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