The Introduction of ‘Companies Fresh Start Scheme’

The Ministry of Corporate Affairs has introduced a new scheme called the Companies Fresh Start Scheme 2020. In the last few years many amendments in Companies Act, 2013 and rules made thereunder.

This scheme is introduced to enable companies to benefit from the relaxation in additional fees and extension with a fresh start and become a fully compliant entity. The MCA has also revised the LLP Settlement Scheme 2020.

Both the Companies Fresh Start Scheme and the amendment in the LLP settlement were introduced to mainly reduce the compliance burden during the unpredictable public health situation caused due to the COVID 19 pandemic.

The company’s Fresh Start Scheme has been introduced for an initial period of 6 months starting from the 1^st of April 2020 to the 30^th of September 2020.

Details about Companies Fresh Start Scheme 2020

Meaning

A defaulting company is one such company that has not been filing any of the documents, statements which also includes the annual statutory documents on due time with the MCA-21 registry.

The applicability of the Scheme

The scheme is applicable for all companies with the following forms

Form AOC-4 – Filing of financial statements
Form MGT 7- Filing of annual returns
Form ADT 1 – Filing of appointment of the auditor
Form ADT 3 – Resignation of auditor
Form INC 22- Shifting of registered office
Form MGT 14 – Filing of resolutions
Form PAS 3 – Filing of return of allotment
Form DIR 3 KYC- Filing of KYC of directors (Penalty of Rs 5000 waived off)
Form INC 22A – Filing of active compliance (Penalty of Rs 10000 waived off)
Any other forms

Non-applicability of the scheme

The scheme is not applicable to the following Companies

Companies against which action of final notice is received from the Ministry for striking off the name of the company.
Filed STK 2 for strike off by the company.
Filed for obtaining the status of the company as Dormant u/s 455 of the Companies Act, 2013.
Companies under the process of amalgamation
Vanishing companies
For filing of Form SH-7 – Increase in authorized capital
For filing of Form CHG 1, CHG 4, CHG8, CHG 9 – Creation/ modification/ satisfaction of charge (all charge related forms)

Application for seeking Immunity Certificate

Application for seeking immunity in respect to the non-submission of documents to be filed electronically in the Form CFSS 2020 ( NO FEES PAYABLE ON THIS FORM )

After the closure of the scheme
Documents taken in the record or approved by the authority
Before the expiry of 6 months from the date of closure of the scheme

Advantages of the scheme

Monetary Benefits – No additional fees for the filing of the belated forms (due dates will not be considered)
Company will get the Immunity Certificate on the application (Form CFSS 2020 to be filed after the filing of all belated forms
Any pending prosecutions regarding such forms will be withdrawn
Adjudication of penalties will be withdrawn by the designated authority

Special cases where the order of the adjudicating authority was passed but the appeal could not be filed

Where the last date of appeal under section 454(6) against such order falls 1^st March 2020 to 31^st May 2020, an additional period of 120 days will be allowed from the last date of filing the appeal.
During the additional period, prosecution under section 454 (8) for non-compliance will not be initiated to such companies.

Conclusion

The scheme not only provides longer timelines for corporates to comply with the various requirements related to the filing of important documents, but also reduces the financial burden on the companies. It gives the companies an opportunity to make a “fresh start”.

If you’re looking for help related to the filing of any of the forms mentioned above, we’ve got your needs covered. Aavana is always here to help you with all your concerns. Count on us!