MCA vide its Circular 12/2020 dated 30th March, 2020, has come out with Scheme “Companies Fresh Start Scheme, 2020” in order to facilitate the Companies registered in India to make a fresh start on a clean slate.
Applicability-All defaulting companies which has made a default in filing of any of the returns, statements, documents etc. It also included the late falling of return.
Relief-The Companies has been given an opportunity to condone the delay in filing with registrar related to additional fees and immunity to be granted from launching of prosecutions or proceeding for imposing penalty on account of delay associated with certain filings. An Immunity certificate shall be provided issued based on the declaration made under CFSS-2020.
Once the immunity granted, the Designated Authority shall withdraw any proceeding of adjudication without any delay u/s 454 of the Act.
Reliefs to the Dormant Company- The inactive companies can get their companies declared as “Dormant Company” by filing of a single declaration at a normal fee.
The Inactive companies can either opt for Dormant status by filing form MSC-1 along with the application or go for striking off by filing STK-2.
Period:The Scheme shall be applicable from 01.04.2020 to 30.09.2020.
Manner of filing: Every defaulting company shall be required to pay normal fee as prescribed under the (Registration Office and Fee) Rules, 2014 as on the date of filing of every belated document and no additional fee is to be charged.
However, an Immunity given under the said scheme is related to the launch of prosecutions/penalty under this Act with regard to the delay in filing associated with only filing of belated documents. No immunity has been provided against any other consequential filing including proceedings involving interests of any shareholder or any other person related to the Company.
Requirement of appeal withdrawal: If a defaulted company has filed an appeal against any notice or complain or any order of adjudicating authorities related to the statutory filing under the Act or its officer in default , shall withdraw such appeal before filing of application and the said application shall be backed up by the acknowledgement of appeal withdrawal.
Application procedure-The application shall be done in form CFSS-2020 electronically and the same shall be taken on record as filed or approved by the Designated Authority. The said process is subject to completion within 6months from the date of closure of the Scheme.
The situations in which this immunity shall not be applicable:
i) If an appeal is pending before any court of law or tribunal related to the Management disputes.
ii) In case where any conviction has been granted or an order imposing penalty has been passed AND no appeal has been made regarding such matter before the enforcement of this scheme.
Scheme not Applicable- This Scheme is not applicable on the following:
i)Companies on which action for striking off u/s 248 has already been initiated.
ii) Where any application has been made to the Registrar by the Companies for striking off.
iii) Where the companies have been amalgamated as per the Scheme of Amalgamation.
iv)Where any application has been made to the Registrar by the Companies for obtaining of dormant status u/s 455 of the Act.
v) Vanishing Companies
vi) In case of increase in authorised Capital (Form SH-7) and in case of charge related documents (CHG-1, CHG-4, CHG-8 & CHG-9).
vii) Companies under CIRP or Liquidation process.
This is a welcome step for all the companies defaulted in some way or the other and it is in the best interest of all to avail such facility introduced for a Fresh Start of the Company in a fair manner.
The entire contents of this article are solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation by the Author. Compliance Calendar LLP and the Author of this Article do not constitute any sort of professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify and confirm the updates from the genuine sources before acting on any of the information’s provided hereinabove. Compliance Calendar LLP shall not be responsible for any loss or damage in any circumstances whatsoever.