Companies Fresh Start Scheme 2020 – A Revival Kit

Companies Fresh Start Scheme 2020 – A Revival Kit

Executive Summary

• A scheme to condone the delay in filing of the necessary documents with the Registrar and grant immunity from any prosecution for imposition of any penalty on account of such delays.
• Provides an opportunity to all the defaulting companies registered in India to make a fresh start, by enabling them to file the belated documents in the MCA-21 registry.
• The Scheme is applicable to all the companies defined under the Companies Act, 2013, which have made a default in filing of the statutory documents annually.
• The CFSS-2020 scheme shall come into force from April 1st, 2020 and remain into force till September 30th, 2020. Defaulting companies are given a time of 6 months to complete their pending filings.
• The scheme gives an opportunity to defaulting company to make their default good by filing the long pending documents and become a COMPLIANT COMPANY from a Defaulting Company.
• Also provides an opportunity to the Inactive Company to convert into a Dormant Company by filing form MSC-1 with nominal fees & helps the Inactive Company to remain on ROCs register with minimum compliance requirements.
• No additional fees shall be charged for late filing and only normal fees for such filing shall be payable.
• To obtain immunity certificate, companies may file electronically in Form CFSS-2020, to seek the immunity with respect to the belated documents, within the six months of the closure of the said scheme.

Introduction

The Ministry of Corporate Affairs (MCA) received representations from various stakeholders requesting one-time opportunity to complete their pending compliances for statutory documents in the MCA-21 registry. In view of the nationwide lockdown due to Coronavirus (COVID-19) pandemic , affecting the companies and their businesses globally and to reduce the burden of the companies, MCA has introduced a scheme named Companies Fresh Start Scheme, 2020 (CFSS-2020). The purpose of this scheme is to condone the delay in filing of the necessary documents with the Registrar and grant immunity from any prosecution for imposition of any penalty on account of such delays.

Purpose & Applicability

Companies Act, 2013 requires all the companies to make statutory compliances annually by filing the Annual Return and Financial Statements and various other documents, returns, statements etc., on the MCA-21 registry within in the prescribed time. Non-Compliance of the same results in prosecution and imposition of penalties upon the defaulting companies.

The Ministry of Corporate Affairs (MCA) vide a circular no. 12/2020 dated March 30th, 2020 introduced a scheme “Companies Fresh Start Scheme, 2020 (CFSS-2020)”, to provide an opportunity to all the defaulting companies registered in India to make a fresh start, by enabling them to file the belated documents in the MCA-21 registry.

The Scheme is applicable to all the companies defined under the Companies Act, 2013, which have made a default in filing of the statutory documents annually.

Keys Features & Benefits

•  The CFSS-2020 scheme shall come into force from April 1st, 2020 and remain into force till September 30th, 2020.
•  The scheme gives an opportunity to defaulting company to make their default good by filing the long pending documents and become a COMPLIANT COMPANY from a Defaulting Company.
• No additional fees shall be charged for late filing and only normal fees for such filing shall be payable as per the provisions of Section 403 of the Companies Act, 2013 read with Companies (Registration Offices and Fees) Rules, 2014 and Section 460 of the Companies Act.
• The scheme provides immunity to defaulting company in relation to prosecution or proceeding for imposing an additional penalty for not filing of belated documents.
• The scheme provides an opportunity to the Inactive Company to convert into a Dormant Company under section 455 of Companies Act, 2013 by filing form MSC-1 with nominal fees & helps the Inactive Company to remain on ROCs register with minimum compliance requirements.
• Defaulting companies are given a time of 6 months to complete their pending filings. Seek to Avail the Immunity?
• To obtain immunity certificate, companies may file electronically in Form CFSS-2020, to seek the immunity with respect to the belated documents, within the six months of the closure of the said scheme.
• The form provides immunity of maximum 6 months to complete their pending filings.
• Every defaulting company shall be required to pay normal fees as prescribed under Companies (Registration Offices and Fees) Rules, 2014 on the date of filing belated documents.
• To avail immunity under the scheme, companies must withdraw their appeal against any order of prosecution for penalty by a competent court, if any and furnish proof of such withdrawal along with the application.
• The scheme does not provide immunity on any other consequential proceedings including proceeding involving the interest of its directors or key managerial personnel etc.

Effect of Immunity

After the grant of immunity, the prosecutions pending or proceedings of adjudication of penalties if any, in the court, shall be withdrawn by the designated authority. And the default against which immunity has been granted shall be considered to have been completed and duly complied with.

Regards,

Legal Team

Proind Business Solutions Private Limited
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