The entire economy of the nation is stagnant due to the current COVID 19 and in order to protect people from the pandemic, all the government authorized regulatory bodies are doing their best in providing relief to the individuals residing in India. One such organization is the Ministry of Corporate Affairs (MCA) that has come up with a brand new scheme named Companies Fresh Start Scheme, 2020 (CFSS) in the favor of businesses in India.
Apart from that, MCA has given relaxations to the LLPs by introducing some statutory changes in LLP Settlement Scheme, 2020. The main purpose of changes in the scheme is to give additional time and financial relief (in terms of compliance) to a certain extent to all the generous companies.
In line with its circular dated March 24, 2020, the Ministry of Corporate Affairs (‘MCA’) has introduced Companies Fresh Start Scheme,2020 (‘CFSS Scheme’) vide circular no. 12/2020 and 13/2020 dated March 30, 2020 under Section 460 of the Companies Act, 2013 (“Act”) read with Section 403.
Applicability of CFSS Scheme
This Scheme shall be applicable on any “Defaulting Company” and shall be commenced from April 01, 2020 till September 30, 2020 and permitted to file all belated documents which were due for filing without any additional fees.
“Defaulting company” means a company defined under the Companies Act, 2013, and which has made a default in filing of any of the documents, statement, returns, etc. including annual statutory documents (AOC-4 & MGT- 7) on the MCA-21 registry on due time.
“Inactive Company” means a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years;
Non Applicability of CFSS Scheme
Where action for striking-off has already been initiated by the Designated Authority or STK-2 for strike off of Company with ROC has been filed by the companies;
Companies which have amalgamated;
Companies which has already filed application for obtaining dormant status;
To Vanishing Companies;
Where any increase in authorized capital is involved (Form SH-7) and all charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9);
In the matter of any appeal pending before the court of law and in case of management disputes of the company pending before any court of law or tribunal;
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.
Features of the CFSS Scheme
1. All necessary documents including annual documents of the company can be filed with normal fees only, as additional fees are waived off.
2. Inactive company can also take status of “Dormant Company u/s 455” by filing simple application in form MSC-1 or can also apply for striking off the name by filing e-form STK-2 with normal fees.
3. The Scheme grants immunity to the companies in relation to proceeding for imposing an additional penalty is only against delayed filings in MCA registry and it doesn’t provides immunity to any proceedings involving interests of shareholders or any other person qua the company or its Directors or KMP means not against any substantive violation of law.
4. It further clarifies that where penalties were imposed by an adjudicating officer due to delayed filing, and no appeal has been made before the Regional Director then
(i) If last date for filing the appeal falls between March 01 to May 31, 2020, additional 120 days shall be allowed for filing the appeal, and
(ii) During this additional period no prosecution shall be initiated against the company or its officers, insofar as it relates to delay in filing.
For DIN holders, the due date for filing DIR-3/DIR-3KYC has been extended by MCA. All the directors of the companies (DIN holders) can activate their DIN by filing the form 1 April 2020 to 30 September 2020, filings after the due date will attract a fine of Rs. 5000.
How to Avail CFSS Scheme
1. The defaulting company shall file their overdue documents/returns/other statements as well as statutory Annual Filing documents such as Financial Statements and Annual Returns in respective prescribed e-Forms by paying the normal statutory filing fee without any additional fee as payable as per section 403 of the Act read with Companies (Registration Offices and fee) Rules, 2014 within due immunity period.
2. The Defaulting Companies shall file the Form CFSS-2020 after making all default good as well as all filed document are taken on file or on record or approved by the Designated authority as the case may and after closure of the Scheme but not after the expiry of six months from the date of closure of the Scheme. The is no filing fees of Form CFSS-2020.
3. The Form CFSS-2020 is entirely self-declaration-based form. Based on the declaration made in the Form CFSS-2020, an immunity certificate in respect of documents filed under this Scheme shall be issued by the designated authority.
We at Gaurav Jain and Associate will be pleased to guide you on filing your due returns availing the maximum value of the scheme.
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