COMPANIES FRESH START SCHEME, 2020 (CFSS-2020): A GREAT OPPORTUNITY FOR NON-COMPLIANT COMPANIES
Need for Introduction of Companies Fresh Start Scheme, 2020 (CFSS-2020)
Companies Act,2013 requires all Companies to make annual statutory compliance by filing the Annual Return & Financial Statements. 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.
To provide relief from additional fees on account of 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.
Benefits of Companies Fresh Start Scheme, 2020 (CFSS-2020)
This is just like an Amnesty Scheme for all defaulting companies to avail following benefits:
- Condonation of all additional fees for filing of belated documents;
- Authority shall provide immunity certificate to Company;
- 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 or the company or its directors or key managerial personnel would not be covered by such immunity.
Applicability of Companies Fresh Start Scheme, 2020 (CFSS-2020)
This Scheme will be appropriate on any “Defaulting Company” and will be initiated from 1st of April, 2020 till the 30th September, 2020 and permitted to file all belated documents which were due for filing without any additional fees.
Non Applicability of Companies Fresh Start Scheme, 2020 (CFSS-2020)
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;
Companies which have 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.
Companies in which Form SH-7 for increase in Authorized Share Capital is pending for filing
Companies in which Charge Related Forms CHG-1, CHG-4, CHG-8 & CHG-9 is pending for filing
Time Period to avail Companies Fresh Start Scheme, 2020 (CFSS-2020)
The Scheme shall remain in force for an initial period of 6 months from April 1, 2020 till September 30, 2020. All pending filings have to be done within the currency of the Scheme.
“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;
“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) Not maintaining its registered office of the company at the address notified with the Registrar of Companies/ Stock Exchange; and
d) That None of its Directors are traceable.
Forms Covered under Companies Fresh Start Scheme, 2020 (CFSS-2020)
- 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 Companies Fresh Start Scheme, 2020 (CFSS-2020)
Form SH-7: Increase in Authorised Share Capital
Forms CHG-1, 4, 8, 9: Charger related documents