Recently, The Ministry of Corporate Affairs in pursuance of the Government of India’s efforts to provide relief to law abiding companies in the wake of COVID 19, has introduced the “Companies Fresh Start Scheme, 2020” which is already in vogue to provide a first of its kind opportunity to companies to make good any filing related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity. The USP of the scheme is, its a one-time waiver of additional filing fees for delayed filings by the companies with the Registrar of Companies during the currency of the Schemes, i.e. during the period starting from 1st April, 2020 and ending on 30th September, 2020.
The summarized details of the same is ad under:
|1||Background of the Scheme||“Company Fresh Start Scheme, 2020″ is a scheme to give a Onetime opportunity to the companies to enable them to complete their pending compliances by filing necessary documents in the MCA-21 registry including annual filings without being subject to a higher additional fee on account of any delay.|
|2||Tenure of the Scheme||1st April, 2020 to 30th September, 2020.|
|3||Benefits extended under Scheme||1) One-time waiver of additional filing fees for delayed filings. However, normal fees in respect of documents filed under scheme are leviable.
2) An immunity certificate in respect documents filed under this Scheme shall be issued which grants immunity from Penalty and Prosecution pertaining to any delay associated with filing of belated documents.
|4||Benefits for Inactive Company||– Can get such an inactive company declared as “dormant company” by filing Form MSC-1 at a normal fee.
– Can apply for striking off the name by filing Form STK-2 at normal fees.
|5||Designated Authority||Registrar of Companies having jurisdiction over the registered office of the company.|
|6||Eligibility for the Scheme & Period of Default||Scheme is applicable for any “defaulting company” which has not filed any document, statement, return etc. including annual statutory documents, which were due for filing on any given date and are pending to file on the date of accessing the Scheme.
Default relating any past period from incorporation of the company till the date is covered.
|7||Applicability exclusions||Scheme shall not apply to:
– Companies who have applied for Striking off its name
– Companies against which action for final notice for striking off has been already initiated
– Companies who have applied for obtaining Dormant Status
– Amalgamated Companies under a scheme of arrangement or compromise
– Vanishing Companies
– filing of documents related to increase in the authorised capital
– filing of charge related documents
|8||Which defaults are not covered under Immunity||All other defaults except delay in filings of documents are not covered, such as proceedings involving interests of any shareholder or any other person.
For Example, under section 42(8), every company is required to file a return of allotment within the period provided therein. However, the proviso to section 42(4) also requires that the utilisation of money raised through private placement shall not be made unless the return of allotment has been filed in the registry. Now, the immunity shall only be available in respect of the proceeding for imposing penalty on account of delay in filing the return of allotment, but not on account of utilization of the money raised through private placement prior to the filing of the return with the registry.
|9||What if Defaulting Company has already filed an appeal before a competent court or an authority||Company shall first withdraw such appeal and furnish proof of withdrawal before filing the application for issue of immunity certificate under the scheme.|
|10||Relaxation for Filing an Appeal against the order of an Adjudicating Authority||Where last date of filing an appeal against the order of an Adjudicating Authority falls between 1st March, 2020 to 31st May, 2020, an extension of 120 additional days has been given from the last date of appeal filing.
During the additional period of 120 days, no prosecution for noncompliance of the order of the adjudicating authority, in so far as it relates to delay associated in filing of any document, statement or return etc., shall not be initiated.
|11||Procedure for applying for Immunity||An application for seeking immunity is required to be made by electronically filing Form CFSS-2020 without any fees.
Form CFSS-2020 shall be filed after documents are taken on record and approved by Authority but not later than six months of the expiry of the Scheme. (i.e. From 1st October, 2020 to 31st March, 2021)
|12||Exception to Immunity||Immunity is not available
– for matter of any appeal pending before the court of law in case of management disputes
– in case any court has ordered conviction in any matter, or an order imposing penalty has been passed by an adjudicating authority under the Act, and no appeal has been preferred against such orders before scheme came into force.
|13||Link to Circular||https://taxguru.in/company-law/companies-fresh-start-scheme-2020.html|