Ministry has received representations from various stakeholders requesting for grant of one time opportunity, so as to enable them to complete their pending compliances by filing necessary documents in the MCA-21 registry including annual filings without being subject to a higher additional fees on account of any delay. Also COVID 19 has been declared as pandemic disease and the whole world is fighting against it.
Thus, Ministry has launched a scheme known as "Companies Fresh Start Scheme, 2020" condoning the delaying filing the above mentioned documents with Registrar, it relates to waiver of additional fees and granting of immunity from launching of prosecution or proceedings for imposing penalty on account of delay associated with certain flings.
Hope all stakeholders will get answer of their query from following FAQs:-
1.) Who can avail this CFSS, 2020 Scheme?
Any Company which has failed to file any mandatory form with ROC may avail this scheme.
2.) Can "officer in default’ avail this scheme as well?
No, the scheme can be availed by defaulting Companies only. The officer in default CANNOT avail the scheme.
3.) What was the need for introduction of CFSS, 2020?
Scheme is introduced with the motive of reducing compliance burden. The aim is to provide defaulting companies a chance to make their compliances good.
4.) What is Inactive Company?
Explanation (i) to Section 455(1) of the Act defines the term "Inactive Company" as "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"
5.) Who do you mean by Defaulting companies?
Defaulting Company means a Company defined under Companies Act, 2013 and which has made a default in filling of:
- Any of Document,
- Any of Statement,
- Any of Return etc.
- Including Annual Statutory Document
6.) How will defaulting Company be benefitted if they files the pending forms during the currency of the scheme?
They will be able to make their compliances good and there will be no prosecution/ penalty for the Companies which file their pending forms till 30th September, 2020 provided such prosecution/ penalty is associated with the filing related default.
No immunity is available for any default other than filing related default.
7.) What forms which can be filed under the Companies Fresh Start Scheme, 2020?
The forms which are subject to additional fee under section 403 of Companies Act, 2013 are eligible for filing under CFSS, 2020 and are divided into
- Annual Return- MGT-7
- Financial statement- AOC-4
Other forms required to be file with Roc Like
– Any other form
Except two forms.
– SH-7- Increase in Authorized
– Charge related form (CHG-1, CHG-4, CHG-8 or CHG-9) Capital
8.) What is the Time limit upto which I can make pending compliances complete?
The Scheme came in to force w.e.f 01.04.2020 and shall remain in force till 30.09.2020. Therefore, company will be able to file remaining forms, compliances till 30th September, 2020.
9.) Is this scheme eligible for Inactive Companies?
This scheme benefitted Defaulting companies but on the same time this scheme, also encouraged Inactive companies to start fresh by filing all their pending forms at Normal Fee by:
(i) either to apply for voluntary strike off by filing e-form STK-2; OR
(ii)apply for the status of Dormant Company by filing e-form MSC-1.
10.) What are the following cases on which Fresh Start Scheme, 2020 (CFSS-2020) shall not apply?
This scheme shall not apply in the following cases are:-
· Final notice for striking off the name of the company under section 248 of the companies act, 2013 already issued by the ROCs;
· The company made an application for striking off the name of the company from ROCs;
· Companies amalgamated under the scheme of compromise & arrangement;
· The company applied for dormant status under section 455 of the companies act, 2013 before the scheme introduction
· Vanishing Companies;
11.) What do you mean by Vanishing Company?
A company would be deemed to be a vanishing company, if it is found to have:
a) Failed to file returns with Registrar of Companies (ROC) for a period of two years;
b) *Failed to file returns with Stock Exchange (SE) for a period of two years (if it continues to be a listed company);
c) It is not maintaining its registered office of the company at the address notified with the Registrar of Companies/ Stock Exchange; and
d) None of its Directors are traceable.
12.) If we want to avail the Scheme, then what will be the procedure?
Procedure to avail the Scheme will be as follows:
· You have to do is file all your pending documents and forms before 30th of September, 2020.
· Yes there is an E-form CFSS – 2020, which you need to file within the six months of the closure of the said scheme.
13.) Is there any application need to be file before filing such forms?
No, we do not need to file any application before filing such forms. However on completion of scheme, the company shall file e-form CFSS-2020 (yet to be deployed) with no fee and obtain immunity certificate.
14.) Can the benefit be taken by an Active –non compliant company i.e company which has not filed INC 22-A?
As per the scheme, filing of Active form is also allowed thus company is required to file Active forms without any additional fees and then proceed for further filings.
15.) Can the benefit be availed by the directors for updating / filing the KYC documents?
Relaxation is provided under CFSS sheme to file DIR-3KYC/DIR-3KYC-Web within the tenure of the Scheme without filing of any additional fees. Once the Din is activated, rest of the pending forms can be filed.
16.) What is the General Circular number of the Scheme applicable for Companies and LLPs?
The Scheme has been introduced by means of following Circulars of MCA:
- General Circular No. 11/2020 dated 24th March, 2020;
- General Circular No. 12/2020 dated 30th March, 2020.
17.) If any company has recently filed an application for striking off my companies name, will it be able to get the benefits of the said scheme?
No, it comes under the Exception list provided by Ministry. Thus, won’t be able to obtain benefits of the scheme.
18.) What about the companies where the order is issued for belated filing of returns?
In the cases, wherein the penalties are imposed under the Act and the company has not further appealed to higher authorities and such period of appeal lies between 1st March 2020 to 31st May 2020, a period of additional 120 days be allowed for filing of appeal from last date as may be specified under the order.
Further, such companies can also avail to withdraw the appeal, if any filed and avail benefits of the scheme.
19.) What is the benefit provided in the Scheme for a defaulting inactive company?
A defaulting inactive company can apply for either of the following:
a. to become a dormant company by filing e-Form MSC-1; or
b. to get its name struck off by filing e-form STK -2Had it not been for the CFSS, an inactive company cannot for itself file for strike off
20.) Does this CFSS, 2020 scheme waive off all kinds of prosecution/ penalty over the Company?
This CFSS, 2020 scheme does not provide Immunity in following matters:
(i). Matters where appeal is pending before any Court;
(ii). Where any management dispute is pending before the Court or NCLT;
(iii). Where an order of conviction has been issued by the Court & no appeal preferred against such order as on 01st April, 2020;
(iv). Where an order imposing penalty has been made by the Adjudicating Authority & no appeal preferred against such order as on 01st April, 2020;
21.) If any company has been inactive since the last 2 years, can it apply for Strike Off?
It is advisable to apply for this scheme and then apply for Dormant status or Strike off your company without paying any additional fees.
22.) Do I need to pay an additional fee for the late filings, if I want to file my pending forms before the 30th of September, 2020?
No, you do not need to pay any additional fees if you take the benefit under this scheme. You will have to pay the normal fees only. However, you have to file the E-Form CFSS- 2020 for availing the benefits under this scheme.
23.) What is Effect of Company Law Fresh Start Scheme, 2020?
Effect of the Scehem will be as follows:
a) No Need to pay any additional fees on any return of Company during Scheme.
b) Authority shall provide immunity certificate to Company.
c) Company shall withdrawal of appeal against any prosecution launched.
d) ROC Shall withdrawal all the prosecution pending regarding such forms/ returns.
e) ROC shall withdrawal the proceedings of adjudication of penalties u/s 454.
24.) Can companies which are struck off and which appeal is pending before the NCLT will avail this CFSS , 2020 scheme?
Struck off company has to revived itself during the tenure of scheme, i.e. upto 30.09.2020 only then possible to avail benefits of this scheme else only Active Companies are allowed to avail benefits of such Scheme.
25.) Is the Scheme available to Nidhi companies?
Yes, Active Nidhi companies can avail the benefit of this Scheme.
26.) If a company increased its share capital but forgot to file the Form SH 7. Can it avail benefit of filing now?
No, it is specifically stipulated in the scheme that, this scheme will not be available in case of filing of form SH 7 i.e. for increase in share capital. Hence, you will have to file the form with additional fees as applicable.
27.) A company is prosecuted for non-filing of Form AOC 4 and MGT 7, will it be immune from being prosecuted under this scheme?
Yes, if you file your form AOC 4 and MGT 7 before the 30th of September, 2020 and file to form CFSS- 2020, you will get immunity from being prosecuted.
28.) A company was willing to apply for striking off it’s name due to the burden of penalties for non-filing of necessary documents, is there any way I can take the benefit of this scheme?
Yes, a company now may file all the pending forms and documents without any penalties and additional fees under CFSS 2020. After that you may either continue with your company or strike off your company without any kind of additional fees.
29.) Can ROC withhold Immunity Certificate even after filing Form CFSS-2020?
It will be the duty of Concerned ROC to provide Immunity certificate to the company once Form CFSS-2020 will be filed on completion of all pending compliances.
30.) What are the consequences if the Company doesn’t avail the CFSS, 2020 scheme?
The consequences faced by company are as follows:
1. Normal fee payable on the forms;
2. Additional Fee which can go in Lakhs;
3. Action for Strike Off by the Registrar;
4. Prosecution/ Heavy Penalty for the Directors & other Officers in default.
31.) Is this scheme eligible on Foreign Companies?
The word used in the Circular is Company and Company is defined under section 2(20) of Companies Act, 2013 and excludes Foreign company. Thus scheme is not valid on Foreign Companies.
32.) In case of MGT-14, Directors has to file an application for Condonation of Scheme after 300 days. Does this scheme provide benefit of filing MGT-14 only with normal fees?
CFSS, 2020 scheme provide company to file MGT-14 without any additional fees. However, Company is required to do Condonation before filing of form
CONCLUSION : The Designated Authority shall take necessary action under the Acts against the companies who have not availed this scheme and are in defaulting filing these documents in a timely manner.
DISCLAIMER: The Article Is Based On The Relevant Provisions And As Per The Information Existing At The Time Of The Preparation. In No Event I Shall Be Liable For Any Direct And Indirect Result From This Article. This Is Only A Knowledge Sharing Initiative.
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