Introduction & Objective

In the wake of Covid 19, to enable the Companies and LLPs to file belated Returns, Ministry of Corporate Affairs, has introduced the Companies Fresh Start Scheme, 2020 and LLP Settlement Scheme, 2020. The entities will be benefited in following manner:

  • There shall be no additional fees charged for delayed filings. (As per provisions of Section 403 and Section 460 of the Companies Act, 2013 read with the Companies (Registration Offices and Fee) Rules, 2014
  • Immunity shall be granted from launching of prosecution or proceeding

The scheme shall come into force on April 1, 2020 and shall remain in force till September 30, 2020

Further this note is divided into two sections:

  • Section A – Companies Fresh Start Scheme 2020 i.e. CFSS 2020
  • Section B – LLP Settlement Scheme

Section A – Companies Fresh Start Scheme 2020 i.e. CFSS 2020

Applicability of the Scheme:

Any Defaulting Company that is any Company that has failed to file return/ E-Form  is permitted to file belated documents which were due for filing on any given date. However, the scheme shall not apply in the following specific cases :

  • Company Specific Non-Applicability:
  1. Actions by the designated authority have been initiated against the final notice of Strike-Off (U/s 248 of the Companies Act, 2013)
  2. Companies that have applied for strike-off
  3. Amalgamated Companies
  4. Companies that have applied for obtaining Dormant Status( U/s 455 of the Companies Act, 2013)
  5. Vanishing Companies
  • E-Form Specific Non-Applicability:
  1. Increase in Authorized Capital i.e. Form SH-7
  2. Charge Related Documents i.e. Form CHG-1, Form CHG-4, Form CHG-8, Form CHG-9

No launch of prosecution or proceeding for imposing Penalty:

  • Registrar of Companies shall not launch any kind of prosecution or proceeding for imposing Penalty for delayed filing of Return/ E-Form, further RoC shall withdraw prosecution/ proceeding pending before the Concerned Courts/ Concerned Authorities for adjudication or Penalties for delay in filing necessary returns/ Eforms (Apart from the proceedings involving Management Disputes).
  • Apart from providing immunity with respect to imposing penalty on delay in filing of Return/ E Forms, This Scheme does not provide immunity on any other consequential regulation/ provision specific proceedings including proceedings involving the interest of its directors or key managerial personnel etc.

Special Measures for outstanding Appeals:

  • If the company has appealed against any order of prosecution for penalty passed by the competent court or adjudicating authority, then the company first needs to withdraw this application of appeal and furnish the proof of withdrawal to avail immunity in this CFSS 2020 scheme
  • If the competent court or adjudicating authority has passed an order to prosecute and company or officer have not filed the appeal before the appellate authority or regional director under section 454(6) of the companies act, 2013 as on commencement of this Scheme, the Company or officers are allowed additional 120 days to file an appeal before the Regional Director if the last date of filing appeal falls between 1st March 2020 to 31st May 2020

Procedure:

Step 1 – Filing of Return/ Eform with normal fees:

Companies to file belated Return/ E forms with MCA (whether Annual Filing Forms i.e. AOC 4, MGT 7 and/or Event based Form i.e. PAS 3, INC 22, DIR 12 etc) without attracting additional fees during this scheme

Step 2 – Filing of Eform CFSS 2020:

The company or officer needs to file electronically Eform – CFSS-2020 without any fees with ROCs through MCA portal to avail immunity under this scheme within 6 months from the closure of this scheme. Based on the declaration with respect to outstanding appeal/ proceeding made in form, Immunity certificate shall be issued after the CFSS-2020 has been filed after the closure of this scheme

Opportunity to Inactive Companies:

Inactive Companies (i.e. Company not carrying out business or operation in last two years) can opt for any of the following mode after availing benefit of this Scheme:

  • Make application for Status of Dormant Company
  • Make application for striking off of Company

Consequences for not availing the scheme:

Consequences are twofold as mentioned below:

  • Additional Fees shall be levied by MCA upon filing of delayed returns/ E Forms
  • Designated Authority shall take necessary actions including initiation of proceeding/ prosecution for imposition of Penalties

Clarification (BJAA Note):

  • This Scheme shall not be availed in filing form MGT-14 beyond 300 days.
  • Also, the scheme shall not affect the status of disqualified directors and DIN Status shall not be changed after the compliances done in this Scheme
  • Company which has been specifically striked off due to late filing of form can make an application to NCLT for revival of companies, on being active be allowed to file the form in this scheme pursuant to orders of NCLT without any additional fees
  • DIN holders of DINs marked as “Deactivated” due to non-fiing of DIR-3KYC/DIR-3 KYC-Web and those Companies whose compliance status has been marked as “ACTIVE non-compliant” due to non-filing of Active Company Tagging Identities and Verification (ACTIVE) eform can complete necessary filing without payment of INR. 5,000/ INR 10,000/- as the case may be

Section B – LLP Settlement Scheme

Applicability:

Any Defaulting LLP i.e. LLP defaulted in filing of any E Forms as on 31st August 2020 is permitted to file belated documents without any additional fees.

Non Applicability:

LLPs that have applied for strike-off in E-Form 24 shall not be able to avail benefit of the scheme

Immunity from proceeding for imposition of Penalty:

The Registrar shall not launch proceedings or prosecution against the LLP who has filed belated Returns under this scheme

Procedure to avail benefit:

LLPs can file all the belated Return/ E forms without attracting additional fees during these scheme

Consequences are two fold as mentioned below:

  • Additional Fees shall be levied by MCA upon filing of delayed returns/ E Forms
  • Designated Authority shall take necessary actions including initiation of proceeding/ prosecution for imposition of Penalties

BJAA Thoughts

The announcement gives relief to the companies In the wake of Covid19, to enable the Companies and LLPs to file belated Returns without hefty filing fees

To know more reach out to our contributors Kinnaree Acharya ([email protected]), Nupur Kamdar ([email protected]) and Minoti Prabhu ([email protected])

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