As a result of the receipt of multiple representations from various stakeholders for granting this time opportunity to make the default good, the Ministry of Corporate Affairs (MCA) vide circular no.12/20 has notified a scheme for the companies registered in India who have defaulted in filing necessary documents & returns in the past, giving them an opportunity to correct their mistakes without having to go through any prosecution or payment of any hefty sum as penalty. This scheme shall be effective from 01.04.2020 and shall expire after 20.09.2020.
Applicability of the Scheme:
The scheme shall be available for the companies who have defaulted in filing necessary documents, statements & returns on the MCA 21 registry in compliance with the necessary provisions of the Companies Act 2013. Such companies have been given a golden opportunity to file such belated documents in accordance with the provisions of the scheme.
However, the scheme shall not be applicable in the following cases-
a. Proceedings for Striking off the name of the company have been initiated- Where the concerned Registrar of companies (ROC) has already initiated proceedings for striking off the name of the company under section 248 of the Companies Act 2013, out of the register of companies, such default companies are not eligible for this scheme.
b. Companies who have voluntarily made an application for winding up of the Company- Such companies who have already made applications to their jurisdictional Registrar voluntarily cannot take benefit of this scheme.
c. Companies who have entered into an arrangement of Amalgamation- The companies who have been entered into a scheme of compromise or amalgamation in accordance with the provisions of the Act.
d. Companies which have made an application under the Act to seek the status of a dormant company- Where the company has made a request to the ROC to acquire the status of a dormant company as per the provisions of section 455 of the Act shall not be able to avail the benefits of the scheme.
e. Vanishing companies if any;
f. Companies who have failed to file documents related to Increase in share Capital & charge related documents-
Where any filling relating to increasing in authorized share capital is pending (Form SH-7) & also charge related documents like (CHG-1, CHG-4, CHG-8 & CHG-9).
Highlights of the Scheme-
1. Immunity from filling Additional Fee for belated fillings-
The companies who apply for the scheme shall be required to pay only the normal fees prescribed under the Companies (Registration & Fees) Rules 2014 and no additional fees or no penalty shall be levied while filling such belated documents. However, immunity shall only be available in respect of such delayed fillings & not against any consequential proceedings involving interests of any shareholders, Key Managerial personnel, or any other person.
2. Withdrawal of Appeal against any Prosecution-
Any company in default who has avoided statutory fillings in the past or any officer-in –the default of such company who has filed an appeal for the notice issued/complaint filed by any adjudicating authority under the Act before a competent court or authority for violation of provisions of Companies Act 1956 or 2013 as the case may be in respect of which an application is made under this scheme, the applicant shall before filling the applicant before filing an application for issue of immunity certificate withdraw the appeal and furnish proof of such withdrawal along with the application.
3. Measures to be taken where the order of Adjudicating authority was passed and no appeal could be filed-
Where due to any delay associated in the filing of any document, statement or return, etc. in the MCA-21 registry, penalties were imposed by an adjudicated officer under the Act, & no appeal has been preferred by the company or its officers before the Regional Director under section 454(6) as on the date of commencement of the scheme, the following shall apply-
A. Where the last date due for filing an appeal against the order of the adjudicating authority falls between 01.03.2020 to 31.05.2020(inclusive of both days) a period of 120 additional days shall be allowed with effect from such last date to all companies and their officers for filing the appeal before Regional Directors;
B. During the additional 120 days, prosecution under section 454(8) for non-compliance of the order of the adjudicating authority in so far as it relates to delay associated in the filing of any document, a statement in return, etc. in MCA-21 shall not be initiated against such companies or their officers.
Application for Seeking Immunity Under The Scheme-
i. In the matter of any appeal pending before the court of law or;
ii. Management disputes of the company are pending before the court of law or tribunal and;
iii. Where the court has ordered conviction in any matter or;
iv. No appeal has been preferred against such orders of the Court or adjudicating authority before the commencement of this scheme.
The order passed by Designated Authority-
On the basis of the declarations made & documents filed in the CFSS form, the designated authority shall pass an “Immunity Certificate” under the Act.
Effect Of Immunity Given Under The Scheme-
Once the immunity is granted, the designated authority concerned shall withdraw the prosecution pending, if any before the concerned courts and the proceedings of adjudication of penalties under section 454 of the Act other than those referred in the second proviso to paragraph 6(vii) of this scheme in respect of defaults against which the immunity has been granted shall be deemed to have been completed.
Option Given to a Defaulted Inactive Company-
Under the CFSS scheme 2020, the defaulting inactive companies while filling belated due documents shall be allowed to simultaneously either-
Apply to seek the status of a “Dormant company” as defined under section 455 of the Act by filling MSC-1 (e-form) paying the normal fee as prescribed under the Act or;
Apply for striking off the name of the Company-
For striking the names of the company in form SKT-2 from the register of companies under the Act by paying requisite fee payable under the Act.
In view of the current situation in lockdown when it has become more difficult for the companies to run their business smoothly, the CFSS scheme is a golden opportunity for the companies to make a fresh start for the companies clearing their past defaults & setting an example for E-governance in near future.