Introduction:
In pursuance of the Government of India’s efforts to provide relief to law abiding companies in the wake of COVID 19, the Ministry of Corporate Affairs (MCA), has introduced the “Companies Fresh Start Scheme, 2020” to provide 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 Fresh Start scheme and reduce compliance burden during the unprecedented public health situation caused by COVID-19. The Scheme, apart from giving longer timelines for companies to comply with various filing requirements under the Companies Act 2013 and significantly reduce the related financial burden on them, especially for those with long standing defaults, thereby giving them an opportunity to make a “fresh start”.
This Scheme also contain provision for giving immunity from penal proceedings, including against imposition of penalties for late submissions and also provide additional time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed.
So, MCA vide its General Circular No 12-2020 dated 30/03/2020 and in order to facilitate the companies registered in India to make a fresh start on clean slate, has decided to take certain alleviative measures for the benefit of the all companies.
Central Government has introduced a Companies Fresh Start Scheme, 2020(CFSS 2020), condoning the delay in filing of documents, returns, statements etc by the defaulting companies with the registrar and granting of immunity from launching of prosecution or proceedings for imposing penalty on account of delay associated with certain filings.
Ministry has given an opportunity to the defaulting companies to file belated documents on MCA 21 registry on or before 30/09/2020 by availing this Scheme.
Further this scheme also gives an opportunity to inactive companies as well to get their companies declared as ‘dormant company’ under section 455 of the Companies Act by filing an application with normal fee. The said provision enables inactive companies to remain in the register of the companies with minimal compliance requirements.
This scheme shall come into force on 01st April, 2020 and shall remain in force up to 30th September, 2020.
Detailed Summary of the scheme are as under:-
• Applicability: Any “defaulting company” is permitted to file belated documents, which were due for filing on any given date in accordance with the provisions of this Scheme.
Where “defaulting company” means a company defined under the Companies Act 2013, and which has made default in filing of any of the documents, statements, returns, etc including annual statutory filings on MCA-21 registry.
• Manner of payment of normal fees for filing of belated documents and seeking immunity under the Scheme – Every defaulting company shall be required to pay normal fees on the date of filing of belated document and no additional fee shall be payable as per the Companies Act 2013 . Immunity from launch of prosecution or proceedings for imposing penalty under the Act pertaining to any delay associated with the filings of belated documents.
• Withdrawal of appeal against any prosecution/proceedings for imposing penalty: An applicant shall before filing an application for immunity certificate under this scheme shall withdraw the appeal (if any) and furnish the proof of such withdrawal along with the application.
• Special Measures for cases where the order of the adjudicating authority was passed but the appeal could not be filed: In case where the penalties were imposed on delayed filing by the adjudicating authority under the act and appeal has not been filed by the company to Regional Director (RD) as on the date of commencement of the scheme and the last date for filing the appeal against the order of the adjudicating authority falls between 01/03/2020 to 31/05/2020, a period of 120 additional days shall be allowed w.e.f such last date to all companies for filing the appeal before RD. Further during such additional period prosecution for non-compliance on delayed filing of any documents in MCA-21 shall not be initiated against such companies.
• Application for issue of immunity in respect of documents filed under the Scheme: The application for seeking immunity in respect of belated documents filed under the scheme shall be made electronically in Form CFSS-2020 after the documents & returns are filed and approved by the designated authority but not after the expiry of 6 months from the date of closure of the Scheme. There shall not any fees payable on this Form. This immunity shall not be applicable in the matter of any appeal before the court of law and management disputes of the company pending before the court of law or tribunal.
• After filing of Form CFSS 2020, an immunity certificate in respect of documents filed under this scheme shall be issued by the designated authority, granting immunity from penalty & prosecution.
• Scheme shall apply on MCA e-forms like;
o AOC-4 (Financial statements)
o MGT-7 (Annual Return)
o ADT-1 (Appointment of Auditor)
o PAS-3 (Return of Allotment)
o DIR-12 (Appointment/Resignation of Director)
o INC 22A (ACTIVE) {Active Company Tagging Identities and Verification}
o DIR-3 KYC/DIR-3 KYC- WEB
o MGT-14 (filing of resolutions or any other documents),
o Any other MCA eforms
EXCEPT
a) Form SH-7 (Increase in Authorised share capital)
b) Form CHG-1(Creation/modification of Charge)
c) CHG-4 (Satisfaction of Charge)
d) CHG-8 (Application for extension of time for filing of charge creation/modification)
e) CHG-9 (creation /modification of Charge for debentures)
• This Scheme shall NOT apply in certain cases:-
ii. Any application which has already been filed by the companies for striking off the name of the company from the register of companies.
iii. Companies which have amalgamated under the scheme of arrangement under the Act.
iv. Any application which has already been filed by the companies for obtaining the dormant status under section 455 before this scheme
v. Vanishing Companies
vi. Companies where increase in authorized share capital (FormSH-7) and charge related documents (CHG-1. CHG-4, CHG-8, CHG-9) are involved.
Conclusion:
This scheme will allow defaulting companies to file all belated returns, documents, statements etc. with the registrar by paying normal fees and seeking immunity under the scheme by filing Form CFSS 2020 with zero fees and also immunity from launching prosecution or proceedings for imposed penalty on account of delay associated with the certain filings.
With this scheme companies registered in India can make a fresh start by filing all belated documents, returns except Form SH-7 & Charge related forms by paying only normal fee. ROC shall withdraw all the prosecution pending regarding forms/returns and proceedings of adjudication of penalties; and also companies shall withdraw the appeal against any prosecution launched before availing this scheme.
