COMPANIES FRESH START SCHEME 2020- CFSS-2020
On 30.03.2020, an applauded step taken by MCA (GOI), to provide a sigh of relief to all the law abiding companies of India.
AN APPLAUDABLE INITIATIVE BY THE MINISTRY OF CORPORATE AFFAIRS (MCA)
As the economy of the whole nation is shaken by the effect of COVID- 19, the Ministry of Corporate Affairs, has introduced via circular the “Companies Fresh Start Scheme, 2020”. This scheme is a first of its kind as it provides the opportunity to the companies to make a fresh start by filing all the belated returns irrespective of its default duration.
The Company by paying a normal fee as per the provisions of Section 403 of the Companies Act, 2013 (“Companies Act”) read with Companies (Registration Offices and Fees) Rules, 2014 and Section 460 of the Companies Act can become compliant once again through this scheme.
No additional penalty or fine will be imposed to the Companies while filing the Form. In this article, we are going to discuss the what the Companies Fresh Start Scheme, 2020 is all about. On 30.03.2020, an applauded step taken by Government of India, to provide a sigh of relief to all the law abiding companies of India.
What is “Companies Fresh Start Scheme, 2020” (CFSS-2020)?
The “Companies Fresh Start Scheme, 2020” (CFSS-2020) will start from 1st April 2020 and will end on 30th September 2020. This means that the companies have been given a time period of 180 days approx. to file all belated documents, returns and forms which were due for filing without paying any additional fees. In short, the defaulting companies, will require to pay only the normal fees as per the rules mentioned in the Act and no additional fee will be imposed on them.
This scheme allows the inactive companies to get their companies acknowledged as “dormant company” under section 455 of the Companies Act 2013 by filing the e-form MSC-1 with normal fee or are required to apply for striking off the name of the company by filing the e-form STK -2 with normal fee. By filing form CFSS-2020 as per the scheme, the companies can seek the immunity in respect of all the belated documents that were due for filing.
After filing the form, the Designated Authority will approve the same and after getting the approval, the company can seek the immunity and can file all the belated documents with Ministry of Corporate Affairs without paying additional fees.
The importance of filing form under CFSS – 2020 is that the Designated Authority have the power to withdraw the prosecutions pending before any court and proceedings pending before any adjudicating authority in connection with the filing of belated Forms or documents and provide immunity certificate to the Company.
Some Important Definitions as per the CFSS-2020 Scheme.
Defaulting Company – Under the Companies Act, 2013, the companies who are in default by not filing any of the documents, returns, statements, forms etc. including the statutory documents on time on MCA 21 registry.
Inactive Company – Under the Companies Act, 2013 the companies which failed to carry on any business or any operation, or has not made any significant accounting transaction during the last two (2) financial years, or has not filed financial statements and annual returns during the last two financial years.
Designated Authority - The designated authority means the Registrar of Companies who have the jurisdiction over the registered office of the respective companies.
Features of CFSS 2020 Scheme
- The Companies can file all the pending and delayed documents, forms, returns, statements including any statutory documents through CFSS-2020 scheme without paying any additional fees. They can again gain the status of active compliant company by using this scheme.
- They are exempted from any prosecution and proceedings related to penalties provided the penalty or fine is related to the delayed filing of returns. Any cases related to the interest of shareholders or any other person of the Company or its directors or Key Managerial Personnel (KMP) will not be covered under the immunity provided by this scheme.
- If there is any appeal filed by the company against any notice, order or complaint passed by any court or by any adjudicating authority relating to belated compliances then the company before availing the CFSS 2020 scheme must withdraw the appeal must withdraw the appeal before enrolling itself under the CFSS 2020. The company has to furnish the proof of withdrawal of appeal along with the application before going for CFSS 2020 scheme.
- In case of Inactive companies, they can again gain the status of “Dormant Company u/s 455” by making or filing an easy application in form MSC-1 or they can also apply for striking off the name of the Company by filing e-form STK-2 with normal fees.
- In case where penalties or fine were imposed by an adjudicating officer under the Act because the company has not filed the documents or returns on time and for this no appeal has been made before the Regional Director by the Company or by the concerned persons of the Company, then:
- In such a case, the company is allowed the time period of 120 days to file the appeal provided the last date for filing the appeal fall between 01st March, 2020 to 31st May, 2020.
- During this time period, no action will be taken against the Company or its officer of the Company, if it is related to delay in filing of returns.
How to avail the CFSS 2020 Scheme?
- The Companies can file all their belated documents, returns, forms or other statements as well as statutory Annual Filing documents like Financial Statements and Annual Returns in their respective e-Forms by paying the normal filing fee as payable as per section 403 of the Act read with Companies (Registration Offices and fee) Rules, 2014 within the prescribed time limit. They will not have to pay any additional fees as per this scheme.
- For seeking immunity n case of belated documents, the Company have to make an application for the same by filing Form CFSS 2020, after closure of the scheme and after the documents were taken on record and were approved by the Designated Authority as the case may be but not after the expiry of 6 months from the date of closure of the scheme. No fees is applicable for form CFSS 2020.
- The Designated Authority will issue an immunity certificate to the Company as per the application made by them.
Scheme for Inactive Companies:
- This scheme provides a chance to inactive companies to get the status of the Companies as Dormant Company under section 455 of the Companies Act, 2013 by filing e-form MSC-1 at a normal fee on said form; or
- They can apply for striking off the name of the Company by filing e-form STK-2 by paying the fees as prescribed for STK-2.
CFSS 2020 scheme is not applicable on the following:
- If the company against which action for final notice for striking off the name u/s 248 of the act has already been initiated by the Designated Authority.
- Where the applicant company has already filed for striking off the name of the Company with ROC in e-form STK-2;
- The Companies which have been amalgamated;
- In case the company has made an application for obtaining the Dormant status.
- Vanishing Companies.
- The Companies cannot file form SH-7 for increase in authorized capital and any charge related forms (CHG-1, CHG-4, CHG-8 or CHG-9).
- If any matter is pending before court of law.
- In case of management disputes in the company and they are pending before any court of law or tribunal;
- If the Court has ordered any conviction in any matters and no appeal preferred before this scheme.
- If any order imposing penalty has been imposed and no appeal preferred before this scheme.
- After issuing the immunity certificate, the ROC office shall withdraw the prosecution(s) and the proceedings of adjudication of penalties under section 454 of the Act, if any, in respect of defaults against which immunity has been so issued shall be deemed to have been completed without any further action.
- The immunity issued under the CFSS 2020, is applicable on the Forms as prescribed by the MCA except form SH-7 for increase in authorized capital and any charge related forms (CHG-1, CHG-4, CHG-8 or CHG-9).
- DIN holders marked as deactivated due to non-filing of DIR-3 KYC or DIR-3 KYC web form, can also file the said form without any late fees of Rs. 5,000/- and get the active status.