COMPANIES FRESH START SCHEME (CFSS), 2020- DETAILED GUIDE

In order to facilitate Indian Companies to make a Fresh Start on a clean slate, the Ministry of Corporate Affairs has come up with a scheme to assist the Companies to complete the compliance at a nominal fee. This scheme is called COMPANIES FRESH START SCHEME (CFSS), 2020.

What exactly is companies fresh start scheme (CFSS)?

Well, the Defaulting Companies which have not filed Annual returns for the past years and not able to file currently due to the enormous additional fee, will now be given a waiver from the additional fees and need to pay only the Normal fee for filing the forms. This will be a huge relief for many Companies as the major burden is waived away. Going forward, it enables them to be compliant with the Company Act 2013 provisions and carry on the business in an efficient manner.  

What is the Time limit for this scheme?

This Scheme will be effective till 30th September 2020.

What are the forms that cant be filed by a Company under this scheme?

All forms that provide documentary evidence for any actions taken by the company and statement of accounts etc can be filed with the MCA 21 Registry under this scheme. The following forms cannot be filed by a Company

  • Increase of Authorised Share capital (Form SH-7)
  • Charge forms (Form CHG 1, Form CHG4, Form CHG 8, Form CHG 9)

(For instance, Form PAS 3 is not filed by a Company for Allotment of shares and raising funds, then they can file the same without any penalty, this will be exempted from prosecution or proceeding from the Designated Authority. Hence, the Companies Fresh start scheme (CFSS) provides Immunity/relief here.

If the same amount is utilised by the Company without filing Form PAS 3, then prosecution or proceedings relation to utilisation of Money received by the Company without informing the MCA 21 Registry shall be ordered by the Designated Authority

Therefore, any other consequence apart from filing of documents and statement of accounts etc, will not be provided with immunity/relief under this scheme)

Can all Companies apply under this scheme and file the pending forms?

Certain Companies are prohibited from filing the forms under this scheme, they are as mentioned below –

  • Companies against which final notice of Action for Strike off u/s 248 of Companies Act 2013 is already initiated
  • Companies have already filed an application for Strike off u/s 248 of CA2013 with the MCA
  • Companies which have initiated action for Amalgamation under scheme of arrangement or compromise under the Act
  • Companies which have filed application for obtaining Dormant status
  • Companies which are vanishing

 How will it help Inactive Companies?

Well, Inactive Companies can proceed to file all the Annual returns with MCA 21 Registry with the Nominal fees and later proceed with

  • Applying for Dormant status, if the Company wish to carry on the business on a future date with minimal Annual filings post Dormant status approval
  • Applying for Strike off, if the Company intends not to carry on any business and close the same.

6. What is the procedure to be followed under this scheme?

If Company wants to en-cash the benefits under this scheme then,

  • All the relevant MCA filings applicable to the Company, need to filed with the Nominal fees and ensure compliance as per Companies Act 2013.
  • Post the completion of the above process, the Company has to file Form CFSS- Application for issue of Immunity Certificate under the Companies Fresh Start Scheme (CFSS) 2020 after October 2020 before March 2021 (Form yet to be notified)
  • Receive Immunity Certificate under Companies Fresh Start Scheme CFSS 2020 as an approval from the Designated Authority for completing all the compliance filing with the MCA 21 Registry.

Will Immunity Certificate under Companies Fresh Start Scheme (CFSS) be issued to all Companies ensuring filings under this Scheme?

The following Companies will not be issued Immunity Certificate under Companies Fresh Start Scheme (CFSS) 2020

  • Company matters pending before the Court of Law and in case of management disputes in the Company is pending before the Court of Law or Tribunal
  • Court has order conviction in any matter or an order imposing penalty has been passed by adjudication authority under this Act and no appeal is made before 31st March 2020.

(*Note – Exemption of additional fee for filing forms for reporting the documentation and Statement of accounts etc will be available, only Immunity Certificate Under Companies Fresh Start Scheme CFSS 2020 will not be issued

What is the advantage/effect of Immunity provided in this Scheme?

After granting this Immunity, the Designated Authority shall withdrawn the pending prosecution before any competent court or proceedings of adjudication of penalties u/s 454 of the Companies Act  2013, other than Companies falling in Qt no 7, shall be deemed to have been completed without any further action initiated by the Designated Authority.

What will happen if a Company has received an order passed by the Competent Authority and has failed to make an appeal ?

While the Order has imposed penalties with respect to filing of any documents, statement of accounts etc, as per the MCA 21 registry and no appeal has been made as on the 01st April 2020, then

  • The last date to file an appeal against order falls in between 01 March 2020 and 31st May 2020 (both days included), a period of 120 additional days will be provided to all such Companies and their officers to file the appeal before the Concerned Regional Directors
  • If the order relates to filing of documents, statement of accounts, with the MCA 21 Registry, prosecution for the same shall not be initiated against the Company or its officers, provided the Company follow the CFSS scheme protocol and completes all the filings.

Note – DIN holders of DINs marked as ‘Deactivated’ due to non-filing of DIR-3KYC/DIR-3 KYC-Web and those Companies whose compliance status has been marked as “ACTIVE non-compliant” due to non-filing of Active Company Tagging Identities and Verification(ACTIVE) eform are encouraged to become compliant once again in pursuance of the General Circular No. 11 dated 24th March, 2020 & General Circular No.12 dated 30th March 2020 and file DIR-3KYC/DIR-3KYC-Web/ACTIVE as the case may be between 1st April, 2020 to 30th September, 2020 without any filing fee of INR 5000/INR 10000 respectively.

Official Notification : http://www.mca.gov.in/Ministry/pdf/Circular12_30032020.pdf

Also Read:

Active Company Tagging Identities and Verification (ACTIVE) Under Companies Act

Recent Articles

Deemed Dividend- Section 2(22)(e) of Income Tax Act: Detailed Analysis

Dividend refers to the return(s) received by a shareholder as a result of investment in a company by way of share capital....

Interest u/s 201(1a) of Income Tax Act, 1961

A person is liable to pay interest for various delays/defaults & one of them is Interest u/s 201(1a) of Income Tax Act,...

GST Audit & Annual Return (GSTR 9/9C) Due Date Extended For FY 2018-19 (View Notification)

Due date for filing GST annual return and Audit (GST 9 & GSTR 9C) for Financial year 2018-2019 is extended by 1...

FAQ on Section 206C(1H)- TCS on Sale of Goods

TCS on Sale of Goods under section 206C(1H) is effective from 01-10-2020. Subsection 1H has been inserted to Section 206C by the...

Get our Daily Updates in your "WhatsApp"

Related Stories

Leave A Reply

Please enter your comment!
Please enter your name here

Get our Daily Updates in your WhatsApp