COMPANIES FRESH START SCHEME

The Ministry of Corporate Affairs (MCA) has introduced a new scheme called the Companies Fresh Start Scheme 2020. This scheme waives off all MCA related penalties and provides prosecution immunity for the Directors of a Company. The Companies Fresh Start Scheme helps a  company make good on any default in regards to filing, irrespective of the time period of the default. It allows the company to start afresh as a fully compliant entity. The Companies Fresh Start Scheme is similar in structure to the LLP Settlement Scheme, 2020, wherein a one-time opportunity was provided to any LLP  to regularise their overdue compliances without being charged any penalty.

COMPLIANCE FOR COMPANY

Any company registered in India is required to file the MCA annual return every year along with the financial statements. Any company which fails that is subject to a penalty of Rs.200 per day of default. The company is struck off, and the directors are disqualified. Our team of tax and legal experts at ACE ALLIANCE can help you with all the compliance needs for your company.

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

APPLICABILITY

The Companies Fresh Start Scheme is not applicable for the below mentioned companies:

  • Any company against whom action for final notice, for striking off the name has already been started by the MCA. An individual can check if his or her company is under strike off by using the Master Data check on the MCA portal
  • Any company that has filed an application for strike-off with MCA, and this application is still pending
  • Any Company which has been amalgamated under a scheme of arrangement or compromise
  • Any Company that has filed to obtain dormant status
  • Any vanishing company
  • Any company in which authorised capital increase is involved/ or the charge documents still have to be filed

 

IMMUNITY FROM PROSECUTION
The biggest benefit of availing the Companies Fresh Start Scheme 2021 is that a company gets immunity from prosecution. If a defaulting company pays the requisite fee and files the overdue returns, it gets immunity from prosecution proceedings that can be initiated by the MCA for defaulting.

CFSS-2020
To apply for immunity in respect to the belated documents filed under the Companies Fresh Start scheme, the 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 charged for filing of the CFSS-2020 form.

IMMUNITY CERTIFICATE
Based on the CFSS-2020 filing, the MCA will provide an immunity certificate under the Companies Fresh Start Scheme 2020. After immunity has been granted, the Designated Authority will withdraw the prosecutions pending, if any, before the concerned Courts, and the process of adjudication of penalties, without any further action by the Ministry of Corporate Affairs.

IMMUNITY EXCEPTIONS

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

  1. Any proceeding that involves the interests of any shareholder, or any other person, qua the company, or its directors, or key managerial persons
  2. Any appeal that is pending before any court of law or tribunal. This appeal could be in regard to any management disputes of the company
  3. A company where the court has ordered conviction or an order, and has imposed penalty. This order has been passed by an adjudicating authority, and no appeal has been filed against the orders. This kind of conviction has been issued before the Companies Fresh Start Scheme 2020 scheme came into force

THE WITHDRAWAL OF PROSECUTION AND PROCEEDINGS
If a defaulting company has filed an appeal against any notice/complaint/order that has been passed by a court of an adjudicating authority. Then such a company before filing the application for an immunity certificate, must withdraw their appeal, and produce proof of withdrawal in the CFSS-2020 form of the Companies Fresh Start Scheme 2020. If an officer has passed an order penalty and the last date for filing the appeal falls between 1st March 2020 to 31st May, 2020 – a period of 120 additional days is given to filing the appeal. During the grace  period, no form of prosecution for non-compliance will be initiated by the MCA

THE MAINTENANCE OF COMPLIANCE
After the regularization of compliance under this scheme, the company will be required to maintain compliance regularly. ACE ALLIANCE can service all your compliance management requirements. If a company does not want to maintain compliance, it can file for dormant status or file for strike-off.