The Covid 19 pandemic has not only affected the health of the people at large but also their wealth. The country has suffered many losses during the lockdown period with a major impact on the economic sector. The government has thus taken a lot of measures to control the growing harmful effect of the lockdown on the common man.
The entire world has suffered a lot this year due to the COVID-19 pandemic. It is upon the respective governments to come up with strategies to cope up with the loss of its citizens. For the citizens of India, the news till now has been very much in favor of them. The government along with its other bodies have come up with various schemes and extensions that have proved very helpful for the business.
Among many of the schemes introduced to date, one of them is the Companies Fresh Start Scheme, 2020 that is introduced by the Ministry of Corporate Affairs of India. This scheme was introduced by the ministry through its General Circular 12/2020 where it said that the said scheme would be applicable for the time period of six months that is from April 1st, 2020 to September 30th, 2020. But after examining the situation and the impact of the pandemic the Ministry extended the applicability further and now the scheme shall be applicable till December 31st, 2020.
What is CFSS, 2020
All the Companies that are registered in India has to follow the norms that are laid down by the government of India. One such procedure that the companies have to follow annually is the filing of the Annual Return, Financial Statement, and the other documents that are specified along with their forms within the time frame prescribed by them. In case the companies fail to submit these forms with the Registrar of the Companies they are penalized with a fine. Such companies are thus known as Defaulting Company.
The ministry introduced the Companies Fresh Start Scheme targeting these businesses so that they can provide some sort of relief to the people who are supposed to pay heavy fines.
Provisions under CFSS 2020
The provisions introduced under the CFSS, 2020 are applicable to two different categories of Companies:
1. Defaulting Company
· The nominal fees that are prescribed under the Companies Rules, 2014 for all filing of MCA 21 registry need to be paid only.
· They will also be granted immunity against prosecution and proceedings only if the case is filed for imposing a penalty for delayed filing of returns.
· The company needs to withdraw any appeal filed against the notice, complaint, or any order issued for delayed compliances, and then only they can register themselves under CFSS, 2020. They also have to furnish a copy of the withdrawal while they are registering themselves.
· The company is given 120 days’ time period to file an appeal before the Regional Director against an order passed by the court. They also get immunity for this 120-day period against non-compliance of the order passed by the court in reference to delay in filing of any document.
· The CFSS form is available for the companies to file. They will get immunity for a period of six months after the date of closure of the form. They will also get an immunity certificate from the designated authority. Further, no fees need to be paid on this form.
· There are three situations laid down for which no immunity shall be granted:
- Where there is a pending appeal against a company.
- Where there is a case of management dispute pending.
- Where no appeal is made before the commencement of the scheme against the order passed by the court.
2. Non-Operative Companies
· The companies can file an e-form MSC-1 with an application for Dormant Status as per Section 455 of the Companies Act, 2013.
· They can also submit an application to strike off their name from the Register of Companies.
· An extension is also provided for filing the e-form ACTIVE, the filing fees of Rs. 10000 shall not be applied.
Non-applicability of CFSS 2020
There are certain conditions specified under the CFSS, 2020 where the scheme shall not be applied:
· In case the final notice has already been issued by the Designated Authority in order to strike off the name of the company as per the Companies Act, 2013.
· In case the company has itself filed the STK-2 form along with fees in order to strike off the name from the Register of Companies.
· In case the companies have merged.
· In case the company has filed the MSC-1 form for the dormant status.
· Vanishing Companies.
· In case the company has been marked for liquidation or Corporate Insolvency Process.
· In case there is an increase in the Authorized Capital i.e. SH-7 form
· In case there are charge related documents i.e. CHG-1, CHG-4, CHG-8 and CHG-9.