Companies Fresh Start Scheme 2020 by MCA

Currently, the World is on a lockdown, as a whole, due to the unprecedented condition regarding the health and safety of the public caused by the COVID-19 pandemic. The Ministry of Corporate Affairs of India has introduced a new Scheme for Companies and it is named as the Companies Fresh Start Scheme, 2020 (CFSS), an attempt to provide relief for the companies.

Our Indian Government has been making enormous efforts in clearing backlogs/appeals/disputes in direct and indirect taxes and as a result, the government has launched settlement schemes in Direct Tax (Vivaad Se Vishwas Scheme) and Indirect tax (Sabka Vishwas Scheme). Following the circular dated March 24, 2020, the MCA has come with Companies Fresh Start Scheme,2020 (‘CFSS Scheme’) under Section 460 of the Companies Act, 2013, vide circular no. 12/2020 and 13/2020 dated March 30, 2020 Act. It is a one-time application of condonation for all companies to file delay filings of various forms, documents and returns.

Furthermore, the MCA has also provided a bit of breathing space to LLPs by inducing certain essential changes to the LLP Settlement Scheme, 2020. The idea behind this scheme is to provide an opportunity for companies to complete all their pending fillings and returns with the authorities and start it fresh. This is a good opportunity for all those law-abiding companies, as this scheme is providing them extended time and a financial relief to a certain limit considering the present global situation.

 Details of the Companies Fresh Start Scheme

CFSS-2020 will come in effect from 1st April 2020 and ends on 30th September 2020, means the companies have a period of 6 months time to use for filings. In this period there is no need to pay any additional fee for being delayed filing the necessary documents, forms and returns.

Under the provisions of the Companies Act, 2013, all companies are needed to follow statutory compliances yearly which include Financial Statements, the Annual Returns and all the other necessary forms, statements and documents that are assigned, within a period of time. Not complaining the same will results in the infliction of penalties and fines by the government. The company which fails to cling to the compliances is known as “defaulting company”.

As per this scheme, defaulting companies shall be expected to pay the normal fees alone according to Registration offices and Fees Rules 2014 and there won’t be any additional fees will be requested from the companies for filing their delayed filings of the documents, forms and returns.

Additionally, under section 455 of the Companies Act 2013, this CFSS-2020 scheme offers an opportunity to all inactive companies to get their status as “dormant company” by filing e-form MSC-1 with normal payable fee or by filing e-form STK -2 to apply for striking off the company name at the prescribed fee.

To make use of this immunity of belated documents, you have to apply electronically by filing form CFSS-2020, no fee required for this process. Effect of filing CFSS-2020 will be that the assigned or concerned authority shall adjourn the pursuances before any courts and legal proceedings pending before deciding authority in respect of which the exemption or immunity has been allotted by the Registrar of Companies or any designated authority.

Here are some special cases

If the defaulting company has registered an appeal against any complaint, notice or any order which is passed by an adjudicating authority or the court, it can apply for immunity certificate under this scheme only after getting such appeal and provide proof of such withdrawal with the CFSS-2020 application.

On the other hand, due to delay of filing any forms or document with the registrar, and order of penalties was imposed by the concerned authority officer and no appeal has been filed till date:

Likewise, the deadline for filing appeal comes on or between 1.03.2020 to 31.05.2020, a time span of 120 additional days shall be provided to the company to file an appeal against Regional Director under the section 454(6), furnished during such additional time period no prosecution shall be started against the directors or officers of the companies and the company.

Cases where this CFSS-2020 Scheme will not apply

• To companies against which legal action or legal process for final notice for crossing off the company name under the section 248 of Companies Act has already started by the concerned authority or the ROC.
• The company which already been filled an application for action of crossing off or removing the name of the company from the ROC.
• Companies which have coalesced according to a scheme of compromise or arrangement under the act.
• Where the company has already been filled an application for obtaining the status of Dormant Status.
• To vanishing companies
• Forms associated to increase in authorized capital -SH-7- and charge associated documents such as CHG-1, CHG-4, CHG-8 and CHG-9

Other details of CFSS-2020 Scheme

According to this scheme, MCA has issued a list of 76 forms which will be provided to file with MCA under Fresh Start Scheme, 2020 (CFSS -2020) and Modified LLP Settlement Scheme, 2020 (LLPSS-2020), out of this, 10 forms are referring to the Companies Act, 1956, 12 forms are referring to LLPs and remaining 56 forms are referring to the Companies Act, 2013. So, a total of 62 forms will be provided to be filed with MCA.

You May interested to Check Previous Update Details: 

1. Know about Belated IncomeTax Filing for FY 2018-19
2. The last date for filing Income Tax Returns (ITR) has been extended to June 30 

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