Companies Fresh Start Scheme 2020 (CFSS 2020)

The Central Government, through the powers conferred to it under Section 460, read with Section 403, of the Companies Act, 2013 has introduced the scheme Companies Fresh Start Scheme 2020 (CFSS 2020).

This scheme is formulated to ease the compliance and waive off the interest and penalties for late filing of documents with the MCA. It also provides immunity against the prosecution and proceedings arising on account of delay and non-filing of documents.

This scheme is in effect from 1st April 2020 till 30th September 2020.

Benefits of CFSS, 2020 to the Directors, KMPs:

1. DIN holders of DINs marked as ‘Deactivated’ due to non-filing of DIR-3KYC/DIR-3 KYC-Web are encouraged to become compliant.

2. They are required to file DIR-3KYC/DIR-3KYC-Web as the case may be between 1st April, 2020 to 30th September, 2020.

3. This compliance need not require any payment of any filing fee of INR 5000/INR 10000 respectively.

Benefits of CFSS, 2020 to the Companies:

A. Active forms:

1. Companies whose compliance status has been marked as “ACTIVE non-compliant” due to non-filing of Active Company Tagging Identities and Verification (ACTIVE) eform are encouraged to become compliant.

2. The companies are required to file ACTIVE forms as the case may be between 1st April, 2020 to 30th September, 2020.

3. This compliance need not require any payment of any late filing fee.

B. Filing on belated documents and seeking immunity:

1. The companies who had failed to file the annual compliance documents (called the defaulting companies) like AOC-4 (Financial Statements), MGT-7 (Annual return), etc. can be benefitted under this scheme.

2. They can file the above-mentioned returns without having to pay any additional late filing fee on the above. Nominal fees can be paid and the compliance must be made by 30th September 2020.

C. Companies who have appealed against prosecution:

1. In case the defaulting company has filed an appeal, with respect to any statutory filing under the Act, against any notice issued or compliant filed or an order passed, by a court or adjudicating authority under the Act, for violating of the provisions under Companies Act, 2013, can also get immunity under this scheme.

2. To get immunity certificate, the defaulting company is required to withdraw the appeal and furnish proof of withdrawal along with the relevant application.

D. Special measure where the order of the adjudicating authority was passed but appeal could not be filed:

1. In case the company has delayed filing and other document, statement or return, and penalties were imposed by adjudicating authorities, and no appeal by the company in filed as on the date of commencement of this scheme, then company will be allowed 120 days to file an appeal.

2. During this period of 120 days, for the non-compliance of the order passed by the court with regard to the delay in filing of any documents for the same shall be condoned and no further action shall be initiated against the company.

E. Application for issue of immunity in respect of documents filed under the Scheme:

1. Application can be filed for immunity for belated filing of the return under the scheme in Form CFSS-2020 after closure of the scheme, within 6 months of the closure of the scheme to take benefit of this scheme.

2. There is no payment to be made under this scheme.

Benefits are not made available to Directors/ Companies in the below cases:

1. Where the company has filed STK-2 and applied for a strike off.

2. Where procedure for strike off has already been initiated by the Designated Authority.

3. Companies which have been amalgamated under a scheme of arrangement.

4. Where a company has already filed an application for obtaining Dormant Status.

5. To vanishing companies.

6. Where forms related to increase in share capital is to be filed (Form SH-7) and also charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9)

7. Where any appeal before the court of law and incase of management disputes of the company are pending before any court of law or tribunal.

8. Where any court of law has ordered conviction in any matter, or an order imposing penalty has been passed by the adjudicating authority and no appeal has been filed, before the scheme has come into force.

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Chartered Accountant with an experience of 8 years in the field of Accounting, Auditing, Compliance & Consulting Business based out of Bangalore, India.

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Nitin Jogad

Nitin Jogad

Chartered Accountant with an experience of 8 years in the field of Accounting, Auditing, Compliance & Consulting Business based out of Bangalore, India.

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