Companies Fresh Start Scheme 2020 CFSS

MCA introduces the “Companies Fresh Start Scheme, 2020” (CFSS-2020) and revised the “LLP Settlement Scheme, 2020” as a relief measure from COVID-19 for companies and LLPs

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• The Ministry of Corporate Affairs (MCA) launched a “Fresh Start Scheme Companies 2020” and revised a “LLP Settlement Scheme 2020” to assist companies and Limited liability partnerships (LLPs) with the COVID 19 effect”.
• Both systems allow for a single waiver of additional filing fees for the company or LLP pending filings to the Registrar of companies (ROCs) from 1 April 2020 to 30 September 2020.

MCA  Companies Fresh Start Scheme, 2020

To facilitate Indian companies to make a fresh start, MCA has taken certain alleviative measures for the benefit of all defaulting companies by exercising its power under section 460 & 403 of The Companies Act 2013 and introduces the scheme “(CFSS-2020)” with effect from 1st April 2020 to 30th September 2020 and waived the additional fee as charged for such forms to be filed with MCA.

• Scheme applies both public and private companies incorporated under Companies Act 1956/2013.
• A company which has failed to any return or form including Annual Returns and Financial Statements and which is governed under section 403 of Companies Act, 2013 can be filed with effect from 1st April 2020 to 30th September 2020 at a nominal fee as prescribed under The Companies (Registration and Office) Rules, 2014 and avail immunity certificate from prosecution or imposition of penalty under the Act for belated filing. However, the same is restricted to imposing of additional fee on certain forms but not contravention of provisions of Companies Act, 2013.
• The inactive companies can also apply simultaneously for obtaining dormant and strike off as per fees applicable on such form while filing returns.
• On completion of the scheme on 30^thSeptember 2020, CFSS-2020 e-form shall be available for filing for companies availing benefit under the scheme and immunity certificate will be issued by MCA.

Applicability of the Scheme;

The scheme is applicable to every defaulting company which is now permitted to file belated documents that were due for filing on any given date and this scheme shall be in force till 30th September 2020. The scheme provides immunity from additional fees and penal proceedings, including against imposition of penalties for late submissions and also provide additional time for filing appeals before the concerned Regional Directors against imposition of penalties. However, the immunity would be only against delayed filings in MCA 21 portal and not against any substantive violation of law.

Non-applicability of the Scheme;

Furthermore, the scheme shall not apply to companies against which an action for final notice of cancelation of the name has been initiated, to companies which have filed an application for declaration of dormancy and to companies which have amalgamated under the scheme of arrangement and to companies which have disappeared. It shall also not be applicable to cases where authorized capital or charge related documents are involved.

Salient features of the Scheme:

1. It permits filing all pending Returns, Statements, Documents for any number of years.
2. It shall come into operation on 1.4.2020 and remain effective up to 30th Sep 2020.
3. It applies to all companies both public or private who failed to file all returns statements or Documents including Annual Return remain for any number of years as on date of filing.
4. Only normal fees as prevailing on the date of filing shall be payable.
5. No late fee no penalty no prosecution only normal fees payable.
6. Prosecution if any pending shall be disposed off after payment
7. Scheme not apply to those companies against whom final notice under Section 248 has been given by ROC for striking off or who applied for striking off or applied for being declared dormant co; vanishing company or  dormant company or companies under CIRP
8. companies who name struck off cannot avail this scheme and have to get their name restored;
9. Companies can avail this scheme for the purpose of (i) getting themselves dormant under Section 455 and also (ii) getting their name struck off
10. After payment of normal fees and documents return statement is taken on record, an application shall be filed electronically (without any fees) for obtaining Immunity Certificate but it shall not be filed beyond six month from the date of expiry of scheme.
11. scheme grants immunity against filing of forms returns and documents but not against any punitive action being done by the company for which suitable can be taken by ROC. For example immunity in delaying in filing return of allotment but not against any illegalites committed in allotment of shares.

Related Relaxation after introduction of  Fresh Start Scheme, 2020:

In pursuance of the General Circular No. 11 dated 24th March, 2020 & General Circular No.12 dated 30th March 2020.

• All the Deactivated DIN marked Deactivated due to non-filing of DIR-3KYC/ DIR-3 KYC-Web
• The Companies whose compliance status has been marked as “ACTIVE non-compliant” due to non-filing of Active Company Tagging Identities and Verification (ACTIVE) eform

are also given One time Opportunity to become compliant once again and file DIR-3KYC/DIR-3KYC-Web/ ACTIVE as the case may be between 1st April, 2020 to 30th September, 2020 without any filing fee of INR 5000/INR 10000 respectively.

FAQ:

Q. Is the Scheme Applicable on all companies or only for private companies?

Scheme applies both public and private companies incorporated under Companies Act 1956/2013.

Q. Which forms can be filed under the Fresh Start Scheme for companies, 2020?

Forms which are subject to additional fees under section 403 of the Companies Act, 2013.

Q. Do we need to make any application before filing the pending forms to avail the scheme?

No application is required to be filed before late returns are filed. However, upon completion of the scheme, the company shall file an e-form CFSS-2020 (still to be deployed) with no fee and obtain an immunity certificate.

Q. Whether active non-compliant companies can file returns under the Fresh Start Scheme, 2020?

Yes, companies which are non compliant of ACTIVE can also file late returns under the scheme as the MCA also Relaxed and waived the Penalty Fees of Rs 10000 for active non-compliant companies.

Q. Whether the Companies which have not filed any form from last many years but still active can file the Form without any penalty or late fees under the scheme?

Yes, companies which are non compliant of ACTIVE, whose directors are Disqualified due to non filing of Dir-3KYC under the Companies Act  can also file all Forms without any Penalty or late fees. Normal fees will be applicable.

Howver the Waiver of Fees on ACTIVE & DIR-3KYC was Introduced later by MCA.

Q. Whether the company striked off by ROC due to non-filing of returns avail the benefits under the Companies Fresh Start Scheme, 2020?

The companies Struck off by the ROC, shall make an application to NCLT for the revival of the company and, on being active, may file returns on orders from NCLT under the scheme.

Q. What is the Measure available for the companies where the order for late filing of returns is issued?

In cases where penalties are imposed under the Act and the company has not yet appealed to higher authorities and that period of appeal is between 1 March 2020 and 31 May 2020, an additional period of 120 days may be allowed for the filing of an appeal from the last date specified in the order.

In addition, such companies may also be entitled to withdraw the appeal if any of the benefits of the scheme have been filed and made available.

 Q. What will be the filing fee for an application for a strike or a dormant company?

Normal fee depending on the paid-up capital of the companies as prescribed by the Companies (Registration and Office) Rules, 2014 to apply for dormant companies and Rs.10,000/-to apply for a strike under STK-2.

Q. What will happen for the Disqualification of Defaulter Directors, If the due returns are filed by the Companies?

No, the scheme does not waive the disqualification of directors and the status of DIN will remain the same even after such returns have been filed.

LLP Settlement Scheme 2020 after amendment

The Ministry of Corporate Affairs has given the LLPs a one-time opportunity to make good their default by filing pending documents and to act as an LLP compliant in the future by introducing the LLP Settlement Scheme, 2020 which will apply from 01.04.2020 to 30.09.2020.