The Ministry of Corporate Affairs (MCA) has introduced a new scheme known as Company Fresh Start Scheme, 2020 (CFSS, 2020) for the companies to reduce the burden of compliance delays during the COVID-19 period. The main purpose of introducing this scheme is to give additional time for various filing requirements and financial relief in terms of Compliance.
Any ‘Defaulting Company' is permitted to file belated documents in accordance with this scheme. This scheme is applicable from 1st April 2020 to 30th September 2020.
Defaulting Company means a company which has made a default in filing of any of the documents, statement, returns, etc. including annual statutory documents on MCA-21.
Any company intending to file forms under this scheme, it needs to have 'Active' status before filing the belated forms under the scheme.
The forms that are eligible for filing under CFSS 2020 are:
- Annual Return - MGT-7
- Financial statement - AOC-4
- ACTIVE e-form INC-22
- DIR-3 KYC
- Any other form
The forms that are not eligible for filing under CFSS, 2020 are:
Every defaulting company shall be required to pay normal fees as prescribed under the Companies (Registration Offices and Fee) Rules, 2014 on the date of filing of each belated document and no additional fee shall be payable.
The scheme not to apply in following cases:-
- Companies against which action for final notice for striking off the name of the company has already been initiated by the Registrar of Companies.
- Where an application has already been filed by the companies for the action of striking off the name of a company from the Registrar of Companies.
- To companies which have amalgamated under a scheme of arrangement or compromise under the Companies Act, 2013
- Where applications have already been filed for obtaining dormant status
- To vanishing companies
The defaulting companies that are inactive may also apply for the CSFF, 2020 to start fresh by filing all their pending forms at a normal fee.
The inactive defaulting company has the following option under this scheme:
- To apply for voluntary strike-off by filing e-form STK-2,
- To submit an application for Dormant status by way of filing of e-form MSC-1 or
- To file pending forms under the scheme and become active
- The company has to file an application (Form CFSS-2020) after the closure of this scheme for seeking immunity in respect of belated documents filed and after the belated forms taken on file or on record or approved by the Registrar of Companies.
- The Form CFSS-2020 should be filed within 6 months after the closure of this scheme. There shall be no filing fee on this Form.
- This immunity shall not be applicable in the matter of any appeal pending before the court of law and in the case of management disputes of the company pending before any court of law or tribunal.
- Based on the declaration filed under the Form CFSS-2020, an immunity certificate shall be issued by the Registrar of Companies in respect of documents filed under this scheme.
- After granting immunity, the designated authority shall withdraw the prosecution pending before courts and proceedings of adjudication of penalties under section 454 of the Act.
- In respect of defaults against which immunity has been granted shall be deemed to be have been completed without any further action on part of designated authority.
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