Company Fresh Start Scheme 2020: An Overview

Company Fresh Start Scheme 2020: An Overview

Company Fresh Start Scheme 2020

Introduction

In an attempt to ease matters for the companies and to provide them with an opportunity to make a “Fresh Start” in their life, the Ministry of Corporate Affairs (MCA) by issuing a General Circular No. 12/2020 dated 30th March 2020, introduced a new scheme called ‘Companies Fresh Start Scheme 2020 (“CFSS-2020”)’.
The changes were brought in the scheme with the intention of giving additional time and financial relief (in terms of compliance) to a certain extent to all the generous companies. The scheme is discussed below.

Overview of CFSS 2020

All the companies, which are registered and operative in India, are bound to follow various rules imposed by the government, which include, Annual Return filing, filling of Financial Statements, books of accounts, and other business-related documents and statements that are asked by the government. However, if these companies fail to comply with all the rules and norms, then they are charged with a penalty on interest as punishment. Companies like these are categorized as ‘Defaulting Companies’.
The CFSS scheme is introduced by the MCA to provide relief to the companies from heavy compliance.

Objective
i. Full Waiver for Payment of Additional Fees/Penalty
ii. Immunity from the launch of prosecution
iii. Immunity from proceedings for imposing a penalty

Validity of the Scheme
The scheme will be valid from 1 April 2020 to 30 September 2020. 

Applicability

i. Companies which have not filed Annual Return and Financial Statements to Registrar of Companies (ROC)/MCA i.e. Form AOC-4, AOC-4 XBRL, AOC-4 CFS,  and Form MGT-7
ii. Companies that have not filed any E-Forms that are required to be filed to ROC/MCA and not filed i.e. Form MGT-14, ADT-1, Form DPT-3, Form DIR-12, Form 20A, INC 22 except SH-7 & Charge related forms.

Non-Applicability

i. A company whose name is to be struck off u/s 248 of Companies Act, 2013.
ii. Amalgamated Companies
iii. Applications filed for obtaining Status of Dormant Companies u/s 455 of Companies Act, 2013
iv. Vanishing Companies
v. Increase in Authorized Share Capital (Form SH-7)
vi. Charge related documents (Form CHG-1, CHG-4, CHG-8, CHG-9)

Provisions in Scheme

i. Defaulting Companies
(a) Shall pay only the normal fees as prescribed by the Companies Rules, 2014 for all filings with the MCA-21 registry. No additional fees to be paid, whatsoever.
(b) Immunity against prosecution and proceedings for imposing penalty only where:
    - The prosecution and proceedings arose due to the delay in the filing of belated documents.
    - No other cases covered.
(c) In case there is an existing appeal filed by the company against any notice, complaint, or order issued with regard to prosecution and proceedings related to the delay in statutory filing, the following steps are to be followed:
    - Before registering under the CFSS 2020, the appeal filed by the company should be withdrawn.
    - At the time of making the application for the scheme, the company must furnish a copy of such withdrawal along with the application as proof.
(d) Where the order has been passed by the court and the company has not filed an appeal against the same as on the commencement of the scheme:
    - The company is allowed 120 days to file an appeal before the Regional Director.
    - 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) Form CFSS – 2020 may be filed by the companies under the scheme.
    - The Form provides the companies with immunity for a period of 6 months after the date of closure of the CFSS 2020.
    - No fees to be paid on this particular form.
    - Immunity Certificates shall be granted by the designated authority.
(f) Immunity is not granted where:-
    - An appeal is pending in court against the company.
    - In case of management disputes pending before any court of law.
    - Where an order is passed by the court and no appeal has been made before the scheme came into force.
(g) Extension granted to file DIR-3/DIR-3KYC: Extended timelines between 1st April 2020 and 30th September 2020 is provided by MCA for the directors’ whose DIN is deactivated to come forward and file DIR-3KYC/DIR-3 KYC-Web. The filing fee of Rs 5,000 will not apply.

ii. For inactive Companies:
(a) The defaulting inactive companies may apply for the CFSS 2020 so as to file the due documents. 
(b) Additionally, they may also do the following:
    - Submit an application for Dormant Status under Section 455 of the Companies Act, 2013 by way of filing of e-Form MSC – 1 along with the prescribed fees.
    - Submit an application for striking off the name of the company from the Register of Companies.
    - Extension granted to file e-Form ACTIVE: An extended timeline between 1st April 2020 and 30th September 2020 is provided by MCA for the ‘ACTIVE non-compliant’ companies to come forward and file e-Form ACTIVE. The filing fee of Rs 10,000 will not apply.

List of Forms Allowed under CFSS 2020

i. Companies incorporated under Companies Act, 1956


Form No. Purpose
Form 20B  Filing annual return by a company having a share capital
Form 21A  Particulars of annual return for the company not having a share capital
JForm 23AC/ACA  Filing balance sheet and other documents
Form 23ACA  Filing Profit and Loss Account and other documents
Form 23AC XBRL  Filing XBRL document in respect of balance sheet and other documents
Form 23ACA XBRL  Filing XBRL document in respect of Profit and Loss Account and other documents
Form 23B  Information by the auditor to Registrar
Form 23 C  Form of application to the Central Government for the appointment of cost auditor.
Form 23 D Information by cost auditor to Central Government
Form 66  Form for submission of a compliance certificate issued by Company Secretary in practice

ii. Companies incorporated under Companies Act, 2013

Form Purpose
Form FC-3 Annual accounts along with the list of all principal places of business in India established by a foreign company
FC-4 Annual Return of a Foreign company
Form GNL-2 Form for submission of documents with the Registrar
Form GNL-3 Particulars of person(s) or key managerial personnel charged or specified for the purpose of sub-clause (iii) or (iv) of clause 60 of section 2
Form IEPF-1 Statement of amounts credited to the Investor Education and Protection Fund
Form IEPF-2 Statement of unclaimed or unpaid amounts
Form IEPF-3 Statement of shares and unclaimed or unpaid dividend not transferred to the Investor Education and Protection Fund
Form IEPF-4 Statement of shares transferred to the Investor Education and Protection Fund
Form IEPF-6 Statement of unclaimed or unpaid amounts to be transferred to the Investor Education and Protection Fund
Form IEPF-7 Statement of amounts credited to IEPF on account of shares transferred to the fund
Form IEPF-e-verification Report Application to the authority for claiming unpaid amounts and shares out of Investor Education and Protection Fund (IEPF) – E-verification report.
Form INC-4 One Person Company- Change in Member/Nominee
Form INC-5 One Person Company - Intimation of exceeding the threshold
Form INC-6 One Person Company – Application for Conversion
Form INC-12 Application for grant of License under section 8
Form INC-20A Declaration for the commencement of business
Form INC-20 Intimation to Registrar of revocation/surrender of a license issued under Section 8
Form INC-22 Notice of situation or change of situation of registered office
Form INC-22A Active Company Tagging Identities and Verification (ACTIVE)
Form INC-27 Conversion of a public company into a private company or private company into a public company
Form INC-28 Notice of order of the Court or Tribunal or any other competent authority
Form MGT-6 Persons not holding beneficial interest in shares
Form MGT-7 Annual Return
Form MGT-10 Changes in the shareholding position of promoters and top ten shareholders
Form MGT-14 Filing of Resolutions and agreements to the Registrar
Form MGT-15 Form for filing Report on Annual General Meeting
Form MR-1 Return of appointment of key managerial personnel
Form MR-2 Form of Application to the Central Government for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or overpayment to managing director or whole-time director or manager and commission or remuneration to directors.
Form MSC-1 Application to Registrar for obtaining the status of dormant company
Form MSC-3 Return of Dormant Companies
Form NDH-1 Return of Statutory Compliances
Form NDH-2 Application for extension of time
Form NDH-3 Return of Nidhi Company for the half-year ended
Form NDH-4 Application for declaration as Nidhi Company and for updating of status by Nidhis
Form PAS-3 Return of allotment
Form SH-11 Return in respect of buy-back of securities