Has your Company defaulted in statutory filing? The MCA has some relief for you!
Update as of September 30, 2020, the scheme will remain in force till December 31, 2020.
In midst of the spread of COVID-19 all over the world, the Ministry of Corporate Affairs (MCA) has taken certain measures in form of a scheme named “Companies Fresh Start Scheme, 2020” (‘CFSS-2020 Scheme’) for the benefit of all the companies by providing an opportunity to make good all/ any defaults related to statutory filing, irrespective of their duration.
This CFSS-2020 Scheme allows the defaulting companies in filling of belated documents without any additional fees with MCA. In addition, the CFSS-2020 Scheme also provides an opportunity to inactive companies to get their companies declared as ‘Dormant Company’ by filing a simple application at a normal fee.
1. Details of the scheme:
The scheme shall come into force on April 01, 2020 and shall remain in force till December 31, 2020.
2. Applicability of the scheme:
“Defaulting Company”* is permitted to file belated documents which are due for filing on any given date in accordance with the provisions of this scheme.
3. Immunity under the scheme:
Immunity from the prosecution/ proceedings or from imposing penalty shall be provided only to the matter related to filing of belated documents. Any other consequential proceedings, including any proceedings related to interest of shareholders, its directors and key managerial personnel would not be covered by such immunity.
4. Withdrawal of appeal against any prosecution launched/ proceedings for imposing penalties initiated:
If a defaulting company has filed any appeal against any notice, complaint, order passed by court or by any adjudicating authority, it can file an application under this scheme for immunity certificate only after withdrawing such appeal and by furnishing a proof of such withdrawal with the application under Form CFSS-2020.
5. Special measures for cases where the order of the adjudicating authority was passed but the appeal could not be filed:
Where due to delay of filing any document with the registrar, order of penalties were imposed by adjudicating officer and no appeal has been filled as on date against such order then:
Where the last date for filing appeal falls between March 01, 2020 to May 31, 2020 (inclusive of both days), a period of 120 additional days shall be allowed to file an appeal against the Regional Director.
Provided during such additional period, no prosecution shall be initiated against the Company or its officers.
6. Application for issue of immunity in respect of documents filed under the scheme:
The Defaulting Companies shall file Form CFSS-2020 after making all default good by filing the belated documents with the Ministry of Corporate Affairs (MCA) and the same should have been taken on record or approved by the designated authority as the case may.
Form CFSS-2020 can be filed anytime until the closure of the CFSS-2020 Scheme but not after the expiry of six months from the date of closure of the CFSS-2020 Scheme i.e. by March 31, 2021.
There are no filing fees of Form CFSS-2020.
As the form is a self-declaration form. After submission of Form CFSS-2020 and on the basis of self-declaration made by the Director, the ROC will issue an Immunity Certificate.
7. Non-applicability of immunity in respect of certain matters:
This immunity shall not be applicable in the following matters:
Any appeal pending before the court of law; and
In case of management disputes pending before any court of law / tribunal.
8. Non-applicability of the scheme in certain cases:
The scheme shall not apply to:
Companies against which an action for final notice for striking off the name has already initiated by the Ministry of Corporate Affairs (MCA);
Where an application had already been filled by the company for action of striking off the name of the company from the Ministry of Corporate Affairs (MCA);
Companies which have amalgamated under a scheme of arrangement or compromise under the Companies Act;
Where an application has already been filled for obtaining the status of Dormant Status;
To vanishing companies**; and
Forms related to increase in authorized share capital (SH-7).
9. Effect of Immunity:
The Ministry of Corporate Affairs (MCA) shall withdraw the prosecutions before any courts and proceedings pending before adjudicating authority in respect of which the immunity has been granted.
10. Scheme for ***Inactive Companies:
Defaulting Inactive Companies while filling application under Form CFSS-2020, may also file:
Form MSC-1 to obtain the status of Dormant Company; and
Form STK-2 for striking off the name of the company.
Note: Immunity shall only be provided to the extent, it pertains to any delay associated with the filling of belated documents with the MCA 21, and not for the Non-compliance.
*Defaulting Company means a company which has made a default in filing any of the documents, statements, returns, etc. including annual statutory documents with the Ministry of Corporate Affairs (MCA).
** “Vanishing Company”
A company would be deemed to be a vanishing company, if it is found to have:
1. Failed to file returns with Registrar of Companies (ROC) for a period of two years;
2. Failed to file returns with Stock Exchange (SE) for a period of two years (if it continues to be a listed company);
3. It is not maintaining its registered office of the company at the address notified with the Registrar of Companies/ Stock Exchange; and
4. None of its Directors are traceable.
***“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;
“significant accounting transaction” means any transaction other than—
(a) payment of fees by a company to the Registrar;
(b) payments made by it to fulfil the requirements of this Act or any other law;
(c) allotment of shares to fulfil the requirements of this Act; and
(d) payments for maintenance of its office and records.
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