So far as corporate compliance is concerned, Companies and Limited liability Partnerships registered in India are supposed to adhere with annual statutory compliance and accordingly file annual return, financial statements and various other documents, statements, returns etc. on MCA21 electronic registry within prescribed time limit. Any delay in making such compliances exposes Companies and LLP to following 03 consequences;
- Additional fees i.e. Late Fees
- Imposition of penalty on account of delay
Thus, In a move to reduce the compliance burden of companies and limited liability partnerships, Ministry of corporate affairs announced “Companies Fresh Start Scheme, 2020 (CFSS-2020), in which companies and Limited liability partnership may file belated annual return and financial statements and various other documents as well without payment of any additional fees.
Moreover, scheme provides for immunity from other 02 consequences as well if companies and LLPs make their default good by filing all statutory forms (as required) on or before 30th<> September 2020.
The scheme also provides an opportunity for inactive companies to get themselves declared as “dormant company” by filling a simple application in form MSC-1 with nominal fees. The dormant status allows any company to remain on the register of company with minimum compliance requirement.
And at last, this scheme also provides an opportunity to defaulting company which are inactive also, to file application in form STK-2 simultaneously for striking-off their name from register of company the company.
Every defaulting company is permitted to file its annual returns, financial statements, Documents, statements, returns etc. which were due for filing but not filed earlier.
The E-filing due on any earlier event before start of this scheme is eligible for filing and that too without payment of any additional fees.
As per definition contained in scheme guideline Defaulting Company is;
“Defaulting company means a company as defined under the Companies Act, 2013 and which made a default in filing of any of the documents, statements, returns, etc. including annual statutory documents on the MCA-21 registry.
Although CFSS-2020 is throughout applicable to all the companies registered either under the provisions of Companies Act, 2013 or any earlier Company law, it specifies some exclusion also which are as under
- Company which has already received notice for Strike-off form ROC.
- The company has itself filed an application for striking off.
- Amalgamating Companies.
- Application filed for Dormant company Status
- Vanishing Companies.
- Filing of Form SH-7 for increase in share capital
- Documents related to or for creation and satisfaction of charges like forms CHG-1, CHG-4, CHG-8 and CHG- 9
- Any defaulting company may file e-forms (due for filing) with normal fees under this scheme.
The list of forms which are eligible for filing under CFSS-2020 can be accessed at
- If in any case, defaulting company has filed any appeal against any notice, complaint, order passed by court or by an adjudicating authority for violation of the provision of companies Act, then defaulting company can file application for immunity certificate under this scheme after withdrawal of such appeal and application shall be filed along with proof of such withdrawal.
- Where penalties were imposed by the adjudicating officer in respect of non- filling of any documents and statements of return etc. and yet no appeal has been preferred by the concerned company and where last date of filling of documents falls within 1st march 2020 to 31st may 2020 (both days included) then 120 additional days shall be allowed under this scheme with effect from last date to all companies to file an appeal.
- Once the filing of e-forms (due for filing) on MCA 21 electronic registry is complete, an application shall be filled in form CFSS-2020 electronically, without any fees. This application will be filed to obtain Immunity certificate which will assure defaulting company about immunity from prosecution as well as imposition of penalty both. The application is required to be filed after documents are taken on record or approved by the designated authority as the case may be but not after the expiry of six months from closure of scheme. i.e. in no case CFS-2020 can be filed electronically after 31st March 2021.
Benefit for Inactive companies
When defaulting inactive company files belated documents under Fresh Start Scheme, 2020 (CFSS-2020) then it may exercise following option simultaneously:
- Inactive company may file form MSC-1 with normal fees to declare itself as dormant company.
- Inactive company may file form STK-2 along with fees for striking off its name from register of companies
we can take an example for better understanding about this scheme:
Suppose, a private limited company incorporated in 2016 with two directors, having authorized and paid up share capital of one lakh Rupees only and company made default in filing of E-forms for year 2017-2018 and Financial year 2018-19. The company failed to file following e-forms
- AOC-4 & MGT-7 Annual Statutory Filing.
- DIR-3 KYC
- INC-22A Active
The additional fees for above non compliances would be as under;
|Statutory Annual Filing||49,100/-||12,600/-||61,700/-|
|INC 22A Active||–||–||10,000/-|
Opting CFSS-2020 will not grant relief to defaulting company from paying this huge amount of Rs. 1,49,400/- but also immune it from imposition of penalty and prosecution both.
However immunity from penalty and prosecution is up to such extent only where it is related with delay in filing of e-forms. Any other liability will still exist and there is no immunity from such under CFSS- 2020.
For ex; a return of allotment in PAS-3 is supposed to be filed within prescribed time. Also money raised through private placement is not supposed to be utilized till the time return of allotment is filed.
SO in instant case, under CFSS only immunity is there from consequences related to delay in filing return of allotment and not from the default on account of utilization of money before filing of return of allotment.