Currently, the World is on lockdown, as a whole, due to the unprecedented condition regarding the health and safety of the public caused by the COVID-19 pandemic. The Ministry of Corporate Affairs of India has introduced a new scheme for companies, known as the Companies Fresh Start Scheme, 2020 (CFSS), aimed at providing relief to companies.
Our Indian Government has been making enormous efforts in clearing backlogs, appeals, and disputes in direct and indirect taxes. As a result, the government launched settlement schemes in Direct Tax (Vivaad Se Vishwas Scheme) and Indirect Tax (Sabka Vishwas Scheme). Following the circular dated March 24, 2020, the MCA has introduced the Companies Fresh Start Scheme, 2020 (‘CF’s Scheme’) under Section 460 of the Companies Act, 2013, vide circular no. 12/2020 and 13/2020 dated March 30, 2020, Act. It is a one-time application for condonation for all companies, documentss and returns.
Furthermore, the MCA has also provided a bit of breathing space to LLPs by introducing specific essential changes to the LLP Settlement Scheme, 2020. The idea behind this scheme is to provide an opportunity for companies to complete all their pending filings and returns with the authorities and start anew. This is a valuable opportunity for all law-abiding companies, as the scheme provides them with extended time and financial relief up to a specific limit, taking into account the current global situation. 2020, launched the Companies Fresh Start Scheme, 2020, which inter alia provided an opportunity to companies to make reasonable filing-related defaults, regardless of the duration of the defaults, and make a fresh start as a fully compliant company.
The Ministry of Corporate Affairs (MCA) has introduced a new scheme called “Companies Fresh Start Scheme 2021” to help companies make good on any default in filing, irrespective of the duration of the default, and make a fresh start as a fully compliant entity. All government-authorized regulatory bodies are doing their best to provide relief to individuals residing in India. One such organization is the Ministry of Corporate Affairs (MCA), which has introduced a new scheme named the Companies Fresh Start Scheme (CFSS) to support businesses in India.
Details of the Company’s Fresh Start Scheme
This means the companies have a period of 6 months to use for filings. During this period, there is no need to pay any additional fee for filing the necessary documents, forms, and returns late.
Under the provisions of the Companies Act, 2013, all companies are required to follow statutory compliances on a yearly basis, which include Financial Statements, annual returns, and all other necessary forms, statements, and documents required within a specified period. Noncompliance results in the infliction of penalties and fines by the government, any company that fails to comply is known as a” defaulting company”.
As per this scheme, defaulting companies shall be expected to pay the standard fees alone, according to the Registration of Offices Fees Rules 2014. Notional fees will be requested from the companies for filing their delayed filings, forms, and returns.
Additionally, under section 455 of the Companies Act 2013, this CFSS-2020 scheme offers an opportunity to all inactive companies to get their s”atus as a “dorman” company” by filing e-form MSC-1 with a normal payable fee or by filing e-form STK-2 to apply for striking off the company name at the prescribed fee.
To make use of this immunity of belated documents, you have to apply electronically by filing form CFSS-2020, no fee required for this process. The effect of filing CFSS-2020 will be that the assigned or concerned authority shall adjourn the pursuances before any courts and legal proceedings pending before the deciding authority in respect of which the exemption or immunity has been allotted by the Registrar of Companies or any designated authority.
Here are some exceptional cases
ISupposethe defaulting company has registered an appeal against any complaint, notice, or any order wthatan adjudicating authority or the court passes,. In that case,it can apply for an immunity certificate under this scheme only after getting such an appeal and providing proof of such withdrawal with the CFSS-2020 application.
On the other hand, due to the delay in filing any forms or documents with the registrar, a penalty was imposed by the concerned authority officer, and no appeal has been filed to date.
Likewise, the deadline for filing appeal comes on or between 1.03.2020 to 31.05.2020, a period of 120 additional days shall be provided to the company to file an appeal against Regional Director under the section 454(6), furnished during such additional period no prosecution shall be started against the directors or officers of the companies and the company.
Cases where this CFSS-2021 Scheme will not apply
- To companies against which legal action or legal process for final notice for crossing off the company name under section 248 of the Companies Act has already started by the concerned authority or the ROC.
- The company has already applied to have its name removed from the ROC.
- Companies that have coalesced according to a scheme of compromise or arrangement under the Act.
- Where the company has already applied for obtaining the status of Dormant.
- To vanishing companies
- Forms associated to increase in authorized capital -SH-7- and charge associated documents such as CHG-1, CHG-4, CHG-8 and CHG-9
Other details of the CFSS-2021 Scheme
According to this scheme, MCA has issued a list of 76 forms which will be provided to file with MCA under Fresh Start Scheme, 2020 (CFSS -2020) and Modified LLP Settlement Scheme, 2020 (LLPSS-2020), out of this, 10 forms are referring to the Companies Act, 1956, 12 forms are referring to LLPs and remaining 56 forms are referring to the Companies Act, 2013. A total of 62 forms will be provided for filing with the MCA.
