Frequently Asked Questions on Company Fresh Start Scheme, 2020
issued by the Ministry of Corporate Affairs, Government of India on 30th March, 2020
The Ministry of Corporate Affairs has issued a
Circular 12/2020 dated 30th March,
2020, in order to facilitate the companies registered in
India to make a fresh start on a clean slate, it has been decided to take certain alleviative measures
for the benefit of all companies. The Companies Act, 2013 requires all companies
to make annual statutory compliance by filing the Annual Return and Financial Statements.
Apart from this, various other statements, documents, returns, etc are required to be
filed on the MCA21 electronic registry within prescribed time limits. Filing fees for filing
such statements, documents, returns, etc is governed by section 403 of the Companies Act, 2013 read
with Companies (Registration Offices and Fees) Rules 2014.
In order to give an opportunity to the
defaulting companies and to enable them to file the belated documents in the MCA-21 registry, the
Central Government in exercise of powers conferred under section 460 read with section
403 of the Companies Act, 2013 has decided to introduce a Scheme namely “Companies Fresh
Start Scheme, 2020 (CFSS-2020)
Q. 1. What is Company Fresh Start Scheme, 2020?
A. 1. “Company Fresh Start Scheme, 2020″ is a scheme to give a Onetime
opportunity to the companies to enable them to complete their
pending compliances by filing necessary documents in the MCA-21 registry including
annual filings without being subject to a higher additional fees on account of any
delay. Refer General Circular No 12/2020 available at the link –
http://www.mca.gov.in/Ministry/pdf/Circular12_30032020.pdf
Q. 2. What is the objective of this Scheme?
A. 2. The Ministry of Corporate Affairs, in pursuance of the Government
of India‟s efforts to provide relief to law abiding companies in the
wake of COVID 19, has introduced the “Companies Fresh Start Scheme,
2020”
(CFSS-2020) to provide a first of its kind opportunity to companies to make good any
filing related defaults, irrespective of duration of default, and make a fresh start as
a fully compliant entity. The Fresh Start scheme incentivizes compliance and reduce
compliance burden during the unprecedented public health situation caused
by COVID-19. The USP of the scheme is a
one-time waiver of additional filing fees for
delayed filings by the companies with the Registrar of Companies during the currency of
the Schemes, i.e. during the period starting from 1st April, 2020 and ending on
30th September,
2020.
Q. 3. Whether this Scheme is permanent?
A. 3. No. It is one time opportunity for the defaulting companies for a
limited period (please refer A. 4).
Q. 4. What is the time period of the Scheme?
A. 4. The Scheme shall come into force on the 1st April, 2020 and shall
remain effective up to 30th September, 2020 (both days inclusive).
Q. 5. For which Companies, the Scheme is applicable?
A. 5. The Scheme shall be applicable on any „defaulting company” which
has not filed any document, statement, return etc. including
annual statutory documents, which were due for filing on any given date in accordance
with the provisions of this Scheme. Contextually, filing of such overdue document,
statement, return etc. should be pending
on the date of accessing the Scheme.
Q. 6. Documents for which period in the past, a defaulting company
is permitted to file?
A. 6. A defaulting company is permitted to file any of the documents,
statement, returns, etc., including annual statutory documents on the
MCA-21 registry wherein the default was made in filing for any period in the past.
Thus, document, statement, return etc. can be relating any period from past from
incorporation of the company till the date.
Q. 7. Whether this Scheme provides any opportunity to the inactive
companies?
A. 7. The scheme gives an opportunity to inactive companies to get
such an inactive company declared as „dormant company‟ under section
455 of the Act by filing a simple
application at a normal fee. The said
provision enables inactive companies to remain on the register of the companies with minimal
compliance requirements.
Q. 8. What is defaulting company as per the Scheme?
A. 8. “defaulting company” means a company defined under the Companies
Act, 2013, and which has made a default in filing of any of
the documents, statement, returns, etc
including annual statutory documents on the
MCA-21 registry. Contextually, filing of such overdue document, statement, return etc.
should be pending on the date of
accessing the Scheme.
Q. 9. What is Designated authority as per the Scheme?
A. 9. “Designated authority” for a company as per the Scheme means the
Registrar of Companies having jurisdiction over the
registered office of the company.
Q. 10. Whether any immunity Certificate is issued for granting
immunity from penalty and prosecution?
A. 10. Yes, based on the declaration made in the Form CFSS-2020, an
immunity certificate in respect documents filed under this Scheme
shall be issued by the designated authority.
Q. 11. What shall be the manner of payment of fees on filing of
belated document for seeking immunity under the Scheme?
A. 11. Under the scheme, every defaulting company shall be required to
pay normal fees as prescribed under the Companies (Registration
Offices and Feel Rules, 2014 on the date of filing of each belated document and no
additional fee shall be payable.
Q. 12. Whether there is any additional fee for filing forms under
this Scheme?
A. 12. No additional fee shall be payable for filing any belated document
under the Scheme.
Q. 13. What Immunity the Scheme shall grant from the launch of
prosecution or proceedings?
A. 13. Immunity from the launch of prosecution or proceedings for
imposing penalty shall be provided only to the extent such prosecution
or the proceedings for Imposing penalty under the Act pertain to any delay associated
with the filings of belated documents.
Q. 14. What defaults shall not be covered under Immunity under the
Scheme?
A. 14. Excepting proceedings following from delay in filings of
documents, any other consequential proceedings, including any
proceedings involving interests of any shareholder or any other person qua the
company for its directors or key managerial personnel would not be covered by such
Immunity. For Example, under section 42(8), every
company is required to file a return of allotment within the period provided therein.
However, the proviso to section 42(4) also requires that the utilisation of money raised
through private placement shall not be made unless the return of allotment has been
filed in the registry. Now, the immunity under the Scheme shall only be available in
respect of the proceeding for imposing penalty on account of delay in filing the
return of allotment, but not on account of utilization of the money raised through
private placement prior to the filing of the return with the registry.
Q. 15. Whether the defaulting company is required to withdraw the
appeal against any prosecution launched or the proceedings for imposing penalties
initiated?
A. 15. Yes, in case if defaulting Company, with respect to any
Statutory filing under the Act or its officer in default as the case may be, has
filed any appeal against any notice issued or compliant filed or an order passed by a
court or by an adjudicating authority under the Act, before any competent court or
authority for any violation of the provisions under Companies Act 1956/2013 in respect of
which an application is filed under this scheme, then it shall first withdraw such
appeal and furnish proof of withdrawal for the filing the application for issue of immunity
certificate under the scheme.
Q. 16. Whether there are any Special measures for cases where the
order of the adjudicating authority has been passed but the appeal could not be
made?
A. 16. Yes, in all the cases where due to delay associated in filing of
any document, statement or return, etc., in the MCA-21 registry,
penalties were imposed by an adjudicating officer under the Act, and no appeal has been
preferred by the concerned company or its officer before the Regional Director under
Section 454 (6) as on date of commencement of scheme, the following would apply:
· Where the last date for
filing the appeal against the order of the adjudicating authority under Section 454(6) falls between
the 1st March,
2020 to 31st May,
2020 (both days inclusive), a period of 120
additional days shall be allowed from the last date to all companies and their officers for
filing the appeal before the Concerned Regional Directors.
Q. 17. Whether there can be prosecution under Section 454(8) for
non-compliance of the order of the adjudicating authority during additional
period of 120 days?
A. 17. No, during the additional period of 120 days, prosecution under
Section 454(8) for noncompliance of the order of the adjudicating authority, in
so far as it relates to delay associated in filing of any document,
statement or return etc., in the MCA-21 registry shall not be initiated against such companies
or their officers.
Q. 18. Whether a company is required to file any application for
seeking immunity in respect of documents filed under the Scheme?
A. 18. Yes, the application for seeking immunity is required to be made by electronically filing Form CFSS-2020 and the same is annexed with Scheme. On filing Form- CFSS 2020, an immunity certificate is issued.