The world, as a whole, is on a lockdown currently due to the exceptional situation regarding public health and safety caused by the Coronavirus (COVID-19) pandemic. Further due to economy lockdown the whole world get into disruption.
The Ministry of Corporate Affairs, in order to ease matters for the companies, recently announced a new scheme named the Companies Fresh Start Scheme, 2020 (CFSS) giving one time prospects to defaulting companies to file the pending forms without any additional fees and seek immunity from the penalties and prosecutions as provided under Companies Act, 2013. As the name proposes, it is a one-time opportunity given to all the defaulting companies to start fresh. This will condone the delay in filing the documents with Registrar in so far as it relates to charging of additional fees and granting of immunity from the launching of proceedings for imposing a penalty on account of delay associated with certain filings.
Defaulting Company means a company defined under Companies Act, 2013 and companies which have made a default in filing of any of the documents, statement, returns etc. including annual statutory documents.
Applicability of Scheme
This Scheme came into process from 01st April, 2020 and will end on 30th September, 2020. Company Law Fresh Start Scheme, 2020 is a scheme ignoring the delay in filing the form mentioned below with the Registrar, in so far it is relate to
- Charging of additional fees and
- Granting of immunity from launching of prosecution or
- Proceeding for imposing penalty on account of delay related with filings
In addition to above, the scheme provides an opportunity to inactive companies to get their companies declared ‘Dormant Company’ under section 455 of the act by filing simple application at normal fees.
Non-Applicability of Scheme
- Where the action for final notice of striking off the name as per the Companies Act, 2013 has already been introduced by the Nominated Authority
- Vanishing companies
- Where the companies have been amalgamated under the scheme of arrangement or compromise
- Where the company has already filed the Form STK – 2 along with the prescribed fees for the striking off of the name of the company from the Register of Companies
- Where the application for Dormant Status has been filed by way of Form MSC – 1 along with the prescribed fees
- Companies that are marked for the Corporate Insolvency Resolution Process or Liquidation
- Where it involves either an increase in the Authorised Capital (Form SH-7) or charge related documents (CHG-1, CHG-4, CHG-8, CHG-9)
Terms to apply for Scheme
This CFSS, 2020 is applicable on below mentioned forms subject to additional fees under section 403 of Companies Act, 2013
Annual Based Forms
- Annual Return - (MGT-7)
- Financial Statements – (AOC-4)
Other Event Based Forms
- PAS – 3
- MGT – 14
- ADT – 1
- Any other form
Except Two forms
- SH-7- Increase in Authorized
- Charge related form (CHG-1, CHG-4, CHG-8 or CHG-9) Capital
Effect of Company Law Fresh Start Scheme, 2020
There are some benefits that a company would receive:
- No requirement to pay any additional fees on any return of company during such scheme
- Authority shall make available immunity certificate to company
- Company shall withdrawal of appeal against any prosecution propelled
- ROC shall withdraw all the prosecutions pending regarding such forms / returns
- ROC shall withdraw the proceedings of adjudication of penalties u/s 454.
Effect of immunity
After granting the immunity, the Designated Authority Concerned shall withdraw the prosecution(s) pending, if any, before the concerned courts 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 Para 6 of this scheme, in respect of defaults against the immunity has been so granted shall be deemed to have been completed without further action on the part of Designated Authority.
All things considered, the scheme comes as a one-time opportunity to those who are facing financial hardships and are unable to complete or missed their filing due to a lack of knowledge of the law and proper guidance. This Scheme will surely provide a big relief and is a golden chance to defaulters to reduce their burden and rectify the non-compliances and make a new beginning “fresh start”.
At AJSH, we assist our clients in registration / incorporation of a company, annual compliances of companies and related services. If you have any questions or want to know more about CFSS 2020 scheme, please click here.