COMPANIES FRESH START SCHEME (CFSS) 2020
Introduction Presently Government of India is providing different kind of amenity schemes under different laws like Vivad se Vishwas Scheme, 2020 related to Income Tax, Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 related to Service Tax and Central Excise Act, etc. Now, The Ministry of Corporate Affairs (MCA) has introduced a new scheme called as Companies Fresh Start Scheme (CFSS), 2020 to provide one-time opportunity to all defaulted companies to make a fresh start by filing various belated returns, documents, statements, etc. without any additional fees/penalty/prosecution. It is an immunity scheme by the MCA for those companies who have failed to file the Annual Returns and Financial Statements or any document or any return in the MCA-21 registry as being governed under section 403 of the Companies Act, 2013. Thus, under CFSS, 2020 scheme, such defaulting companies can file all pending necessary documents in the MCA-21 registry at nominal fees as prescribed under the Companies (Registration and Office) Rules, 2014. Applicability
- The scheme is applicable on defaulting company. As per Companies Act, 2013, "Defaulting Company" means company which has made default in filing of any or the documents, statement, returns, etc including annual statutory documents on the MCA-21 registry.
- The scheme is effective from 1st April, 2020 and shall remain effective up to 30th September, 2020 (both days inclusive)
- Under the scheme, defaulting inactive companies, while filing documents under CFSS, 2020 can, simultaneously
- apply to get themselves declared as dormant company under section 455 of the Companies Act, 2013 by filing a simple e-form MSC-1 at a nominal fee OR
- apply for striking off name of the company by filing e-form STK-2 at a nominal fee.
Procedure
- Firstly, the defaulting company is required to file all pending documents in prescribed e-forms by paying nominal fees.
- Once all filed documents are taken on file or on record or approved by the designated authority as the case may, the defaulting company will make an application for the issue of immunity certificate electronically in the Form CFSS-2020 within six months from the date of the closure of the scheme i.e. till 31st March, 2021. No fee shall be payable on such form.
- Lastly, on the basis of Form CFSS-2020, an immunity certificate shall be issued by the designated authority.
Effect of scheme in case of appeal
- If any defaulting company has filed any appeal against any notice, complaint, order passed by court or by an adjudicating authority then an application for immunity certificate can be filed under CFSS -2020 after withdrawing such appeal and furnishing the proof of such withdrawal along with the application.
- If appeal has not been filed and last date of appeal falls within1st March, 2020 to 31st May, 2020 then additional 120 days shall be granted from the last date of appeal for filing the appeal.
Immunity from the Scheme
- The scheme provides immunity from fresh launching of prosecution w.r.t. delayed filing of e-forms.
- The benefits of scheme are also available for prosecution already launched provided:
- Order of the appropriate authority is complied;
- An appeal has been filed against such order and appeal is withdrawn;
- Where due date of appeal falls within 1st March, 2020 to 31st May, 2020, the last date of filing appeal will be increased by additional 120 days.
Cases where scheme shall not be applicable
- to companies against which action for final notice for striking off the name u/s 248 of Companies Act, 2013 has already initiated by the designated authority i.e. the Registrar of Company (ROC).
- where an application had already been filled by the company for action of striking off the name of the company from the register of companies.
- to companies which have amalgamated under a scheme of arrangement or merger.
- where an application has already been filled for obtaining the status of Dormant Status under section 455 of the Companies Act, 2013 before this scheme.
- to vanishing companies.
- forms related to increase in authorize capital (SH-7) and charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9).
Conclusion CFSS-2020 provides relief and opportunity to defaulting companies to make a fresh start as a fully compliant entity by making good any defaults related to statutory filings. The idea behind the scheme is to ease compliance burden for companies and giving immunity from penal proceedings. For the scheme refer the link: http://www.mca.gov.in/Ministry/pdf/Circular12_30032020.pdf
-Garima Mohit Jindal M.Com, M.B.A, NET and JRF Qualified Email: garimamohit19@gmail.com
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