Introduction of “Companies Fresh Start Scheme, 2020” to provide relief to law abiding companies in the wake of COVID 19 By Divya Saluja

The Ministry of Corporate Affairs on March 30, 2020, has introduced the “Companies Fresh Start Scheme, 2020to provide relief to law abiding companies in the wake of COVID 19.

It reduces financial burden on them and giving them an opportunity to make a “fresh start”.

Provisions of Companies Fresh Start Scheme, 2020 (CFSS-2020)

Duration: The scheme shall be valid for 6 Month starting from 1st April 2020 to 30th  September 2020.

Fees: The defaulting company shall require to file the belated documents including annual filing by paying nominal fees (without including Additional Fees) within applicability period i.e 1st April 2020 to 30th September 2020.

Immunity to companies: This Scheme provides immunity to companies in relation to prosecution or proceeding for imposing an additional penalty for not filing of belated documents. This Scheme doesn’t provide immunity on any other consequential proceedings including proceeding involving the interest of its directors or key managerial personnel etc.

Application for issue of immunity certificate in e-form CFSS-2020:  After filing the belated documents, the Company shall make an application for seeking immunity in e-form CFSS-2020, mentioning Service Request Number (SRN) of the e-forms filed by the company under this scheme. No fees shall be payable on filing of this e-form CFSS-2020.

The companies cannot be filed e-Form CFSS-2020 after expiry of 6 months from the date of the closure of the Scheme. The Companies seeking immunity can file this e-form CFSS-2020: post the closure of the scheme i.e. post September 30, 2020 but on or before March 31, 2020. 

Provided that no immunity for any appeal pending in the court of law and in case management disputes of the Company pending before any court of law or tribunal.

Provided also that no immunity shall be provided in case court has ordered conviction or an order imposing penalty has been passed by adjudicating authority & no appeal preferred against such order, before the scheme came in enforce.

Withdraw of appeal: If any company which has defaulted in filings of any statutory documents, made good of that default by filing the statutory documents under this scheme, but that company or its officer in default has previously filed any appeal against any notice issued or compliant filed or an order of court or by an adjudicating authority, before any competent authority, shall first withdraw that appeal and furnish proof of such withdrawal in e-form CFSS-2020.

Additional period for filling appeal:  The competent court or adjudicating authority passed an order to prosecute and company or its officer didn’t file the appeal before the appellate authority or regional director under section 454(6) of the companies act, 2013 as on commencement of this Scheme then the following things apply are:-

  • Where the last date of filing an appeal against the order of the adjudicating authority falls between March 01, 2020 to May 31, 2020 (both days included), an additional period of 120 days shall be given to file such appeal.

  • During this additional period of 120 days, prosecution under section 454(8) for non-compliance of the order of adjudicating authority, to the extent it relates to delay in filing of any statutory document in MCA-21, shall not be initiated against the companies and its officer.

Immunity Certificate: Based on declaration in e-form CFSS-2020, immunity Certificate shall be issued by Designated authority.

Opportunity to the inactive company: The Scheme also provides an opportunity to the inactive company to convert into a dormant company under section 455 act, by filing form MSC-1 with normal fees & help the inactive companies to remain on ROCs register with minimum compliance requirement.

Non-application of the scheme: Following companies cannot avail the benefit of this scheme:

  • Companies against which final order for striking off the name u/s 248 of the Companies Act, 2013 (section 560 of Companies Act 1956) has already been issued by the
  • The company suo-moto made an application for striking off the name of the company from ROCs in e-form STK-2.
  • Companies amalgamated under the scheme of compromise & arrangement.
  • Companies which have filed an application for obtaining the dormant status in e-form MSC-1.
  • Vanishing Companies.
  • Where increase in authorized share capital (filing of e-form SH-7).
  • Charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9). 

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