Companies Fresh Start Scheme, 2020 ( CFSS-2020)

In pursuance of the Government of India’s efforts to provide relief to law abiding companies and Limited Liability Partnerships (LLPs) in the wake of COVID 19, the Ministry of Corporate Affairs (MCA), has introduced the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020” which is already in vogue to provide a first of its kind opportunity to both companies and LLPs to make good any filing related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity.

The Fresh Start scheme and modified LLP Settlement Scheme incentivise compliance and reduce compliance burden during the unprecedented public health situation caused by COVID-19. The USP of both the schemes is a one-time waiver of additional filing fees for delayed filings by the companies or LLPs with the Registrar of Companies during the currency of the Schemes, i.e. during the period starting from 1st April, 2020 and ending on 30th September, 2020.

The Schemes, apart from giving longer timelines for corporates to comply with various filing requirements under the Companies Act 2013 and LLP Act, 2008, significantly reduce the related financial burden on them, especially for those with long standing defaults, thereby giving them an opportunity to make a “fresh start”. Both the Schemes also contain provision for giving immunity from penal proceedings, including against imposition of penalties for late submissions and also provide additional time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed.

However, the immunity is only against delayed filings in MCA21 and not against any substantive violation of law.

The details of Companies Fresh Start Scheme, 2020 (CFSS-2020)

  • The CFSS 2020 scheme remain to enforce from 1st April 2020 to 30th September 2020.

  • Any ‘defaulting company” is permitted to file belated documents which were clue for filing on any given date in accordance with the provisions of this Scheme.
  • This Scheme provides immunity to companies in relation to prosecution or proceeding for imposing an additional penalty for not filing of belated documents.
  • Any other consequential proceedings, including any proceeding involving interests of any shareholder or any other person of the company or its directors or KMP would not be covered by Immunity.
  • Companies filing any belated document under the scheme may file form CFSS 2020 to avail immunity for such delay after filing of such belated document but not after the six months of the expiry of the Scheme.

This scheme shall not apply in the following cases are:-

  • The company made an application for striking off the name of the company from ROCs;
  • to companies against which action for final notice for striking off the name of the company under section 248 of the companies act, 2013 already issued by the Designated Authority;

  • where any application has already been filed by the companies for striking off the name of the company from ROC;

  • to Companies which have  amalgamated under the scheme of compromise & arrangement under the Act;

  • where application  have already been filed for obtaining Dormant Status under section 455 of the Act before this scheme;

  • Vanishing Companies;

  • where any Increase in authorised share capital (Form SH-7);

  • Charge related documents (CHG-1, CHG-4, CHG-8  and  CHG-9);

Scheme for Inactive Companies:

The defaulting inactive companies, while filing due documents under CFSS-2020 can simultaneously, either:-

  • apply to get themself declared as  dormant status under section 455 of the companies act, 2013 by filing MSC-1 to ROCs with nominal fees;

  • apply striking off the name of the company by filing e-form STK-2 by paying fees payable on form STK-2.

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