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MCA introduces Companies Fresh Start Scheme, 2020 (CFFS-2020)

[CFFS- 2020}

The Ministry of Corporate Affairs has launched the Companies Fresh Start Scheme,2020. The reason to introduce a new scheme is to deliver relief to law-abiding companies & LLPs i.e. Limited Liability Partnership. Also, MCA revised the “LLP Settlement Scheme, 2020”. This is the third time, when the Government proposes such kind of scheme/opportunity on the demand of various stakeholder, as in the year of 2014 and 2018, the Ministry had previously proposed such kind scheme with different names like Company Law Settlement Scheme, 2014 and CODS Scheme 2018. Both the schemes incentivize agreement and decrease assent burden during the difficult time’s public health situation made by the explosion of COVID-19.

What is the Companies Fresh Start Scheme,2020?

The new scheme CFSS-2020 is initiated for an initial period of 6 months i.e. 01.04.2020 till 30.09.2020. As per the mentioning in its General Circular No.12/2020 on the 30th of March 2020. This is an opportunity for all defaulted companies along with inactive companies to file all overdue documents as freshly started documents, not including any additional fees.

Hereby Defaulting company means a company established under the Companies Act, 2013. That has caused a default in filing of any of the documents, statements, returns, etc. That also includes annual statutory documents (AOC-4 & MGT- 7) on the MCA-21 registry on due time.

 

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Inactive Company means a company which has not been carrying on any marketing or operation or has not made any important accounting transaction throughout the last 2 financial years. Also,  the companies that have not filed financial statements and annual returns during the last 2 financial years.
Both of them have a great opportunity to do so.

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Important Definitions Under the Scheme

Eligibility Under the Scheme

This Scheme applies to any “Defaulting Company”. It shall be initiated from 01st of April, 2020 till the 30th of September, 2020. In this all the mentioned people are allowed to file all overdue documents which were due for filing without any Extra Fees except 2 documents and out of which, some permitted documents are as follows:

Conditions Under Which CFSS-2020 isn’t Applicable

CFSS-2020 must not apply under the following cases:

Manner of payment of a normal fee for the filing of overdue documents and soliciting immunity under the Scheme –

All defaulting companies must need to pay normal fees as directed under the Companies (Registration Offices and Fee) Rules, 2014 on the date of filing of all late documents and no extra fee shall be payable. Immunity from the launch of prosecution or proceedings for imposing a penalty shall be given only to the extent such prosecution or the proceedings for imposing a fine under the Act concern to any delay linked with the filings of overdue documents. Any other important proceedings, including any proceedings including interests of any shareholder or any other person qua the company or its directors or key managerial staff, would not be included by such immunity.

Withdrawals appeal if any 

Withdrawal of appeal upon any prosecution launched or the procedures for forcing penalties initiated- If the defaulting company, concerning any statutory filing under the Act or its officer in default. As it has filed any appeal upon any notice circulated or complaint filed or an order given by a court or by an adjudicating authority under the Act. Before a competent court or authority for disrespecting of the provisions under the Companies Act, 1956  of Companies Act, 2013. In respect of that, the application is made under this scheme, the candidate shall before applying to issue of immunity certificate, withdraw the appeal and provide proof of such withdrawal along with the application.
If an application is registered upon any notice, complaint or order before any competent authority by the defaulting company or its officer in default, then such applications are to be withdrawn by the candidate before filing any application for immunity certificate and provide the proof of such withdrawal along with the application.

Specific measures for situations where the order of the adjudicating authority was passed but the appeal could not be filed- 

As on the date of start of the Scheme, the following would apply:-

Application for Issue of Immunity 

Application for issue of immunity in respect of document(s) filed under the Scheme- The application for getting immunity in respect of overdue documents filed under the Scheme may be made electronically in the Form CFSS-2020. After the closure of the Scheme and after the document(s) arc taken on the file, or record or authorized by the Designated authority as the case may be but not after the expiry of 6 months from the date of closure of the Scheme. There must not be any fee payable on this Form.

Given that this immunity shall not be relevant in the matter of any appeal pending before the court of law. In case of control disputes of the company pending before any court of law.

Also, given that no immunity must be rendered in case any court has settled belief in any matter, or an order forcing penalty has been passed by a judicial authority under the Act, and no appeal has been favored upon such orders of the court or the judging officials, as the case may be before this Scheme has evolved into power.

Order by the Selected Authority Giving Immunity From Penalty and Prosecution – 

Based on the statement made in the Form CFSS-2020, an immunity certificate in respect of documents registered under this Scheme must be circulated by the nominated authority. The immunity certificate must be allotted by the DA after taking into consideration the declaration given in the Form CFSS-2020.

Effect of Immunity

After giving the immunity, the Nominated authority involved must withdraw the prosecution pending, if any, before the concerned Court and the proceedings of adjudication of fines under section 454 of the Act. In respect of errors upon which immunity has been so given shall be deemed to have been completed without any additional action on the part of the Designated Authority.

 

 

Scheme for Inactive Companies-

The defaulting inactive companies, while registering due documents under CFSS-2020 can, together, either:

Provisions of CFSS, 2020:

It’s a great opportunity for all the defaulters to refer to this scheme for their betterment and the demand for stakeholders this scheme was introduced by MCA.  For more updates, stay connected with LegalPillers.

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