Submitted By:: AARUSHI GARG

CFSS 2020

COMPANIES FRESH START SCHEME 2020 The Ministry of Corporate Affairs (MCA) issued a scheme known as Companies Fresh Start Scheme 2020 (CFSS 2020) vide its General Circular No. 12/2020 dated 30th March, 2020. In this scheme, MCA has come out with the BIG RELEIF for all the defaulting companies registered in India. BACKGROUND OF THE SCHEME There are large number of defaulting companies that were willing to file the required documents, forms and returns but were reluctant because of the huge additional fees that they were required to pay for the late filings. With the introduction of this scheme, the Ministry grant one time opportunity to all the stakeholders in order to complete their pending compliances by filing necessary documents without being subject to a higher additional fees on account of any delay. As per the scheme, ‘Defaulting company’ means a company defined under the Companies Act 2013 and which has made a default in filing of any of the documents, statements, returns etc. including annual statutory documents on the MCA21 registry. INTRODUCTION OF THE SCHEME • CFSS-2020 shall come into force from 1st April, 2020 and will end on 30th September, 2020 which means the companies has six months to file their pending statutory compliances and that too without any Additional Fees. • The Ministry exercises its power under section 460 read with section 403 of the companies Act 2013 and introduces the scheme. • Only normal fees for filing of the documents in the MCA 21 registry will be payable during the effective period of the scheme. • The scheme also gives an opportunity to Inactive Companies to get their companies declared as ‘Dormant Company’ under Section 455 of the Act by filing e-form MSC-1 at a normal fee or apply for striking off the name of the company by filing e-form STK-2 at a normal fee. As per the scheme, ‘Inactive Company’ means a company as defined in Explanation 1 to sub section (1) of section 455(1) of the Companies Act, 2013. As per Explanation 1,‘Inactive company ‘means a company which has:- • not been carrying on any business or operation or • not made any significant accounting transaction during the last two financial years, or • not file financial statements and annual returns during the last two financial years. SOME OTHER PROVISIONS OF THE SCHEME • The scheme provides immunity to companies in relation to prosecution or proceeding for imposing a penalty under the act for not filing of belated documents. • The scheme does not provide immunity on any other consequential proceeding including any proceeding involving the interests of any shareholder or of its directors or key managerial personnel etc. • Under this scheme, if the defaulting companies has filed an appeal against any notice issued or complaint filed or an order passed by a court or by an adjudicating authority, it can file an application under this scheme for immunity certificate only after withdrawing such appeal and furnish proof of such withdrawal with the application (CFSS-2020). • In case where the order of the adjudicating authority was passed but the appeal has not been filed as on the date of the commencement of the scheme, then: - a) the Company or officers are allowed 120 additional days to file an appeal with effect from such last date of filing appeal before the concerned regional directors if the last date of filing appeal falls between 1st March 2020 to 31st May 2020 and, b) during this additional period, no prosecution shall be initiated against the Company or officers for non-compliance of adjudicating authority order under section 454(8) of the Companies Act, 2013. APPLICATION UNDER CFSS-2020 All the companies who have filed any belated documents or forms under this scheme, need to make an application in E-form “CFSS-2020” without any fees with approved designated authority or ROC as the case may be through MCA portal to seek immunity under this scheme after closure of this scheme and after documents are taken on record by the designated authority, but not later than 6 month from the expiry of this scheme. Based on the e-form CFSS-2020 filed by the Companies, an Immunity Certificate in respect of documents filed under this scheme shall be issued by designated authority. NO IMMUNITY CERTIFICATE GRANTED: 1. in the matter of any appeal pending before the court of law in case of management disputes of the company. 2. in case any court has passed order of conviction or an order of imposing penalty passed by the adjudicating authority and no appeal has been preferred against such order, before this scheme came into force. NON-APPLICABILTY OF THE SCHEME This scheme shall not apply:- 1. To the companies against which action for final notice for striking off the name under section 248 of the Companies Act,2013 has already been issued by the designated authority (ROC). 2. Where an application had already been filled by the company for the action of striking off the name of the company from the ROC. 3. To the Companies that have amalgamated under a scheme of arrangement or compromise under the act. 4. Where an application has already been filled for obtaining the status of Dormant Status. 5. To Vanishing Companies. ‘Vanishing Companies’ are those companies which had raised funds from the public through initial public offers (IPOs) and subsequently failed to comply with the listing and filing requirements of ROC and the Stock Exchanges for two years and not maintaining its registered office at the address notified with Registrar of companies. 6. In case of forms related to the increase in authorized capital (Form SH-7) and also Charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9). OUTCOME OF THE IMMUNITY After granting immunity, the ROC shall withdraw the prosecutions pending and the proceedings of adjudication of penalties under section 454 of the Act, if any, in respect of defaults against which immunity so granted shall be deemed to have been completed without any further action. CONCLUSION This is the great move by the Ministry for the benefit of the companies registered in India to make a fresh start on a clean slate. So, this opportunity needs to be grabbed by the companies at the earliest. Also, this will allow the designated authority to take necessary action under the act against the companies who have not availed this scheme and are in default in filing these documents in a timely manner.

Submitted By:: Manish Bansal


Goods and Services Tax (GST) is an indirect tax (or consumption tax) imposed in India on the supply of goods and services. It is a comprehensive multistage, destination based tax. Comprehensive because it has subsumed almost all the indirect taxes except few. Multi-Staged as it is imposed at every step in the production process, but is meant to be refunded to all parties in the various stages of production other than the final consumer. And destination based tax, as it is collected from point of consumption and not point of origin like previous taxes.