Companies Fresh Start Scheme, 2020

MCA vide its Notificationdated March 30, 2020 has notified Companies Fresh Start Scheme, 2020 to facilitate the companies registered in India to make a fresh start on a clean slate which shall remain in force from April 1, 2020 to September 30, 2020.

Key features of Companies Fresh Start Scheme, 2020 are as follows:

1. Filing of belated documents and manner of making payment- Under this Scheme, any company which has made a default in filing of any of the documents, statement, returns, etc. including annual statutory documents on MCA 21 portal can complete their pending compliances by filing necessary documents including annual filings without being subject to a higher additional fees on account of any delay. In addition, the Scheme also allows inactive companies to get themselves declared as ‘dormant company’ under Section 455 of the Companies Act, 2013 by filing a simple application at normal fee.

2. Manner of seeking immunity under the Scheme- 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. Any other consequential proceedings, including any proceedings involving interests of any shareholder or any other person qua the company or its directors or key managerial personnel would not be covered by such immunity.

3. Withdrawal of appeal against any prosecution launched or the proceedings for imposing penalties initiated- If the defaulting company, with respect to any statutory filing under the Act, or its officers in default, as the case may be, has filed any appeal against any notice issued or complaint filed or an order passed by a court or by an adjudicating authority under the Act, before a competent court or authority for violation of the provisions under the Companies Act, 1956 and/or Companies Act, 2013, in respect of which the application is made under this Scheme, the applicant shall before filing an application for issue of immunity certificate, withdraw the appeal and furnish proof of such withdrawal along with the application.

4. Special measure for cases where the order of the adjudicating authority was passed but the appeal could not be filed-In all cases where due to delay associated in filing of any document, statement or return, etc. in the MCA-21 registry, penalties were imposed by an adjudicating officer under the Act, and no appeal has been  preferred by the concerned company or its officer before the Regional Director under section 454(6) as on the date of commencement of the Scheme, the following would apply:
   1. Where the last date for filing the appeal against the order of the adjudicating authority under Section 454(6) falls between the 1^st March, 2020 to 31^st May, 2002 (both days included), a period of 120 additional days shall be allowed with effect from such last date to all companies and their officers for filing the appeal before the concerned Regional Directors;
   2. During such additional period as stated in (i) above, prosecution under Section 454(8) for non-compliance of the order of the adjudicating authority, in so far as it relates to delay associated in filing of any document, statement or return, etc. in the MCA-21 registry shall not be initiated against such companies or their officers

5. Application for issue of immunity in respect of document(s) filed under the Scheme- The application for seeking immunity in respect of belated documents filed under the Scheme may be made electronically in the Form CFSS-2020, after closure of the Scheme and after the document(s) are taken on file, or on record or approved by the Designated authority (i.e. the Registrar of Companies having jurisdiction over the registered office of the company) as the case may be but not after the expiry of six months from the date of closure of the Scheme. There shall not be any fee payable on this Form.

However, this immunity shall not be applicable in the matter of any appeal pending before the court of law and in case of management disputes of the company pending before any court of law or tribunal

Further, no immunity shall be provided in case any court has ordered conviction in any matter, or an order imposing penalty has been passed by an adjudicating authority under the Act, and no appeal has been preferred against such orders of the court or of the adjudicating authority, as the case may be, before this Scheme has come into force.

6. Order by designated authority granting immunity from penalty and prosecution – Based on the declaration made in the Form CFSS-2020, an immunity certificate in respect of documents filed under this Scheme shall be issued by the designated authority.

7. Scheme not to apply in certain cases- This Scheme shall not apply:
   1. To companies against which action for final notice for striking off the name u/s 248 of the Act (previously Section 560 of Companies Act, 1956) has already been initiated by the Designated authority;
   2. where any application has already been filed by the companies for action of striking off the name of the company from the registrar of companies;
   3. to companies which have amalgamated under a scheme of arrangement or compromise under the Act;
   4. where applications have already been filed for obtaining Dormant status under Section 455 of the Act before this Scheme;
   5. to vanishing companies;
   6. where any increase in authorized capital (Form SH-7) and also charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9) is involved;

8. Effect of immunity- After granting the immunity, the Designated authority concerned shall withdraw the prosecution(s) pending, if any, before the concerned court(s) and the proceedings of adjudication of penalties under Section 454 of the Act, other than those referred in paragraph 5 above, in respect of defaults against which immunity has been so granted shall be deemed to have been completed without any further action on the part of the Designated Authority.

9. Scheme for inactive companies-The defaulting inactive companies, while filing due documents under CFSS-2020 can, simultaneously, either:
   1. apply to get themselves declared as Dormant Company under Section 455 of the Companies Act, 2013 by filing e-for MSC-1 at a normal fee on said form; or
   2. apply for striking off the name of the company by filing e-Form STK-2 by paying the fee payable on form STK-2

10. At the conclusion of the Scheme, the Designated authority shall take necessary action under the Act against the companies who have not availed this Scheme and are in default in filing these documents in a timely manner.