ICAI FAQs on Company Fresh Start Scheme, 2020

Frequently Asked Questions on Company Fresh Start Scheme, 2020 issued by the Ministry of Corporate Affairs, Government of India on 30th March, 2020

The Ministry of Corporate Affairs has issued a Circular 12/2020 dated 30th March, 2020, in order to facilitate the companies registered in India to make a fresh start on a clean slate, it has been decided to take certain alleviative measures for the benefit of all companies.

The Companies Act, 2013 requires all companies to make annual statutory compliance by filing the Annual Return and Financial Statements. Apart from this, various other statements, documents, returns, etc are required to be filed on the MCA21 electronic registry within prescribed time limits. Filing fees for filing such statements, documents, returns, etc is governed by section 403 of the Companies Act, 2013 read with Companies (Registration Offices and Fees) Rules 2014. In order to give an opportunity to the defaulting companies and to enable them to file the belated documents in the MCA-21 registry, the Central Government in exercise of powers conferred under section 460 read with section 403 of the Companies Act, 2013 has decided to introduce a Scheme namely “Companies Fresh Start Scheme, 2020 (CFSS-2020)

Q. 1. What is Company Fresh Start Scheme, 2020? A. 1. “Company Fresh Start Scheme, 2020″ is a scheme to give a Onetime opportunity to the companies to enable them to complete their pending compliances by filing necessary documents in the MCA-21 registry including annual filings without being subject to a higher additional fees on account of any delay.

Q. 2. What is the objective of this Scheme? A. 2. The Ministry of Corporate Affairs, in pursuance of the Government of India‟s efforts to provide relief to law abiding companies in the wake of COVID 19, has introduced the“Companies Fresh Start Scheme, 2020” (CFSS-2020) to provide a first of its kind opportunity to companies to make good any filing related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity. The Fresh Start scheme incentivizes compliance and reduce compliance burden during the unprecedented public health situation caused by COVID-19. The USP of the scheme is a one-time waiver of additional filing fees for delayed filings by the companies with the Registrar of Companies during the currency of the Schemes, i.e. during the period starting from 1st April, 2020 and ending on 30th September, 2020.

Q. 3. Whether this Scheme is permanent? A. 3. No. It is one time opportunity for the defaulting companies for a limited period (please refer A. 4).

Q. 4. What is the time period of the Scheme? A. 4. The Scheme shall come into force on the 1st April, 2020 and shall remain effective up to 30th September, 2020 (both days inclusive). Q. 5. For which Companies, the Scheme is applicable? A. 5. The Scheme shall be applicable on any „defaulting company” which has not filed any document, statement, return etc. including annual statutory documents, which were due for filing on any given date in accordance with the provisions of this Scheme.  Contextually, filing of such overdue document, statement, return etc. should be pending on the date of accessing the Scheme. Q. 6. Documents for which period in the past, a defaulting company is permitted to file? A. 6. A defaulting company is permitted to file any of the documents, statement, returns, etc., including annual statutory documents on the MCA-21 registry wherein the default was made in filing for any period in the past. Thus, document, statement, return etc. can be relating any period from past from incorporation of the company till the date. Q. 7. Whether this Scheme provides any opportunity to the inactive companies? A. 7. The scheme gives an opportunity to inactive companies to get such an inactive company declared as „dormant company‟ under section 455 of the Act by filing a simple application at a normal fee. The said provision enables inactive companies to remain on the register of the companies with minimal compliance requirements. Q. 8. What is defaulting company as per the Scheme? A. 8. “defaulting company” means a company defined under the Companies Act, 2013, and which has made a default in filing of any of the documents, statement, returns, etc including annual statutory documents on the MCA-21 registry. Contextually, filing of such overdue document, statement, return etc. should be pending on the date of accessing the Scheme. Q. 9. What is Designated authority as per the Scheme? A. 9. “Designated authority” for a company as per the Scheme means the Registrar of Companies having jurisdiction over the registered office of the company. Q. 10. Whether any immunity Certificate is issued for granting immunity from penalty and prosecution? A. 10. Yes, based on the declaration made in the Form CFSS-2020, an immunity certificate in respect documents filed under this Scheme shall be issued by the designated authority. Q. 11. What shall be the manner of payment of fees on filing of belated document for seeking immunity under the Scheme? A. 11. Under the scheme, every defaulting company shall be required to pay normal fees as prescribed under the Companies (Registration Offices and Feel Rules, 2014 on the date of filing of each belated document and no additional fee shall be payable. Q. 12. Whether there is any additional fee for filing forms under this Scheme? A. 12. No additional fee shall be payable for filing any belated document under the Scheme. Q. 13. What Immunity the Scheme shall grant from the launch of prosecution or proceedings? A. 13. Immunity from the launch of prosecution or proceedings for imposing penalty shall be provided only to the extent such prosecution or the proceedings for Imposing penalty under the Act pertain to any delay associated with the filings of belated documents. Q. 14. What defaults shall not be covered under Immunity under the Scheme? A. 14. Excepting proceedings following from delay in filings of documents, any other consequential proceedings, including any proceedings involving interests of any shareholder or any other person qua the company for its directors or key managerial personnel would not be covered by such Immunity. For Example, under section 42(8), every company is required to file a return of allotment within the period provided therein. However, the proviso to section 42(4) also requires that the utilisation of money raised through private placement shall not be made unless the return of allotment has been filed in the registry. Now, the immunity under the Scheme shall only be available in respect of the proceeding for imposing penalty on account of delay in filing the return of allotment, but not on account of utilization of the money raised through private placement prior to the filing of the return with the registry. Q. 15. Whether the defaulting company is required to withdraw the appeal against any prosecution launched or the proceedings for imposing penalties initiated? A. 15. Yes, in case if defaulting Company, with respect to any Statutory filing under the Act or its officer in default as the case may be, has filed any appeal against any notice issued or compliant filed or an order passed by a court or by an adjudicating authority under the Act, before any competent court or authority for any violation of the provisions under Companies Act 1956/2013 in respect of which an application is fil