A golden opportunity for defaulter companies to become compliant with savings of lakhs of rupees.
What is Companies Fresh Start Scheme 2020 (CFSS 2020)?
In order to facilitate the companies registered in India to make a fresh start on a clean slate, Ministry of Corporate Affairs has introduced Company Fresh Start Scheme 2020 vide MCA General Circular No. 12/2020 dated 30th March, 2020. This will enable companies to complete pending compliance requirements under the Companies Act without the levy of late fees and with immunity from legal proceedings under the act for these non-compliances.
Who can avail the benefit of the scheme?
Defaulter companies can avail the benefit of the scheme, and file pending requirements under Companies Act without paying additional/ late fees for filing. This benefit can be availed also for one-time compliance requirement of Form INC-22A ACTIVE for verification of registered office.
Inactive companies, those who are in default, may apply for dormant status, or strike off the company by filing STK-2, after fulfilling the requirements of CFSS 2020.
Directors, whose DIN are deactivated due to non-filing of DIR-3KYC/DIR-3 KYC-Web, can comply with the filings and activate their DIN without the late fees of Rs. 5,000.
Period of the scheme
The Scheme shall remain in force from April 1, 2020 till September 30, 2020.
Benefits of opting CFSS-2020 Scheme are as follows
– No additional fees applicable for pending compliances
– Granting of Immunity from the Penalty and Prosecution under Companies Act for delay in filing of forms included under the scheme (however, section-wise default if any shall prevail and no immunity for such violation shall be provided);
– ROC shall withdraw all the proceedings of adjudication of penalties u/s 454, other than those referred in the second proviso to sub-para (vii) of para 6.
Applicability of the scheme
The following forms can be filed under the scheme
– Filing of annual reruns and financial statements forms including- AOC-4, AOC-4 XBRL, AOC-4 CFS, and Form MGT-7.
– Other MCA forms including- ADT-1, INC-22, INC22A, PAS-3, MGT-14, INC-20A, ADT-3, 23AC, 23ACA, 20B, DIR-12, etc.
– In total 64 forms are covered under the scheme out of which 10 forms are under Companies Act 1956 and 54 forms under Companies Act 2013.
However, this scheme is not applicable for form SH-7 for increase in authorised capital and charge related filings, i.e., forms CHG-1, CHG-4, CHG-8 and CHG-9
Non applicability of the scheme
The scheme shall not be applicable in the following cases:
– 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 amalgamated
– Companies which has already filed for obtaining Dormant Status
– To vanishing Companies
- File all pending forms, documents, returns, statements, etc. as mentioned above with the MCA-21 without paying any additional/late fees.
- In case there is an existing appeal filed by the company against any notice, complaint or order issued with regard to prosecution and proceedings related to the delay in statutory filing, the same shall be withdrawn before applying for the scheme.
- After the above filed forms are approved by the authority, file Form CFSS-2020 for seeking immunity in respect of belated documents filed. This form shall be filed after the closure of the scheme, but before the expiry of six months from the date of closure of the scheme.
- An immunity certificate in respect of documents filed under this scheme shall be issued by the designated authority.
Consequence of not opting for the scheme
If you are a defaulter and you do not opt for the scheme, you may face the following consequences:
– Late fee/ additional fee for pending compliances may shoot up to Lakhs
– Registrar may strike off your company and you may become disqualified to be a director in any company
– Prosecution and penalties under Companies Act, which may extend to lakhs.
Author – CA. Arun Chacko ACA