The Companies Act, 2013 requires all the companies to file Annual Return and financial statement on annually basis with MCA. Apart, various other set of documents, returns, statements etc. are also required to be filed. Companies Act, 2013 prescribes time limit for filing of each such document. Fee and additional fee for such filing is given in Section 403 of Companies Act, 2013 read with Companies (Registration Office and fee) Rules, 2014.
MCA received various representations from various stake holders requesting granting of one-time opportunity to file all pending documents without additional fee via Companies fresh start scheme, 2020 (CFSS – 2020).
To implement such scheme, Ministry of Corporate Affairs (“MCA”) has issued circular No. 12/2020 dated 30th March, 2020 to prescribe detailed procedure and conditions for such filing.
It was considering as one of the major relief and also a onetime opportunity for defaulting companies to file their long pending documents. Such document filing otherwise could have attracted enormous amount of additional fee.
List of the same is as follows:
- Additional fee on delay filing of documents is condoned,
- Immunity is granted from initiating prosecution or proceedings for imposing of penalty in such cases, and
- Inactive companies are given an opportunity to declare their companies as “Dormant Company” by filing a simple application form. Therefore, inactive companies may remain on register of RoC with least compliance requirement.
- Therefore, Company is required to make payment of only normal fee while filing belated documents.
1. Applicability of Companies fresh start scheme, 2020
- CFSS, 2020 is applicable on “Defaulting Companies” only.
- Defaulting Company means a company which made default in filing of any of the documents, statements, returns etc. including annual statutory documents with MCA-21.
- Therefore, defaulting company can file belated documents in accordance with this scheme.
- The scheme will be applicable from 1st April 2020 to 30th September 2020.
2. Granting Immunity from Proceedings and prosecution under CFSS, 2020
Defaulting companies will be required to pay only normal fee at the time of filing of belated documents and no additional fee will be charged.
Upon filing, immunity will be granted to such company that no prosecution or proceedings for imposing penalty will be initiated against such company related to such delay filing.
However, please note that immunity will be granted only with respect to delay and not with respect to any other consequential proceedings including proceedings involving interest of any stakeholders or any other person qua the company or its directors or Key Managerial person would not be covered under the immunity.
3. Withdraw of appeal before filing application under CFSS 2020
If any notice is issued or complaint is filed or order is passed by a court or adjudicating authority against the defaulting company for violation of provisions of Companies Act, 2013 and defaulting company or its officer in default has filed appeal against it.
Subsequently, such company intends to make an application under CFSS with respect to such matter. In such case, company shall be first required to withdraw such appeal before filing application for issue of immunity certificate. Proof of withdrawal will be furnished with application.
4. Cases where appeal could not be filed
There can be certain cases where order is passed by adjudicating authority imposing penalty for delay in filing of documents, statements, returns etc. with MCA.
However, no appeal has been filed by the company or its officer against such order before regional director u/s 454(6) of Companies Act, 2013 on date of commencement of scheme.
In such case, where last of filing of appeal falls between 1st March, 2020 to 31st May, 2020 (both dates inclusive) then an additional period of 120 days will be allowed with effect from such last date to all the companies or their officers to file their appeal.
During such additional period, prosecutions for non-compliance of order shall not be initiated as far as it is related to delay filing of any document, statement or return.
5. Application for issuance of immunity under CFSS
- After closure of such scheme, application will be filed for seeking immunity in respect of belated documents filed under the scheme provided such documents are taken on file, or on records or approved by designated authority.
- Such application can’t be filed after expiry of 6 months from date of closure of scheme and it will be filed electronically in form CFSS-2020. No fee shall be payable for CFSS-2020 form.
- Provided that no immunity will be granted in following cases:
- Where matter of any appeal is pending before the court of law and in case of management dispute of the company, pending before any court of law or tribunal; or
- Where court has ordered conviction in any matter; or
- An order imposing penalty has been passed by adjudication authority but no appeal has been filed against such order before the scheme came in force
6. Issuance of Order granting immunity from penalty or prosecution
Based on declaration filed in form CFSS-2020, an immunity certificate will be issued by designated authority with respect to documents filed under the scheme.
7. Non applicability of Companies Fresh Start Scheme, 2020 (CFSS-2020)
CFSS 2020 Scheme shall not apply in following cases:
- Where companies against which action for final notice for striking off name u/s 248 has already been initiated by designated authority; or
- Where company has already filed application for name strike off; or
- Companies which have amalgamated under the scheme of arrangement or compromise; or
- Where application has already been filed for obtaining status of “Dormant Company” under section 455 of companies act, 2013; or
- Vanishing Companies; or
- Where any increase in authorized share capital is involved (Form SH-7) and also on charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9)
8. Effect of Immunity
- After granting immunity, designated authority shall withdraw the prosecution pending before courts and proceedings of adjudication of penalties under section 454 of the act.
- In respect of defaults against which immunity has been granted shall be deemed to be have been completed without any further action on part of designated authority.
9. CFSS Scheme for Inactive Companies
Inactive companies can complete there filing process under CFSS, 2020 and can simultaneously, either:
- Apply to get themselves registered as Dormant Company by filing form MSC-1 at a normal fee or
- Apply for striking off the name of the company by filing form STK-2 by paying normal fee.