repealed on 12th January 2019] . Later on, the same was adopted in the Companies (Amendment) Act, 2019 w.e.f. 02.11.2018[Companies (Amendment) Second Ordinance 2019 is repealed on 31st July 2019].
“(9) If the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may cause a physical verification of the registered office of the company in *such manner as may be prescribed and if any default is found to be made in complying with the requirements of sub-section (1), he may without prejudice to the provisions of sub-section (8), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.”.
In view of the provision of sub-section 9 of Section 12 of the Principal Act, a new Rule 25A was inserted in the Companies (Incorporation) Rules, 2014 by the amendment in the Incorporation Rules.
The Ministry of Corporate Affairs (‘MCA’) vide its Notification No. 144(E) Dated February 21, 2019 has amended the Companies (Incorporation) Rules, 2014 as the Companies (Incorporation) Amendment Rules, 2019 w.e.f. 25.02.2019. By this amendment, MCA inserted a new Rule namely ‘Rule 25A’ regarding Company’s KYC as Active Company Tagging Identities and Verification (ACTIVE).
“25A. Active Company Tagging Identities and Verification (ACTIVE).-(1) Every company incorporated on or before the 31st December, 2017 shall file the particulars of the company and its registered office, in e-Form ACTIVE (Active Company Tagging Identities and Verification) on or before 25.04.2019.
Provided that any company which has not filed its due financial statements under section 137 or due annual returns under section 92 or both with the Registrar shall be restricted from filing e-Form-ACTIVE, unless such company is under management dispute and the Registrar has recorded the same on the register:
Provided further that companies which have been struck off or are under process of striking off or under liquidation or amalgamated or dissolved, as recorded in the register, shall not be required to file e-Form ACTIVE:
Provided also that in case a company does not intimate the said particulars, the Company shall be marked as “ACTIVE-non-compliant” on or after 26th April, 2019 and shall be liable for action under sub-section (9) of section 12 of the Act:
Provided also that no request for recording the following event based information or changes shall be accepted by the Registrar from such companies marked as “ACTIVE-non-compliant”, unless “ e-Form ACTIVE” is filed-
(vi) SH-07 (Change in Authorized Capital);
(vii) PAS-03 (Change in Paid-up Capital);
(viii) DIR-12 (Changes in Director except cessation);
(ix) INC-22 (Change in Registered Office);
(x) INC-28 (Amalgamation, de-merger)
(2) Where a company files “e-Form ACTIVE”, on or after 26th April, 2019, the company shall be marked as “ACTIVE Compliant”, on payment of fee of ten thousand rupees”.
3. in the said Rules, after Form INC-22, the e-form ACTIVE (INC-22A) shall be inserted,namely:-…”
MCA has also inserted Clause VIII in Table of Fee by the Companies (Registration Office and Fees) Amendment Rules, 2019 w.e.f. 25.02.2019 regarding fee for filing E-Form Active under Rule 25A of the Companies (Incorporation) Rules, 2104.
Further MCA vide its Notification No. 332(E) Dated 25th April, 2019 has amended the Companies (Incorporation) Rules, 2014 as the Companies (Incorporation) Fourth Amendment Rules, 2019 w.e.f. 25.04.2019. By this Amendment MCA amended Rule 25A regarding Company’s KYC as Active Company Tagging Identities and Verification (ACTIVE):
“2. In the Companies (Incorporation) Rules, 2014, in rule 25A, in sub-rule (l) of for the words and figures ‘on or before 25.04.2019, the words and figures on or before 15.06.2019‘ shall be substituted.
3. In In the Companies (Incorporation) Rules, 2014, in rule 25A, in sub-rule (1), in the third proviso, for the words and figures,on or after 26th April,2019, the words and figures‘on or after 16th June, 2019 shall be substituted.
4. In the Companies (Incorporation) Rules, 2014, in sub-rule (2), for the words and figures “on or after 26tn April, 2019”, the words and figures “on or after l6th June, 2019′ shall be substituted.”
Therefore, the deadline for the filinge-Form ACTIVE (Active Company Tagging Identities and Verification) in Form INC-22, the e-form ACTIVE (INC-22A)was June 15, 2019.
MCA has issued the Notification by way of the companies (Registration offices and Fees) Second Amendment Rules, 2019, extending the due date for filing Active e-Form INC-22A to 15.06.2019. Late fee of Rs. 10000/- shall not be payable for INC-22A filed up to 15.06.2019.
Also, MCA vide its Notification No. 368(E) Dated 16th May, 2019 has amended the Companies (Appointment and Qualification of Directors) Rules, 2014 as the Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2019 w.e.f. 16.05.2019. By this Amendment MCA amended Rule 12B regarding Director of ACTIVE non-compliant Company as under:
“12B. Directors of company required to file e-form ACTIVE.- (1) Where a company governed by Rule 25A of the Companies (Incorporation) Rules, 2014, fails to file the e-form ACTIVE within the period specified therein, the Director Identification Number (DIN) allotted to its existing directors, shall be marked as “Director of ACTIVE non-compliant company”.
(2) Where the DIN of a director has been marked as “Director of ACTIVE non-compliant company”, such director shall take all necessary steps to ensure that all companies governed by rule 25A of the Companies (Incorporation) Rules, 2014, where such director has been so appointed, file e-form ACTIVE.
(3) After all the companies referred to in sub-rule (2) file the e-form ACTIVE, the DIN of such director shall be marked as “Director of ACTIVE compliant company”.
Further MCA vide its Notification No. 793(E) Dated 16th October, 2019 has amended the Companies (Incorporation) Rules, 2014 as the Companies (Incorporation) Eighth Amendment Rules, 2019 w.e.f. 16.10.2019. By this Amendment MCA amended Rule 25A regarding Company’s KYC as Active Company Tagging Identities and Verification (ACTIVE). as under:
II. in rule 25A,-
in sub-rule (1), in the fourth proviso, for the item (iii), the following shall be substituted, namely.-
“(iii) DIR-12 (changes in Director except in case of:
(a) cessation of any director or
(b) appointment of directors in such company where the total number of directors are less than the minimum number provided in clause (a) of sub-section (1) of section 149 on account of disqualification of all or any of the director under section 164.
(c) appointment of any director in such company where DINs of all or any its director(s) have been deactivated.
(d) appointment of director(s) for implementation of the order passed by the Court or Tribunal or Appellate Tribunal under the provisions of this Act or under the Insolvency and Bankruptcy Code, 2016).”
Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.
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What is event date of form INC-22A for the purpose of Form CFSS?