Companies Fresh Start Scheme, 2020
As the new financial year begins, the Central Government has introduced a new scheme for all the companies registered in India to assist them in making a fresh start.
What is the scheme?
Registered companies which have delayed in filing/submitting thier returns, forms or any other compliance under the Companies Act can be filed with the payment of normal fees only as prescribed under the Companies (Registration Offices and Fees)Rules, 2014 without having to pay any penalty or late fees .
Duration/Period of the applicability of the Scheme :
The scheme shall come into force from 1.04.2020 till 30.09.2020
Validity of the Scheme:
This scheme is valid for all the companies registered under the Companies Act to file any belated documents if any.
Exceptions of this Scheme:
All the belated filing under the Companies Act can be filed without any additional fee under this scheme.
However, forms such as:
1. SH-7 (only for the increase of Authorized capital) and
2. Charge related Forms such as Form CHG-1, Form CHG-4, Form CHG-8 and Form CHG-9 cannot be filed.
Merits of this Scheme:
The benefits of this Scheme are:
1.Exemption from payment of any additional fees;
2.Immunity from prosecution to the extent of default connected with non-filing of form; and
3.Immunity from proceedings related to adjudication of penalty under Section 454.
However, immunity has not granted from any consequential proceedings including any proceedings involving interests of any shareholder or any other person qua the Company or its Directors or KMP.
For example, immunity against non-filing of form PAS-3 under Section 42, can be availed under the Scheme by filing the Form but immunity from consequential defaults arising on account of default like utilizing of application money without the filing the Form PAS-3, will not be granted.
Circumstances under which immunity is not available in this Scheme:
1. If the registered company's appeal of any kind in respect of matter for which immunity is being sought, is pending before any court of law;
2. If the registered company has any management dispute pending before any Court of Law or Tribunal;
3. If the court has ordered conviction in the matter and no appeal has been filed, before coming into force of this Scheme and
4. If the penalty has been adjudicated under Section 454 of the Companies Act and no appeal has been filed, before coming into force of this Scheme.
Benefit without immunity under this Scheme for registered companies:
A Registered Company which cannot avail immunity under this Scheme is still entitled to the benefit of exemption from payment of additional fees arising on account of belated filing.
Whether benefit can be availed under the Scheme if prosecution for non-filing or proceeding of adjudication of penalties has already been initiated under the Act?
Yes. After the requisite belated form, statement, return etc., has been filed under the Scheme, the Eligible Company, after the belated filing has been taken on record, shall file a Form CFSS-2020 within 6 months of closure of the Scheme without payment of any fees. Based on the aforesaid filing, a certificate of immunity will be issued to the Eligible Company.
Once the immunity certificate has been issued, the authorities will withdraw the following:
1.Prosecution (if any) pending before concerned court; and
2.Proceedings (if any) initiated under Section 454 of the Act for adjudication of penalties.
Whether it is necessary to obtain certificate of immunity?
While the certificate of immunity is specifically required in case where prosecution has been initiated against any company and its officers before any court under the Act or where proceeding for adjudication of penalty has been initiated under Section 454 of the Act but it is advisable that the certificate should be obtained in all cases, so that immunity can be availed against any future prosecution or adjudication of penalty proceedings.
Is there any prerequisite for applying the certificate of immunity?
Yes. The pre-requisites are:
The belated form, return, statement, etc. has been filed under the Scheme;
The belated form, return, statement, etc. have been taken on record;
Where any appeal has been filed by the company or officer who is in default, against any notice issued, or compliant filed, or any order passed by court or any adjudicating authority under the Act, before a competent court or authority for violations of the provisions of the Companies Act, 2013 or Companies Act, 1956, in respect of which application is made under the Scheme, such appeal should be withdrawn and proof of withdrawal is furnished along with application.
Any benefit where adjudication order under Section 454 of the Act, has been passed but no appeal has been filed against the same.
In cases, where adjudication order has been passed under Section 454 of the Act with respect to any default on account of non-filing of any form, return or statement etc., but no appeal has been preferred to the Regional Director against the said order as on the date of commencement of the Scheme, following benefits have been provided:
Where the last date of filing appeal falls between March 01, 2020 and May, 30, 2020, then additional time of 120 days from the last date of filing appeal, shall be allowed to companies and their officers, for filing appeal before the Regional Director; and
During the aforesaid period, no action for non-compliance of adjudicating order under Section 454(8) shall be initiated against the company or its officers.
Can inactive companies participate in the Scheme?
An inactive company i.e. a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years can also avail the benefit of the Scheme and it can either:
1.File an application for obtaining the status of dormant company by filing requisite form with normal fees; or
2.File an application for striking -off their names under Section 248 of the Act.
For any queries and clarifications:
Contact: CA Yashwanth Anand Pesala
Mail : info@taxmarket.in
Mobile : +919710007514
Office : +91996299993
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