Company Fresh Start up Scheme -2020

INTRODUCTION:

A company format of business requires thorough reporting and compliances. A company registered under companies act 1956/2013 needs to fulfill all mandatory compliances prescribed under companies act, rules, guidelines and under all other related acts within prescribed due dates. Those companies who do not comply with the requirements within certain due dates have to bear the penalties in the form of late filing fees. At times, a company fails to comply to the rules and regulation so negligently that it may be served with the rigorous notice to close down the company. To overcome this kind of situation the MCA has come up with a rewarding scheme to all those defaulting company to revive and restart their business by fulfilling all the pending compliances without payment of late fees. This is one-time opportunity, so as to enable the defaulting companies to complete their pending compliances by filing necessary documents to MCA-21 electronically without being subject to additional fees on account of delay. The MCA has named it as Companies Fresh Start Scheme-2020. Let us look at this scheme in detail.

APPLICABILITY OF SCHEME

The Said Scheme is Applicable to any Defaulting company; Defaulting companies are permitted to file the belated documents, which are due for filing on any given date in accordance with the provision of this Scheme.

Defaulting Company defined Under CFSS-2020

“Defaulting company” means a company defined under the. Companies Act, 2013, and which has made a default in the filing of any of the documents, statements, returns, etc including annual statutory documents on MCA-21 Registry.

This scheme shall not be applicable in the following cases:

Companies against which Final notice of “Strike off” Under Section 248 already initiated by Designated authority:

Where the company has already filed the application for Strike off with Registrar of Companies

Companies which have amalgamated under the Scheme of arrangement or compromise under the act;

Where a company has already filed the Application for obtaining Status of Dormant Company U/s 455 of the act;

Vanishing companies

Forms Regarding Increasing In Authorised Capital Form SH-7, Charge Related forms, CHG-1, CHG-4, CHG-8, & CHG-9.

Duration of scheme:

The Scheme Shall come into force from April 1st, 2020 and shall remain in force till September 30th, 2020.

MANNER OF PAYMENT UNDER SCHEME AND SEEKING IMMUNITY UNDER THE SCHEME:

• The Defaulting companies required to Pay Normal Fees as prescribed under Companies (Registration offices and Fee) Rules, 2014, there will be no additional fees payable on the date of filing of belated documents.
• Immunity from the launch of prosecution or proceedings shall be provided only to the extent such prosecution or proceedings for imposing penalty under this act pertain to any delay associated with the filing of belated documents. Any other consequential proceedings, including any proceedings involving interest of any shareholders or any other person or any directors or key managerial persons will not be covered by such immunity.
• In simple words we can say that company is immune only to the extent of payment of additional fees in the form of penalties however if any defaults made by company leads to any prosecution against any person who is director, key managerial person or any other person related to company will have to bear all the consequences.

For example: A company is required to file form AOC-04 and MGT-07 within prescribed time limit. Despite of being issued several reminder notices, the company and its directors neither respond to the notice nor comply with the required compliances. In such case, a company is immune from the penalties but if MCA found any discrepancy in the forms filed which is serious in the nature and leads to any proceedings against the directors than in that case directors will have to obey those proceedings and no immunity from proceedings shall be granted.

Withdrawal of Appeal:

If a Defaulting company or Any of its Officer has filed any appeal against any notice issued/complaint filed/order passed by any court or adjudicating authority, then the applicant company has to withdraw such appeal before filing an application for Immunity & shall file the Proof of Withdrawal along with the application for immunity.

Special Cases where order passed but appeal could not file:

Where on account of non-filing of documents or return by a company and an order imposing penalty has been issued in this respect by adjudicating authority and no appeal have been preferred by concerned company then following shall be applicable:

• Where the Last date of filing of Appeal falls between 1st march 2020 to 31st may 2020, a period of 120 additional days shall be allowed to file an appeal from the date of the last date of Filing of appeal as specified in the order.
• In such additional period, no prosecution shall be initiated for the Non-compliance of the order passed by adjudicating authority, against the company and its officers.

Application for issuing immunity under the scheme:

The application for seeking immunity shall be filed electronically to MCA portal by filing form CFSS-2020 after the closure of the scheme and after all the documents are taken on the records and approved by competent authority but not later than six months from the closure of the scheme. There shall be no fees payable on the form CFSS-2020.

No immunity shall be granted in the following case:

• If any appeal is pending before any court of Law or in Case of management disputes of the company pending before Court or tribunal,
• Also, if any appeal is pending to be filed, before the commencement of the Said Scheme, against the order passed by court or penalty imposed by adjudication.

            Certificate of immunity:

On verification of form CFSS-2020, immunity certificate in respect of the documents filed under this scheme shall be issued by designated authorities.

Effect of immunity:

After Granting the Immunity, the designated authority shall withdraw the prosecutions pending, if any, pending before the Concerned Court and Proceedings of adjudication of penalties, other than those whose order is already passed, in respect of default against which immunity has been granted shall be deemed to have completed without any further action on part of the Designated Authority.

Scheme for inactive company:

This Scheme provides space to the inactive companies to be declared as Dormant Company under Section 455 or Declared as Strike off the name under Section 248 of the Act by making application with the normal fees.

The Defaulting inactive companies can also opt to,

1. Apply status of dormant company u/s 455 of Companies Act, 2020 by filing form MSC-1 at a normal fee for minimal Statutory Compliance
2. Apply for Strike off of Company by filing form STK-2 with normal fees.

Action against defaulting companies:

In the Conclusion of the Scheme, the designated authority shall take the necessary action under the companies who have not availed this scheme and are in default in filing of these documents in a timely manner.