On 30th March 2020, The Ministry of Corporate Affairs issued a circular pertaining to Companies Fresh Start Scheme 2020. This happens to be another window for all defaulting companies to file every belated document as newly began documents devoid of any extra fees. Under the scheme, the companies get the breather to file their outstanding documents such as annual returns and financial statements sans paying any extra fee for the delay.
The Intent:
Giving exemption from extra fees: It happens to be a single-time prospect to assist stakeholders in filing their due compliances such as Annual Return and Financial statement and several other statements, documents and returns to be filed with the Ministry of Corporate Affairs (MCA),minus the additional fee due to the hold up.
Getting Immunity: To get protection from prosecution or proceeding or being made to pay a penalty due to the delay regarding filing of belated documents (and not any other consequential proceeding).
Opportunity to dormant companies: To grant an option to dormant companies to get their entities labelled as inactive company as per section 455 of the Companies Act, by filing a normal application at regular fees, which would assist these inactive companies to be on the register of the Companies with very few compliance obligations.
Period: The Companies Fresh Start Scheme would be active on the 1st of April 2020 till the 30th of September 2020.
NON-APPLICABILITY: The Fresh Start Scheme will not be applicable in these cases:
For entities against which action for last notice for deleting the name as per 248 of the Act has already been launched by the concerned authority.
In cases where any application has already been filed by the Companies for deleting the name of the Company from the registrar of Companies.
To Companies that have merged as per a scheme of arrangement or compromise under the Act.
In cases where applications have already been filed for keeping inactive status under section 455 of the Act prior to the scheme.
To varnishing Companies.
In cases where any spike in authorized capital (Form SH-7) and charge related documents (Form CH-1. CH-4, CH-8, CH-9) are in the fray.
The immunity will not be there with regard to any appeal pending before the court of law and if a management dispute arises regarding the Company and the same is pending before any court of law or tribunal.
The immunity is not applicable if any court has convicted in any matter or an order levying any penalty has been issued by an adjudicating authority under the Act.
Method:
The defaulting company can file their pending documents/returns/other statements and standard Annual Filing documents in relevant specified e-Forms by giving the regular statutory filing fee (minus any extra fee) within the immunity period.
The defaulting Companies has to file the Form CFSB-2020 after ending all defaults and every filings are put on record or authorized by the Designated authority accordingly. This form can even be filed post the end of the Scheme but not after six months have expired from the date of closure of the Scheme. There are no filing fees of Form CFSB-2020.
The Form CFSB-2020 is a form totally based on self-declaration. Post submitting Form CFSB-2020 and as per self-declaration made by the Director, the ROC will provide Immunity Certificate.
PLAN FOR INACTIVE COMPANIES: The defaulting welsh companies while filing the outstanding documents as per CFSS 2020, can side by side either:
Apply to get themselves certified as inactive Company under section 455 of the Companies Act 2013 by filing e-form MSC-1 at regular fee on said form or;
Apply for getting the name of the company deleted by filing e-form STK-2
The Companies Fresh Start Scheme is to boost the special measures under Companies Act, 2013 (CA-2013) and Limited Liability Partnership Act, 2008 with regard to the COVID-19 outbreak, to give respite to the obedient Companies and Limited Liability Partnerships.