ONE-TIME OPPORTUNITY FOR DEFAULTING COMPANIES – COMPANIES FRESH START SCHEME, 2020 (CFSS)

The Ministry of Corporate Affairs (MCA) vide General Circular No 12/2020 dated March 30, 2020 has come up with the ‘Companies Fresh Start Scheme 2020’ to enable companies make good of any filing-related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity. The USP of the scheme is a one-time waiver of additional fees for delayed filings by the companies with the jurisdictional ROC during the currency of the Scheme, i.e. during the period starting from April 1, 2020 and ending on September 30, 2020. CFSS also contain provision for giving immunity from penal proceedings, including against imposition of penalties for late submissions and also provide additional time for filing appeals before the jurisdictional Regional Directors against imposition of penalties, if already imposed. In this article, I’ve tried to summarize some of the important features of these scheme:

ONE-TIME OPPORTUNITY FOR DEFAULTING COMPANIES - COMPANIES FRESH START SCHEME, 2020 (CFSS)

Salient Features of CFSS 2020:

  • The Scheme shall remain in force from April 1, 2020 till September 30,2020. All pending filings have to be done within this period.
  • Applicability: Any “defaulting company” is permitted to file belated documents, which were due for filing on any given date in accordance with the provisions of this Scheme. Where “defaulting company” means a company defined under the Companies Act 2013, and which has made default in filing of any of the documents, statements, returns, etc including annual statutory filings on MCA-21 registry.
  • Applicability on Foreign Companies: CFSS 2020 is available for foreign companies also.
  • No additional filing fee: Companies will be required to pay normal filing fees and no additional filing fees will be levied by the MCA for late filing on the specified forms.
  • Immunity: Immunity granted against any prosecution or proceedings for imposing penalty associated with delay in filing the Document. However, no immunity is available from other consequential proceedings. For example, Section 42(8) of the CA 2013 mandate a company to file a return of allotment (in Form PAS 3) within 30 days of issuance of securities. However, Section 42(4) of CA 2013 stipulates that the money received under private placement cannot be utilised by the company before filing the return of allotment. Under the Company Scheme, immunity is available from penalties arising from delay of filing of return of allotment, but not for breaching Section 42(4) regarding utilisation of money raised through private placement route prior to filing the return of allotment by the company.
  • Withdrawal of appeal: If any company has filed any appeal against the notice, complaint or order passed by a court or adjudicating authority with respect to default in filing a Document under the Companies Act 2013, then such company will have withdrawn the appeal before filing the application for receiving immunity under the Company Scheme.
  • Extension of time for filing appeal: If any company has not filed any appeal against the order passed by adjudicating authority imposing penalties due to delay in filing Document, and last date of filing appeal falls between March 1, 2020 to May 31, 2020, then such company and their officers will have an additional period of 120 days from such last date for filing the appeal before the concerned Regional Director. Till the expiry of such extended period, the MCA will not initiate any prosecution regarding non-compliance with the order of adjudicating authority relating to delay in filing the Document.
  • Application: The company will have to file an application in E-Form CFSS-2020 for seeking immunity certificate within maximum period of 6 months from the closure of the Scheme. Thereafter, the MCA will issue an immunity certificate.
  • Effect Of Immunity: Upon receipt of the Immunity Certificate by a company, the ROC having jurisdiction over a said company shall withdraw any pending prosecution(s) with respect to any penalty imposed for filing.

Scheme for inactive companies:

  • The companies which are inactive, while making filings of the due statutory documents under the CFSS 2020, can simultaneously file after payment of relevant fees, for either:
  1. getting themselves declared as Dormant Companies under section 455 of the Companies Act, 2013 by filing form MSC-1;
  2. striking of their names from the register of companies in form STK-2; 

Things to know:

  • CFSS 2020 scheme is not applicable for the companies which have been automatically struck off due to non-filing of annual documentse. Annual Returns. The struck off companies have to approach the NCLT for reviving their companies first and a copy order of NCLT approving for such revival under section 252 of the CA 2013 to be filed in Form No.INC-28. Later on, they can take the benefit of this scheme.
  • The Scheme immune’s only for companies for default in penalties or compliance filings or against proceedings held against the company, it does not cover any proceedings involving the interest of stakeholders, directors or any key managerial personnel of the company.
  • Companies cannot claim additional fee which is already paid by them.
  • For claiming immunity under the scheme towards appeals held against the company passed by an adjudicating authority or any competent court for any violation shall have to be made only after the withdrawal of the appeal and submission of withdrawal of the appeal with the immunity application.
  • If AGM was not held in specified time period then CFSS shall not be applicable, since not holding AGM on time is a violation of the law. CFSS only provides immunity for delayed filing. Accordingly, once the AGM is duly conducted after necessary permission from the jurisdictional ROC,  the  filings  related  to  the  said  AGM  can  be  done  during  the  tenure  of   Accordingly, violation, if any, has to be cured first.
  • The Scheme shall not be applicable for matters where any appeal is pending before the court of law or in case of management disputes held before the law.
  • Belated documents have to be filed during the currency of the scheme. If the scheme benefits are availed, such a company has to file the CFSS form on or after October 1, 2020 and before March 31, 2021.
  • There is a separate Scheme for LLPs i.e LLP Settlement Scheme -2020. The currency of Scheme for LLP is also same as of CFSS 2020 i.e April 1,2020 till September 30, 2020..
  • The Scheme cannot be availed if any penalty or conviction has been passed by any adjudicating authority with a clause that no appeal against such order has to be preferred.
  • The Scheme cannot be availed by companies against which a striking off name order under Section 248 has been issued or if the company has voluntarily applied for striking off name from the register.
  • The Scheme is not applicable for companies under the scheme of amalgamation or has amalgamated or to vanishing companies.

Procedure:

  • The defaulting company shall file their overdue documents/returns/other statements as well as statutory Annual Filing documents in respective prescribed Forms by paying the normal statutory filing fee (i.e without any additional fee) within the immunity period.
  • The defaulting Companies shall have to file the e-Form CFSS-2020 (the draft version of the form has been annexed with the MCA Circular) after making all default good and after all the filings are taken on record or approved by the Designated authority as the case may. This form can be filed after closure of the Scheme i.e on or after October 1, 2020 but not after the expiry of six months from the date of closure of the Scheme. There is no filing fees of Form CFSS-2020.e-Form CFSS-2020 would be made available w.e.f 1st October, 2020.
  • The Form CFSS-2020 is entirely self-declaration-based form. After submission of Form CFSB-2020 and on the basis of self-declaration made by Director, the ROC will issue Immunity Certificate.

The scheme is available with respect to 66 forms which are classified as follows:

  • ˃˃ 56 forms under CA,2013
  • ˃˃ 10 forms under CA,1956

     Forms specifically excluded:

  • SH-7 – form to be filed for increase in authorized
  • Forms CHG-1, CHG-4, CHG-8 and CHG-9 for creation, modification and satisfaction of charges

List of Forms eligible for additional fee waiver:

S.No. Act Form No. Form Description
 

1

CA 1956  

20B

Annual Return.
2 CA 1956  

21A

Annual Return for company having no share

capital.

3 CA 1956 23B Notice by Auditor.
4 CA 1956 23C Appointment of Cost Auditors.
5 CA 1956  

23D

Information by Cost Auditor to Central

Government.

6 CA 1956  

23AC

Filing          Balance         Sheet         and        other

documents with the Registrar

7 CA 1956  

23AC- XBRL

Form for filing XBRL document in respect of Balance Sheet and other documents with

the Registrar.

8 CA 1956  

Form 66

Form       for      submission        of      Compliance

Certificate.

9 CA 1956  

 

I-XBRL

Form for filing XBRL document in respect

of Cost Audit Report and other documents with the Central Government.

 

 

10

 

CA 1956

 

 

A-XBRL

Form for filing XBRL document in respect

of compliance report and other documents with the Central Government.

11 CA 2013 INC-4 Intimation for Change in Member/Nominee.
12 CA 2013  

INC-5

One        Person        Company-Intimation             of

exceeding threshold.

13 CA 2013  

INC-6

One      Person      Company–Application            for

Conversion.

14 CA 2013  

INC-12

Application        for     grant     of    License      under

section 8.

15 CA 2013  

 

INC-20

Intimation                 to              Registrar                of revocation/surrender of license issued under

section 8.

16 CA 2013 INC-20A Declaration for Commencement of Business.
17 CA 2013  

INC-22

Notice of Situation or Change of situation of

Registered Office of the Company.

18 CA 2013 INC- 22A(ACTIV

E)

 

Active Company Tagging Identities and Verification (ACTIVE).

19 CA 2013  

 

INC-27

Conversion of Public Company into Private Company or Private Company into Public

Company

20 CA 2013  

INC-28

Notice of Order of the Court or Tribunal or

any other competent authority.

21 CA 2013 PAS-3 Return of allotment.
22 CA 2013 SH-11 Return in respect of Buy-Back of securities.
23 CA 2013 DPT-3 Return of Deposits.
24 CA 2013  

DPT-4

Statement regarding deposits existing on the

commencement of the Act.

25 CA 2013  

 

MGT-6

Return      to     the     Registrar      in     respect     of

declaration under section 89 received by the company.

26 CA 2013 MGT-7 Annual Return.
27 CA 2013  

MGT-10

Changes       in      shareholding         position        of

promoters and top ten shareholders.

28 CA 2013  

MGT-14

Filing of Resolutions and agreements to the

Registrar under section 117.

29 CA 2013  

MGT-15

Form for filing Report on Annual General

Meeting.

30 CA 2013  

AOC-4

Form for filing Financial Statement and other

documents with the Registrar.

31 CA 2013  

 

AOC-4 CFS

Form      for     filing       Consolidated       Financial Statements and other documents with the

Registrar.

32 CA 2013  

AOC- 4(XBRL)

Form for filing XBRL document in respect of Financial Statement and other documents

with the Registrar.

33 CA 2013 AOC-4

(NBFC) (IND-AS)

 

Form for filing Financial Statement and other documents with the Registrar for NBFCs.

34 CA 2013 AOC-4 CFS (NBFC)

(IND-AS)

Form      for     filing       Consolidated       Financial Statements and other documents with the

Registrar for NBFCs.

35 CA 2013  

AOC-5

Notice of address at which books of account

are maintained.

36 CA 2013  

ADT-1

Information to the Registrar by company for

appointment of auditor.

37 CA 2013  

ADT-2

Application for removal of auditor(s) from

his/their office before expiry of term.

38 CA 2013 ADT-3 Notice of Resignation by the Auditor.
39 CA 2013  

DIR-3C

Intimation of Director Identification Number

by the company to the Registrar.

40 CA 2013 DIR-3

KYC/Web form

 

 

Application for KYC of Directors.

41 CA 2013  

DIR-11

Notice of resignation of a Director to the

Registrar.

42 CA 2013  

 

DIR-12

Particulars of appointment of Directors and the         Key     Managerial       Personnel      and    the

changes among them.

43 CA 2013  

MR-1

Return of appointment of Key Managerial

Personnel.

44 CA 2013  

 

 

 

 

MR-2

Form of Application to the Central Government for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or over payment to managing director or whole time director or manager and commission or

remuneration to Directors.

45 CA 2013  

FC-1

 

Information to be filed by Foreign Company.

 

46 CA 2013  

FC-2

Return of alteration in the documents filed

for registration by Foreign Company.

 

47 CA 2013  

 

FC-3

Annual accounts along with the list of all principal                     places      of     business      in     India

established by Foreign Company.

48 CA 2013 FC-4 Annual Return of a Foreign Company.
49 CA 2013 NDH-1 Return of Statutory Compliances.
50 CA 2013 NDH-2 Application for extension of time.
51 CA 2013  

NDH-3

Return of Nidhi Company for the half year

ended.

52 CA 2013  

 

NDH-4

Application         for      declaration        as     Nidhi

Company and for updation of status by Nidhis.

53 CA 2013  

MSC-1

Application to ROC for obtaining the status

of dormant company.

54 CA 2013 MSC-3 Return of dormant companies.
55 CA 2013  

 

CRA-2

Form of Intimation of appointment of Cost Auditor                   by      the      company       to      Central

Government.

56 CA 2013  

CRA-4

Form for filing Cost Audit Report with the

Central Government.

57 CA 2013  

BEN-2

Return      to     the     Registrar      in     respect     of

declaration under section 90.

58 CA 2013  

GNL-2

Form for submission of documents with the

Registrar.

59 CA 2013  

 

 

GNL-3

Particulars of person(s) or key managerial personnel charged or specified for the purpose of sub-clause (iii) or (iv) of clause

60 of section 2.

60 CA 2013  

IEPF-1

Statement of amounts credited to the Investor

Education and Protection Fund.

 

61 CA 2013 IEPF-2 Statement of unclaimed or unpaid amounts.
62 CA 2013  

 

IEPF-3

Statement of shares and unclaimed or unpaid dividend not transferred to the Investor

Education and Protection Fund.

63 CA 2013  

IEPF-4

Statement      of     shares     transferred       to     the

Investor Education and Protection Fund.

 

64 CA 2013  

IEPF-5 e-

verification report

Application to the authority for claiming unpaid amounts and shares out of Investor Education and Protection Fund (IEPF)–E-

verification report.

65 CA 2013  

 

IEPF-6

Statement of unclaimed or unpaid amounts to be transferred to the Investor Education and

Protection Fund.

66 CA 2013  

IEPF-7

Statement of amounts credited to IEPF on

account of shares transferred to the fund.

Conclusion:

This Scheme is in furtherance to the special measures taken by the ministry in view of the COVID-19 outbreak, to provide relief to the law abiding Companies. CFSS 2020 goes a long way to provide the ‘renewed lifeline’ to the defaulting companies by giving them the opportunity to save themselves from becoming non-existent.

(Author – CS Kapil Dudeja, KAPIL DUDEJA & ASSOCIATES Company Secretary in Practice from Faridabad and can be contacted at kapildudeja@gmail.com)

Disclaimer: Care has been taken to ensure the accuracy of the information provided; however, no completeness or reliability is ensured by the Sender. The above information is solely for disseminating knowledge and private circulation. We are hereby not liable for any loss, damage or inconvenience caused as a result of reliance on such information and we accept no legal liability or other responsibility by or on behalf of any errors, omissions, or statements on this content.. Therefore, users of this information are expected to refer to the relevant existing provisions of applicable laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice.

About CS KAPIL DUDEJA

CS KAPIL DUDEJA
Practicing Company Secretary from Faridabad.

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