Companies Fresh Start Scheme, 2020 along with LLP Settlement Scheme, 2020 an amnesty for pending filings with MCA.

Companies Fresh Start Scheme, 2020 along with LLP Settlement Scheme, 2020 an amnesty for pending filings with MCA.

Ministry of Corporate Affairs (MCA) has issued circular dated 30th March, 2020 to provide for new Companies Fresh Start Scheme, 2020

Objective of Companies Fresh Start Scheme, 2020

As per the provision of the Companies Act, 2013 all the Companies are required to make many statutory compliance by filing like filing of their Annual Returns, Financial Statements and various other statements, documents, returns and forms with MCA 21 (an electronic filing portal of the Ministry of Corporate Affairs) within prescribed time, failing of which companies has to pay late fee in the form of penalty make the same compliance in addition to normal fee. Govt. has decided to give an chance to come out of all the pending MCA form filing defaults without paying any additional late fee or penalty.

Benefit of Companies Fresh Start Scheme, 2020

By exercising power conferred by Govt. under Section 460 read with section 403 of the Companies Act, 2013 has given the opportunity of companies with pending defaults and to enable them to file belated documents with MCA21 through this Companies Fresh Start Scheme, 2020(CFSS-2020) condoning the delay in filing of the forms and granting immunity from from launching of any prosecution or proceedings for imposing penalty in relation to delay associated with certain filings on the Company. The Company who has to file forms under this scheme has to pay normal fee only as per their capital structure or as applicable.

Further this scheme also giving an opportunity to inoperative companies or inactive companies to declare themselves as “Dormat Company” as per section 455 of the Companies Act, 2013 by just paying normal fee. This enables the company owner to remain with register of Companies with minimal compliance requirement.

After getting immunity certificate, the designated authority concerned shall withdraw prosecution(s) pending, if any before the concerned court(s) and the proceedings of penalty under section 454 shall be deemed to have completed without any further action on the part of designated authority.

Period of Companies Fresh Start Scheme, 2020

Companies Fresh Start Scheme, 2020 shall come into force from 1st April, 2020 and shall remain open till 30th September, 2020 i.e. for 6 months, means waiver of this late fee and immunity shall be granted only if the duly filing done withing this period by paying due normal govt. fee.

Applicability of this Scheme

This scheme shall be applicable to all the belated form due for filing with MCA 21 by Defaulting Company which includes Annual Forms MGT-7, Financial Statements AOC-4 and other forms like PAS-3, MGT-14, ADT-1 etc. However this scheme shall not apply for forms related to increase in Authorized Capital and Charge Related forms.

Steps Involved in Availing Companies Fresh Start Scheme, 2020

  • Step 1: Filing of the pending forms with with MCA 21 after payment of due normal fee as prescribed under Companies (Registration Offices and Fee) Rules, 2014 on the date of filing of the form and no additional fee shall be charged.
    • In case of matter is already pending before the court or the adjudicating authority against the appeal filed by the Company against the notice already issued for the violation of the Companies Act, 1956 and/or Companies Act, 2013, the Company has to withdraw the appeal bore filing of application for issue of immunity certificate.
    • Special measure where order has been passed by the adjudicating authority but but the appeal could not be filed and where the last date to file appeal falls between 1st March, 2020 to 31st May, 2020, including both dates an additional 120 days shall be provided with effect from such last date to file to file appeal before Regional Directors; during such period no penalty or prosecution shall be initiated so far related to filing of statements, documents or returns etc.
  • Step 2: Filing of application for issue immunity certificate in respect of the documents/forms filed under this scheme in Form CFSS-2020, after closer of the scheme i.e 30th September, 2020 and after documents/forms taken on record and approved by designated authority but not after the 6 months of the closure of the scheme i.e 31st March, 2021
    • Immunity shall not be applicable in case any appeal s pending before the court of law due to management disputes of the Company. Further immunity shall also be not available where court has ordered conviction in any matter or an order imposing penalty has been passed by adjudication authority under the Act, and no appeal has been preferred against such order of the court or the adjudicating authority.
  • Step 3: An immunity certificate shall be issued by designated authority, to provide for immunity from penalty and prosecution against the belated forms and documents filed by the Company

Cases where Companies Fresh Start Scheme, 2020 is not applicable

  1. Companies against which final notice for striking off the name has already been initiated by the designated authority;
  2. Where application has already been filed for striking off the name of the company from register of companies;
  3. Companies which has amalgamated under the scheme of arrangement of companies under the Act;
  4. Where the company has already filed application for obtaining Dormant Status under section 455 of the Act before this scheme
  5. Vanishing companies
  6. Increase in Authorized Share capital and also charge related documents

Inactive Companies the defaulting inactive companies may go for this scheme as well by filing due documents under CFSS-2020 and simultaneously chose for either

  1. Get themselves regularized and start operations in the Company; or
  2. Get themselves declared Dormant Company by filing e-Form MSC-1 as pr the provisions of section 455 of the Act; or
  3. Apply for striking of the name of the Company by filing e-form SKT-2 by paying due fee.

The Designated authority will be taking necessary action under the Act, against the companies who have not availed this opportunity and still remain in default in filing these documents in the timely manner

LLP Settlement Scheme – 2020

As discussed for the Companies same scheme was already brought for the LLP’s as well 4th March, 2020 and the same was modified on 30th March, 2020 in the name of LLP Settlement Scheme – 2020 modified, under this scheme all the defaulting LLP’s are permitted to file belated documents due for filing till 31st August, 2020 without any additional fee and this scheme is also effective from 1st April, 2020 and will remain in force till 30th Sept, 2020

Authors Opinion and Views

In my personal view this is an golden opportunity for the defaulter in doing ROC filings and Annual Filings with MCA, i will not be calling them law abiding companies as mentioned in the press release issued. Law abiding are those who did their compliance on time and if got delayed had paid fine for the delay, what about those fines, shall the MCA will refunding the additional fees paid by many companies in last two-three years to assure the compliance.


eStartIndia Team

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