COMPANIES FRESH START SCHEME, 2020 (CFSS-2020)

 COMPANIES FRESH START SCHEME, 2020

(CFSS-2020)

The Central Government in exercise of powers conferred under Section 460 read with Section 403 of the Companies Act, 2013 has decided to introduce a scheme namely “COMPANIES FRESH START SCHEME, 2020 (CFSS-2020), It shall facilitate the companies registered in India to make a fresh start on a clean slate.

This scheme is one-time opportunity to enable defaulting companies to complete their pending compliances by filing necessary documents in the MCA-21 registry including annual filings forms, other returns, documents and statements without paying additional fees on account of delay and to avail immunity from launching of prosecution or proceedings for imposing penalty on account of delay associated with certain filings. In other words, defaulting companies shall require to pay only normal fees for filing of above-mentioned delayed documents during the currency of CFSS-2020.

In addition, the scheme gives an opportunity to inactive companies to get their companies declared as “dormant company” under section 455 of the Act by filing a simple application at a normal fee. The said provision enables inactive companies to remain on the register of the companies with minimal compliance requirements.

1. SCHEME VALIDITY

The Scheme shall come into force on 01^st April, 2020 and shall remain in form till 30^th September, 2020.

2. BENEFITS OF SCHEME

• One-time opportunity to enable defaulting companies to complete their pending compliances in respect of registering on MCA-21, annual filings forms, other returns, documents and statements without paying additional fees. 
• Scheme can be availed for all forms including DIR-3 KYC and INC-22A but excluding SH-7, CHG-1, CHG-4, CHG-8, CHG-9.
• Immunity Certificate to save from launching of prosecution or proceedings for imposing penalty on account of delay associated with such filings.
• An opportunity to inactive companies to get their companies declared as “dormant company” under section 455 of the Act by filing a simple application at a normal fee.

3. APPLICABILITY

Any “defaulting Company” is permitted to file belated documents which were due for filing on any given date in accordance with the provisions of this scheme.

“Defaulting Company” means a company defined under the Companies Act, 2013 and which made a default in filing of any of the documents, statement, returns, etc including annual statutory documents on the MCA-21 registry.”

4. SPECIAL CONDITIONS

• IMMUNITY FOR ONLY THOSE COMPLIANCES PERTAINING TO DELAY ASSOCIATED WITH FILINGS OF BELATED DOCUMENTS: Immunity from the launch of prosecution or proceedings for imposing penalty shall be provided only to the extent such prosecution or the proceedings for imposing penalty under the Act pertain to any delay associated with the filings 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.

• WITHDRAWAL OF APPEAL: The Applicant shall before filing an application for issue of immunity certificate, withdraw the appeal against any prosecution launched or the proceedings for imposing penalties initiated; and furnish proof of such withdrawal along with the application.

5. SPECIAL MEASURES FOR CASES WHERE THE ORDER OF THE ADJUDICATING AUTHORITY WAS PASSED BUT THE APPEAL COULD NOT BE FILED

In all cases where delay associated in filing of any document, statement or return, etc., in the MCA-21 registry, penalties were imposed by an adjudicating officer under the Act, and no appeal has been preferred by the concerned company or its officer before the Regional Director under section 44(6) as on the date of commencement of the Scheme, the following would apply:-

A. Where the last date for filing the appeal against the order of the adjudicating authority under section 454(6) falls between the 1^st March, 2020 to 31^st May, 2020 (both days included), a period of 120 additional days shall be allowed with effect from such last date to all companies and their officers for filing the appeal before the concerned Regional Directors;

B. During such additional period as state in (A) above, prosecution under section 454(8) for non-compliance of the order of the adjudicating authority, insofar as it relates to delay associated in filing of any document, statement or return, etc., in the  MCA-21 registry shall not be initiated against such companies or their officers; 

6. PROCEDURE TO AVAIL BENEFITS AND IMMUNITY IN RESPECT OF DOCUMENT(S) FILED UNDER THE SCHEME: 

i. File all pending forms, documents, returns, statements, etc. as mentioned above with the MCA-21 registry during the currency of the Scheme without paying any additional fees.

ii. File Form CFSS-2020 for seeking immunity in respect of belated documents filed under the scheme, after closure of scheme and after the documents are taken on file or on record or approved by the designated authority as the case may be but not after the expiry of six months from the date of closure of scheme. 

iii. An immunity certificate in respect of documents filed under this scheme shall be issued by the designated authority. 

7. EXCLUSION FROM IMMUNITY

i. Immunity shall not be applicable in the matter of any appeal pending before the court of law and in case of management disputes of the company pending before any court of law or tribunal;

ii. Immunity shall not be provided in case any court has ordered conviction in any matter, or an order imposing penalty has been passed by an adjudicating authority under the Act, and no appeal has been preferred against such orders of the court or of the adjudicating authority, as the case may be before this scheme has come in force. 

8. EFFECT OF IMMUNITY

After granting the immunity, the Designated authority concerned shall withdraw the prosecution(s) pending, if any, before the concerned Court(s) and the proceedings of adjudication of penalties under section 454 of the Act, other than those referred in the second proviso to sub paragraph (vii) of paragraph 6 of this scheme, in respect of defaults against which immunity has been so granted shall be deemed to have been completed without any further action on the part of the Designated authority.

9. SCHEME FOR INACTIVE COMPANIES

The defaulting inactive companies, while filing due documents under CFSS-2020 can, simultaneously, either:

a. Apply to get themselves declared 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

b. Apply for striking off the name of the company by filing e-form STK-2 by paying the fee payable on form STK-2. 

LINK OF SCHEME : 

http://www.mca.gov.in/Ministry/pdf/Circular12_30032020.pdf

LIST OF FORMS ELIGIBLE FOR WAIVER OF ADDITIONAL FEES:
http://www.mca.gov.in/Ministry/pdf/CFSS2020_02042020.pdf

Regards

CS Shivam Rastogi

Immediate Past Chairman,

Noida Chapter of NIRC of ICSI;

Managing Partner,

SVR & Co. Company Secretaries

+ 91 78279 844 34 | csshivam@svrcindia.com