COMPANY FRESH START SCHEME 2020

At the backdrop of several requests from companies/stakeholders for granting relief/reasonable opportunity, the Ministry of Corporate Affairs has introduced the Companies Fresh Start Scheme, 2020 vide General Circular No. 12/2020 dated March 30, 2020 in order to facilitate the companies registered in India to make a fresh start and give an additional one time opportunity to all the defaulting companies to plug in the non compliances of earlier years and start afresh as if it is a new fully compliant company .

Applicability of the Scheme:

The scheme shall be applicable to all the “Defaulting Companies” as defined under the Companies Act, 2013 and which has made a default in filing of any of the documents, statements, returns etc including annual statutory documents on the MCA 21 registry.

Duration of the Scheme:

The scheme shall come into effect from 1st April, 2020 till 30th September, 2020.  

Benefits under the scheme: 

  • This scheme allows the defaulting companies to file any of the documents, statement, returns etc as are essentially required under MCA 21 guidelines till September 30, 2020 on payment of normal fees and without any requirement of payment of additional fees/penalties. 
  • Relief from the prosecution or proceedings for imposing penalty pertaining to any delay associated with the fillings of belated documents. However, any other consequential proceedings, including any proceedings involving interests of any shareholder or any other person qua the company or its directors or key managerial personnel would not be covered by such Immunity.  

Procedure:

  • All belated documents/returns/other statements as well as statutory Annual Filing documents such as Financial Statements and Annual Returns in respective prescribed e-Forms shall be filed by the defaulting companies by paying the normal filing fee without any additional fee as payable as per section 403 of the Act read with Companies (Registration Offices and fee) Rules, 2014 within due immunity period (30th Sept, 2020).
  • The defaulting companies shall withdraw all appeals filed against any prosecution/proceedings for imposing penalty of any statutory filings & furnish proof of such withdrawal along with application.
  • In cases where penalties are imposed by an adjudicating officer and no appeal has been filed by the concerned company before the Regional Director then an additional 120 days from the last day is given for filing appeal before the concerned Regional Directors if only the last day for filing the return falls between 1st March 2020 and 31st May 2020. Also, during such additional period, prosecution for non-compliance of order of the Adjudicating authority shall not be initiated against the company/its officers.
  • Form CFSB-2020 shall also be filed  after making all default good as well as all filed documents are taken on file or on record or approved by the Designated authority as the case may and after closure of the Scheme but not after the expiry of six months from the date of closure of the Scheme. There shall not be any fee payable on this form  
  • Based on the declaration made in the Form, an immunity certificate in respect of the documents filed under this scheme shall be issued by the Designated Authority.

Forms covered under this scheme:

All forms including DIR-3 KYC & inc 22A are covered under this scheme except Form SH 7(Form for Increase in Authorized Capital) & all Charge related forms(CHG 1, CHG 4, CHG 8, CHG 9).

Exceptions: 

This scheme shall not apply to Companies:

  • who have received a final notice from Ministry for Striking off the name u/s 248 of the Companies Act, 2013,
  • who have filed STK 2 for strike off by Company,
  • who have filed for obtaining Status as Dormant u/s 455 of the Companies Act, 2013,
  • which have amalgamated under a scheme of arrangement or compromise under the act,
  • Vanishing Companies.
  • Having management disputes and pending before any Court of law or Tribunal.
  • which are convicted by any Court in any matter and no appeal has been preferred against such orders of the Court before this Scheme has come into force
  • Companies upon which an order passed for imposing penalty by an adjudicating authority under the Act, and no appeal has been preferred against such orders of the Adjudicating Authority before this Scheme has come into force.

Scheme for inactive Companies:

Companies can simultaneously apply:

  • to get themselves declared as ‘Dormant Company’ under section 455 of the Companies Act, 2013 by filing e-form MSC-1 at a normal fee on said form; or
  • for striking off the name of the company by filing e-Form STK-2 by paying the fee payable on form STK-2. 

Scheme if not availed:

The respective Registrar of Companies, post close of the Scheme,  having jurisdiction over the registered office of the companies shall  take the necessary actions pursuant to the respective provisions of the Act, 2013 in respect of all those companies which continue to be in default of filing the documents and have not availed this scheme and such forms shall be subject to additional fees, penalty, prosecution as applicable pursuant to the provisions of the Act.

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. The author does not accept any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied without express written permission of the author.

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