On 24th March, 2020, The Government of India has announced lockdown of 21 days in view to protect the people at large from the COVID-19 pandemic. All the government organisations are doing their best in providing relief and constant services to everyone who is in need of help. Among them, Ministry of Corporate Affairs (MCA) has come up with a brand new scheme named Companies Fresh Start Scheme, 2020 (CFSS) in the favor of businesses in India.
Apart from that, MCA has given relaxations to the LLPs by introducing some statutory changes in LLP Settlement Scheme, 2020. The main purpose of changes in the scheme is to give additional time and financial relief to a certain extent to all the generous Companies and LLPs in terms of statutory compliances.
Contents in the Companies Fresh Start Scheme (CFSS) 2020
All the Companies registered and operating in India are obliged to follow certain norms directed by the Ministry of Corporate Affairs that includes filing of Annual Return, Financial Statements, books of accounts and other business-related documents and statements, etc. within stipulated time period. In case, if the company fails to abide by such norms then such companies are categorized as ‘Defaulting Companies’ and heavy penalty or interests are charged as form of punishments.
Talking about Companies Fresh Start Scheme, 2020, MCA has introduced this scheme to give relief to the companies from heavy compliance and is valid from 1 April 2020 to 30 September 2020.
Here are the Provisions Under CFSS 2020:
1. For the Defaulting Firms:
- Such companies will be obliged to pay the normal fees that are prescribed by the Companies Act 2014 for all the filings on MCA 21. No additional charges shall be payable.
- Exemption from prosecution and proceedings related to penalties only if the penalty is applicable to the delayed filing of returns. No other case is covered.
- In case there is any statutory appeal filed by the company related to any notice, order or complaint issued regarding delayed compliances then:
(A) The company must withdraw the appeal before enrolling itself under the CFSS 2020.
(B) While applying for the registration under CFSS, the concerned company must furnish the copy of appeal withdrawal along with the application as a proof.
- Any order, notice or compliant has been passed by the court but no appeal in response has been filed.
(A) In such a case, the company is allowed the time period of 120 days to file the appeal.
(B) Until then, no action will be taken against the non-compliant company (if it is related to delay in filing of returns).
- A company can file CFSS-2020 to avail of the benefits of the scheme:
(a) The company will be immune until 6 months from the date of closure of CFSS 2020.
(b) No fees are charged for filing Form CFSS-2020.
(c) Immunity certificates will be granted to companies that have their registrations under the scheme.
- Immunity will be not given to the companies if:
(a) An appeal is pending for the company.
(b) If any disputes (related to the company) are pending with the court.
If any order is passed by the court is not replied by the company by the way of an appeal.
- For DIN holders, the due date for filing DIR-3/DIR-3KYC has been extended by MCA. All the directors of the companies (DIN holders) can activate their DIN by filing the form between 1 April 2020 to 30 September 2020, filings after the due date will attract a fine of Rs. 5000.
2. For the Non-Operative Firms:
The inactive or defaulting firms can also apply for CFSS 2020 and file their due compliance without any hassle. Apart from that, they can do below-mentioned tasks:
- Apply for Dormant Status u/s 455 of the Companies Act, 2013 by filing MSC-1 along with the prescribed charges.
- Apply for striking off the name of the company from the Register of Companies (ROC).
- Due dates of filing e-form ACTIVE extended till 30 September 2020. The firms liable must file the form on or before the due date else there is a fine of Rs. 10,000 per filing after the due date.
List of Forms Which Can Be Filed Under CFSS 2020
CFSS 2020 is Not Applicable if:
- The final notice for striking off the name of the company name under section 248 of the Companies Act, has already been issued by the concerned authority.
- If the company has already applied for striking off the name of the company by filing STK-2 along with prescribed fees with Registrar of Companies (ROC).
- Companies which have been amalgamated under scheme of arrangement or compromise under the Act.
- Vanishing Companies (Insolvent)
- Companies that are marked for the Corporate Insolvency Resolution Process or Liquidation.
- In any of the cases following are involved: –
– Increase in the Authorised Capital (Form SH – 7)
– Charge related documents (CHG – 1, CHG – 4, CHG – 8, CHG – 9)
Modifications Introduced Under LLP Settlement Scheme 2020
- LLP Settlement Scheme 2020 is valid only from 1 April 2020 to 30 September 2020.
- For defaulting LLPs, the due date for filing all the belated documents is 31 August 2020.
- There are no additional fees other than the normal application fees for filing.
- There will be no prosecution by Registrar against the defaulting firms that have filed all the belated compliances on or before 30 September 2020.
- The norms are non-applicable for LLPs that have nominated their company name to be removed from the Registrar of Companies as per LLP rules 2009.