Companies Fresh Start Scheme

Companies Fresh Start Scheme

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Companies Fresh Start Scheme


Companies Fresh Start Scheme

MCA has introduced a new scheme called the 'Companies Fresh Start Scheme 2020' which waives all MCA related penalties and provides prosecution immunity for Directors.

Companies Fresh Start Scheme 2020

The Ministry of Corporate Affairs (MCA) has introduced a new scheme called the “Companies Fresh Start Scheme 2020” to help companies make good on any default in filing, irrespective of duration of default, and make a fresh start as a fully compliant entity. This scheme is similar to the LLP Settlement Scheme, 2020 – wherein a one-time opportunity was provided for all LLPs to regularise overdue compliances without any penalty.

Compliance for Company

All companies registered in India are required to file MCA annual return each year along with the financial statements. Companies which fail to do so will be subject to penalty of Rs.200 per day of default, the company being struck off and the directors being disqualified.

At IndiaFilings, we can help you easily maintain the compliance for your company at a very nominal cost. To know more about maintaining compliance for a company, click here.

Validity

All existing companies with default in filing of statutory compliance under MCA rules and regulations can avail benefit under this scheme. The scheme will be operational from 1st April 2020 till 30th September 2020. During this time, a company can file all overdue compliance without any penalty, get immunity from prosecution and file for dormant status or apply for strike-off. If compliance is not regularized under this scheme before 30th September 2020, prosecution may be initiated by the Registrar against defaulting companies as provided under the Companies Act, 2013.

Applicability

Any defaulting company that has not filed annual return or any other MCA filing can use this scheme to file belated documents without paying penalty.

This scheme will NOT be applicable for:

  • Companies against which action for final notice for striking off the name has already been initiated by the MCA. You can check if a company is under strike off using the Master Data check on MCA portal.
  • The company has filed an application for strike-off with MCA and the application is pending.
  • Companies which have amalgamated under a scheme of arrangement or comproise.
  • Companies that have filed for obtaining Dormant status.
  • Vanishing companies.
  • Companies in which authorised capital increase is involved or charge documents are to be filed.

Immunity from Prosecution

The biggest advantage of availing the Companies Fresh Start Scheme 2020 is immunity from prosecution. If a defaulting company pays the requisite fee and files the overdue returns, immunity from launch of prosecution or proceedings would be provided.

CFSS-2020

To seek immunity in respect of the belated documents filed under the scheme, Form CFSS-2020 must be filed within 6 months of closure of the scheme and filing of all overdue returns. There is no government fee applicable for filing of CFSS-2020 form.

Immunity Certificate

Based on the CFSS-2020 filing, the MCA would provide an immunity certificate under the Companies Fresh Start Scheme 2020. After granting immunity, the Designated Authority would withdraw the prosecutions pending, if any, before the concerned Courts and the proceedings of adjudication of penalties without any further action by MCA.

Immunity Does Not Cover

The immunity provided under the Companies Fresh Start Scheme 2020 does not apply to:

  • Any proceedings involving the interests of any shareholder or any other person qua the company or its directors or key managerial persons.
  • Matter of any appeal pending before the court of law an in case of management disputes of the company pending before any court of law or tribunal.
  • Company wherein court has ordered conviction or an order imposing penalty has been passed by an adjudicating authority and no appeal has been preferred against the orders, before this scheme has come into force.

Withdrawal of Prosecution & Proceedings

If a defaulting company has filed an appeal against any notice or complaint or order passed by a court of a adjudicating authority. Then such a company before filing the application for immunity certificate, withdraw the appeal and furnish proof of withdrawal in the CFSS-2020 form.

If an officer has passed an order penalty and the last date for filing appeal falls between 1st March 2020 to 31st May, 2020 – a period of 120 additional days would be allowed for filing of appeal. During the additional period, prosecution for non-compliance would not be initiated by the MCA.

Maintaining Compliance

Post regularization of compliance under this scheme, the company would be required to maintain compliance regularly. IndiaFilings provides compliance management at a very nominal price. If the company does not wish to continue maintaining compliance, it can file for dormant status or file for strike-off.


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