Ministry Of Corporate Affairs Notifies Companies Fresh Start Scheme, 2020

The Ministry of Corporate Affairs (“MCA”) vide its circular dated 30th March 2020 has issued “Companies Fresh Start Scheme, 2020” (“CFSS 2020”) and revised the “LLP Settlement Scheme, 2020” (“LLP Scheme 2020”) to promote defaulting companies/LLPs to make a fresh start on a clean slate and waive the additional fees for delayed filings by the companies/LLPs with the Registrar of Companies (“ROC”) during the currency of the Schemes i.e. from 1st April 2020 to 30th September 2020. Both the schemes incentivize compliance and reduce compliance burden during the unprecedented public health situation caused by the outbreak of COVID-19.

The CFSS 2020 and LLP Scheme 2020, both contain provisions for giving immunity from penal proceedings, including relief against imposition of penalties for late submissions and further provide additional time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed. However, the immunity is only against delayed filings with MCA and not against any substantive violation of law.

Key provisions of CFSS, 2020:

• Under the CFSS 2020 scheme, any company which has failed to file the Annual Returns and Financial Statements or any return or form which are governed under section 403 of the Act, then such defaulting companies can file such belated documents in the MCA-21 registry at a nominal fee as prescribed under the Companies (Registration and Office) Rules, 2014 with the ROC during the currency of the CFSS 2020 i.e. with effect from 1st April 2020 to 30th September 2020.

• The defaulting inactive companies can also simultaneously apply for obtaining dormant status under the provisions of section 455 of the Act or apply for striking off the name of the company by filing e-form STK-2, by paying the normal fees as applicable under the Act.

• On completion of CFSS 2020 on 30th September 2020, CFSS-2020 e-form shall be available for filing for companies availing benefit under the scheme and an immunity certificate will be issued by the MCA.

• The CFSS 2020 does not apply to companies stroke off by ROC under section 248, companies which have already applied for strike off, companies which have been amalgamated under a scheme of arrangement or merger, companies which have already filed for obtaining dormant status under section 455 of the Act, the vanishing companies and on forms for increase in capital & charge related forms i.e. form SH-7, CHG-1, CHG-4, CHG-8 and CHG-9.