The Ministry of Corporate Affairs (“MCA”) in order to facilitate the companies registered in India to make a fresh start on a clean slate, has vide circular dated March 30, 2020 (“Circular”) introduced CFSS-2020 to facilitate such companies which have defaulted in filing any documents, statements, returns etc with MCA-21 registry (“defaulting companies“), to file belated documents without any additional fees.
Key highlights of the scheme
- Period of validity: From April 01,2020 till September 30,2020.
- All the defaulting companies.
(Note: If the defaulting company has filed any appeal against notice issued or complaint filed or order passed by a court or adjudicating authority under the Companies Act , 2013 (“Act”) in respect of statutory filings before a competent court, shall withdraw the appeal before filing for the immunity certificate, which is a certificate issued by the MCA providing immunity from prosecution and payment of penalty as provided under para 5 below)
- Non applicability in certain cases:
- Companies against which final notice of strike off has been initiated by designated authority.
- Companies who have filed application for strike off.
- Companies which have amalgamated under schemes of arrangements.
- Companies which have filed an application to obtain dormant company status under section 455 of the Act.
- Vanishing companies.
- Where any increase of authorized capital involved (SH-7) and also charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9).
- How to get the immunity:
- Due date: Form CFSS-2020 needs to be filed within a maximum period of 6 (Six) months from the closure of the scheme subject to the filed documents taken on file or on record or approved by designated authority without any fees.
- Immunity certificate: Designated authority shall issue immunity certificate based on the declaration made in Form CFSS-2020.
- Effect of immunity:
- All pending prosecutions by designated authorities against the company shall be withdrawn, including if any pending before the concerned courts.
- All proceedings of adjudication of penalty under section 454, except for any prosecution for non-compliance of the order of the adjudicating authority (which relates to delay associated with the filing of any documents, statement of return etc. with MCA-21), shall be withdrawn.
- Scheme for inactive company:
Defaulting inactive companies have been given an option to file due documents under the scheme CFSS-2020 and they can simultaneously, either:
- Apply for status of dormant company by filing e-Form MSC-1 at a normal fee of the said form. Or
- Apply for striking-off of the company in e- Form STK-2 by paying the normal fee.
- Applicable fees: Only normal fees and no additional fees are be charged.
- Other highlights of the scheme:
- Relaxation for making appeals by defaulting companies: For defaulting companies where no appeal has been initiated against any penalty imposed by adjudicating authority as on April 01, 2020, a period of 120 additional days shall be allowed to make an appeal to the Regional Director if the last date of the appeal falls between March 1, 2020 to May 31, 2020 (both days included).
- Extent of immunity: Immunity against the initiation f prosecution or proceedings for imposing penalty shall be provided only to the extent that such prosecution or proceedings pertains to delay associated with the filings of only belated documents. Any other consequential proceedings, including any proceedings involving interest of any shareholders or any other person or its directors or key managerial personnel would not be covered by such immunity.
- Restriction on immunity:
- Immunity shall not be applicable in the matter of any appeal pending before a court of law and in cases of management disputes of the company pending before any court of law or tribunal.
- No immunity shall be provided where a court has ordered conviction for any matter, or an order imposing penalty has been issued by adjudicating authority and no appeal has been filed against such order by the court or adjudicating authority, as the case may be before the scheme came into force.
The Government of India has launched this scheme to promote ease of doing business by providing the defaulting companies to have an opportunity of a fresh start by filing their belated documents by paying only the normal fees. However, at the conclusion of the scheme, designated authorities will have the right to initiate necessary actions against the defaulting companies who have not availed of this scheme, hence now is the time to undertake a spring cleaning exercise for any such companies before winter sets in.
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