Wednesday, April 1, 2020

Companies Fresh Start Scheme 2020

To provide relief from additional fees on delayed filing of documents and forms with the ROC, the Ministry of Corporate Affairs (MCA) has come up with the Companies Fresh Start Scheme, 2020 (CFSS-2020) for an initial period of 6 months from 01-Apr-2020 to 30-Sep-2020 vide its General Circular No.12/2020 dated 30-Mar-2020. This is an opportunity for all defaulting companies to file all belated documents without any additional fees.

Defaulting company” means a company defined under the Companies Act, 2013, and which has made a default in filing 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;

Applicability and Forms Covered: all defaulting companies as defined above will be permitted to file all belated documents which were due for filing, without any additional fees (excluding delayed filing of Form SH-7 for increase in authorized capital and charge related documents), including the following:

Forms Covered under CFSS
- Form MGT-7: Annual Return
- Form AOC-4: Annual Financial Statements
- Form INC-22A: Active Company Tagging Identities and Verification (ACTIVE)
- Form INC-20A: Declaration for commencement of business
- Form PAS-3: Return of Allotment
- Form ADT-1: Appointment of Auditor
- Form MGT-14: Filing of Resolutions and agreements to the Registrar
- Form DIR-12: Particulars of appointment of Directors and the key managerial personnel and the changes among them

Forms Not Covered under CFSS
- Form SH-7: Increase in Authorised Share Capital
- Forms CHG-1, 4, 8, 9: Charger related documents

Not Applicable on Following Companies

- Companies against which action for final notice for striking off the name u/s 248 of the act have already been initiated by the Designated Authority;
- Companies which have already filed STK-2 for strike off of Company with ROC;
- Amalgamated Companies;
- Already filed application for obtaining dormant status;
- Company with an appeal pending before the court of law;
- Company having management disputes that are pending before any court of law or tribunal;
- Companies which are convicted by any court in any matter and no appeal has been preferred against such orders of the Court before this Scheme has come into force;
- Companies upon which an order passed for imposing penalty by an adjudicating authority under the Act, and no appeal has been preferred against such orders of the Adjudicating Authority before this Scheme has come into force.

Benefits of CFSS

- Condonation of all additional fees for filing of belated documents;
- Immunity from prosecution;
- Withdrawal of proceedings of adjudication of penalties u/s 454.

Note: Immunity from Prosecution and Proceeding shall be provided only to the extent such prosecution or proceedings for imposing penalty under the Companies Act pertain to any delay associated with filing of belated documents. Any other consequential proceedings, including any proceedings involving interests of any shareholder or any other person qua the company or its directors or key managerial personnel would not be covered by such immunity.

Procedure for Claiming Scheme Benefit

1. Defaulting company to file the overdue documents in respective prescribed e-Forms by paying the normal statutory filing fee without any additional fee within due immunity period.

2. Subsequently file Form CFSB-2020 after making good all the defaults and after closure of the Scheme but not after the expiry of six months from the date of closure of the Scheme. There is no filing fees of Form CFSB-2020. It is a self declaration based form certified by the Director.

3. Following which the ROC will issue an Immunity Certificate.

Companies can simultaneously apply to get themselves declared as Dormant Company under section 455 of the Companies Act, 2013 by filing e-Form MSC-1, or choose to file for striking off the name of the company by filing e-Form STK-2.