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Companies Fresh Start Scheme, 2020

General Circular No. 12/2020

F.No. 02/01/2020-CL-V

Government of India
Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhawan,
Dr. R P. Road, New Delhi,
Dated: 30/03/2020

To
All Regional Directors,
All Registrars of Companies,
All Stakeholders,

Subject: Companies Fresh Start Scheme, 2020.

Sir(s),

In furtherance of the Ministry’s Circular No. 11/2020, dated 24th March. 2020 and in order to facilitate the companies registered in India to make a fresh start on a clean slate, this Ministry has decided to take certain alleviative measures for the benefit of all companies.

2. Companies Act. 2013 requires all companies to make annual statutory compliance by filing the Annual Return and Financial Statements. Apart from this, various other statements, documents, returns, etc are required to be filed on the MCA-21 electronic registry within prescribed time limits. Filing fees for filing such statements, documents, returns, etc is governed by section 403 of the Companies Act, 2013 read with Companies (Registration Offices and Fees) Rules 2014.

3. The Ministry has received representations from various stakeholders requesting for grant of one-time opportunity, in as to enable them to complete their pending compliances by filing necessary documents in the MCA-21 registry including annual filings without being subject to a higher additional fees on account of any delay.

4. In order to give such an opportunity to the defaulting companies and to enable them to file the belated documents in the MCA-21 registry, the Central Government in exercise of powers conferred under section 460 read with section 403 of the Companies Act, 2013 has decided to introduce a Scheme namely “Companies Fresh Start Scheme, 2020 (CFSS-2020)” condoning the delay in filing the above mentioned documents with the Registrar, in so far as it relates to charging of additional fees, and granting of immunity from launching of prosecution or proceedings for imposing penalty on account of delay associated with certain filings. Only normal fees for filing of documents in the MCA-21 registry will be payable in such case during the currency of CFSS-2020 as per the provisions of section 403 read with Companies (Registration Offices arid Fee) Rules, 2014 and section 460 of the Act.

5. In addition, the scheme gives an opportunity to inactive companies to get their companies declared as ‘dormant company’ under section 455 of the Act by filing a simple application at a normal fees. The said provision enables inactive companies to remain on the register of the companies with minimal compliance requirements.

6. The details of the scheme are as under:-

(i) The scheme shall come into force on the 01.04.2020 and shall remain in force till 30.09.2020.

(ii) Definitions:- In this scheme, unless the context otherwise requires,

(a) “Act” means the Companies Act, 2013 and Companies Act, 1956 (where ever applicable);

(b) “Company” means a company as defined in clause (20) of section 2 of the Companies Act, 2013;

(c) “defaulting company” means a company defined under the Companies Act, 2013, and which has made a default in filing of any of the documents, statement, returns, etc including annual statutory documents on the MCA-21 registry;

(d) “Designated authority” means the Registrar of Companies having jurisdiction over the registered office of the company;

(e) “Immunity certificate” means the certificate referred to in sub paragraph (viii) of paragraph 6 of the scheme;

(f) “Inactive Company” means a company as defined in Explanation (i) to sub section (1) of section 455(1) of the Companies Act, 2013;

(iii) Applicability:- Any “defaulting company’ is permitted to file belated documents which were due for filing on any given date in accordance with the provision of this Scheme;

(iv) Manner of payment of normal fees for filing of belated documents and seeking immunity under the Scheme:- Every defaulting company shall be required to pay normal fees as prescribed under the Companies (Registration Office and Fees) Rules, 2014 on the date of filing of each belated document and no additional fees shall be payable. 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. For example, under section 42(8), every company is required to file a return of allotment within the period provided therein. However, the proviso to section 42(4) also requires that utilisation of money raised through private placement shall not be made unless the return of allotment has been filed in the registry. Now, the immunity under the scheme shall only be available in respect of the proceedings for imposing penalty on account of delay in filing the return of allotment, but not on account of utilisation of money raised through private placement prior to the filing of the return with the registry.

(v) 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 officer in default, as the case may be, has filed any appeal against any notice issued or complaint filed or any order passed by the 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 the scheme, the applicant shall before filing an application for issue of immunity certificate, withdraw the appeal and furnish proof of such withdrawal along with application.

(vi) Special measure for cases where the order of the adjudicating authority was passed but the appeal could not be filed: In all the 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 scheme, the following would apply:-

(A) Where the last date for filing the appeal against the order of the adjudicating authority under section 454(6) falls between the 1st March, 2020 to 31st May, 2020 (both days included), a period of 120 additional shall be allowed with effect from such last date to all companies and their officers for filing the appeal before the concerned Regional Directors;

(B) During such additional period as stated in (A) above, prosecution under section 454(8) for non compliance of the order of the adjudicating authority, insofar as it relates to delay associated in filing of any documents, statement or return, etc. in the MCA-21 registry shall not be initiated against such companies or their officers;

(vii) 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 annexed, after closure of the scheme and after the document(s) are taken on file, or on record or approved by the Designated authority 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.

Provided that this immunity shall not be applicable in the matter of any appeal pending before the court of law and in case of management disputes fo the company pending before any court of law or tribunal;

Provided also that 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 order of the court or of the adjudicating authority, as the case may be, before this Scheme has come into force.

(viii) 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.

(ix) Scheme not to apply in certain eases This scheme shall not apply:-

a. 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;

b. where any application has already been filed by the companies for action of striking off the name of the company from the register of companies;

c. to companies which have amalgamated under a scheme of arrangement or compromise under the Act;

d. where applications have already been filed for obtaining Dormant Status under section 455 of the Act before this Scheme;

e. to vanishing companies;

f. where any increase in authorized capital is involved (Form SH­-7) and also charge related documents (CHG-1, CHG-4, CHD-8 and CHG-9);

(x) 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 the second proviso to sub-paragraph (vii) of paragraph 6 of this Scheme, 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;

(xi) Scheme for Inactive Companies:- The defaulting inactive companies, while filing due documents under CFSS-2020, can, simultaneously, either:

a. apply to get themselves declared as Dormant Company under section 455 of the Companies Act, 2013 by filing e-Form MSC-1 at a normal fee on said form; or

b. apply for striking off the name of the company by filing e-Form STK-2 by paying the fee payable on form STK-2.

7. 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 timely manner.

8. This issues with the approval of the competent authority.

Yours faithfully,

(KMS Narayanan)

Assistant Director (policy)


Source: http://mca.gov.in/Ministry/pdf/Circular12_30032020.pdf

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