Amidst the COVID-19 pandemic, there are 'n' number of compliances that a company has to complete. Now taking this into consideration, The Ministry of Corporate Affairs has launched a scheme namely "Companies Fresh Start Scheme, 2020' to give a fresh start to defaulting companies and to give immunity against the prosecution to such companies by filing E form CFSS 2020.
What is this scheme is all about? Who it will benefit? Who it will not? What would be the effect of these schemes? There would be numerous questions that might be bothering you. So here is an article specifically to clear all your doubts and solve all your questions "A compilation of FAQs on Companies Fresh Start Scheme, 2020:
1. What is the "Companies Fresh Start Scheme"?
"Companies Fresh Start Scheme, 2020' is a scheme which will give a chance to enable companies to make good of any filing-related defaults, irrespective of the duration of default, and make a fresh start as a fully compliant entity.
2. Who will get benefit from the Companies Fresh Start Scheme?
Under the scheme, all the defaulting companies, who have made a default in filing necessary documents and forms with ROC will be able to get the benefit. Also, the companies who have been prosecuted against such default may be able to get immunity from such prosecutions.
3. Who are defaulting companies?
The companies that made default in payment or filing of any document, statement or return, etc are said to be the defaulting companies.
4. What documents/forms will I be able to file under the Companies Fresh Start scheme?
You may file the following forms in the case where you have defaulted earlier in filing the form, which otherwise required to be filed with additional fees.
- Form AOC 4 (Financial Statements)
- MGT 7 (Annual returns)
- other forms like MGT 14, PAS 3, ADT 1 etc.
5. From when the scheme will be applicable and till when I can file the form?
The Scheme came into force on 01.04.2020 and shall remain in force till 30.09.2020. So you will be able to file all your pending forms and documents till the 30th of September, 2020. (Now you will be able to file all your pending forms till 31.12.2020, as the date for the CFSS scheme has been extended till 31st December 2020)
6. What is the procedure to avail this scheme? Is there any Separate form? If so, what is the time limit to file that form?
There is no procedure as such to avail this scheme. All you have to do is file all your pending documents and forms before the 30th of September, 2020 Extended date: 31.12.2020). Yes, there is an E-form CFSS – 2020, which you need to file within the six months of the closure of the said scheme.
7. I have recently filed an application for striking off my companies name, will I be able to get the benefits of the said scheme?
No, the MCA has specifically mentioned that companies who have applied for the final notice for striking the companies name or against whom the ROC has issued the final notice for striking off the companies name, will be not able to get the benefit under the scheme. Hence, you will not be able to get the benefit of the same.
8. My company has been inactive for the last 2 years, can I directly apply for the closure of the company under the Companies Fresh Start scheme?
No, first you will have to file your annual returns and then apply for the closure. However, under this scheme, you may while filing pending forms under this scheme can simultaneously apply for a dormant company or Strike off your company without paying any additional fees.
Saying that this would be a huge benefit for you, as all the penalty amount for not filing the returns for two years will be waived off if you take the benefit of this scheme.
9. Do I need to pay an additional fee for the late filings, if I want to file my pending forms before the 30th of September, 2020?
No, you do not need to pay any additional fees if you take the benefit under this scheme. You will have to pay the normal fees only. However, you have to file the E-Form CFSS- 2020 for availing the benefits under this scheme.
Note: Now you may file all your pending forms till 31.12.2020 without any additional fees for the late filings as the date for the CFSS Scheme, 2020 has been extended.
10. What is the fees for filing the E-form CFSS- 2020?
There is no fees for filing the for E form CFSS-2020 to be paid.
11. I am a partner in LLP, Can I take benefit of this scheme?
No, You can not take benefit under this scheme. However, there is another scheme introduced for LLPs as well which is the "LLP settlement scheme, 2020' which gives the same benefits as provided to the companies by this scheme.
12. In March 2018, I increased my share capital but forgot to file the Form SH 7. Can I take the benefit of the same?
No, it is specifically stipulated in the scheme that, this scheme will not be available in case of filing of form SH 7 i..e for an increase in share capital. Hence, you will have to file the form with additional fees as applicable.
13. I am prosecuted for non-filing of Form AOC 4 and MGT 7, will I be immune from being prosecuted under this scheme?
Yes, if you file your form AOC 4 and MGT 7 before the 30th of September, 2020 (31st December, 2020 as an extended date for the scheme CFSS 2020) and file to form CFSS- 2020, you will get immunity from being prosecuted further. You will be provided with Immunity circumstances.
14. I was going to apply for striking off my company’s name, due to the burden of penalties for non-filing of necessary documents, is there any way I can take the benefit of this scheme?
Yes, You may file all the pending forms and documents without any penalties and additional fees under CFSS 2020. After that, you may either continue with your company or strike off your company without any kind of additional fees.
15.Is the penalty for DIR 3 e-KYC i.e of Rs.5,000 also waived off under this scheme?
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) e form 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.
Note: Now the Due date for the Conclusion of the Companies Fresh Start Scheme has been extended till 31.12.2020. Hence, DIR 3 KYC can be filed till 31st December 2020 without any filing fees.
16.Is only additional/ late fee waived off in the Companies Fresh Start scheme or even penalty is waived off?
List of Forms eligible for an additional fee waiver under the CFSS,2020 and LLP Settlement Scheme, 2020 are (List of forms eligible for the waiver)
17. Is the CFSS 2020 applicable to foreign companies? Will the forms FC-1, FC-2, and FC-3 be covered under the scheme?
Yes, Foreign companies are also covered under the scheme. So late filing of Form FC-1, FC-2, and FC-3 are also covered under the scheme.
18. How to file the belated returns for companies under liquidation?
Only Refund form, GNL-2 (149, 152, 153, 154, 156, 157, 158, 159 and others), INC-28 (Amalgamation/Merger/Demerger/445, 466, 481, Others), MGT-14 (Others), and GNL-4 are allowed to be filed if the company status is under liquidation.
19. Can Deactivated directors be activated through this scheme?
Yes. He can file DIR-3 KYC eform/Web form and INC-22A (Active) as applicable without any payment of fee provided such director is not disqualified under section 164 of the CA 2013.
20. Should the returns be filed for the subsidiary where its Holding is currently under liquidation but the returns related to the period where the holding had its normal business activities? How to deal with this?
Yes, the company needs to file the returns for the period during which the holding company had its normal business activities without any late fees.
21. Under this scheme whether AoC-4 for a year can be filed, without filling the AOC-4 for the previous year?
Yes, you can file without filing for the previous year. There is no restriction, however, it is expected that complete and continuous year filing (without skipping intermediate year) will be good corporate governance.
22. Whether any separate AOC 4 and MGT 7 has to be filed for companies under liquidation?
There is no separate AR/BS for companies under Liquidation.
23. Whether the CFSS scheme is applicable for the companies which have been automatically struck off due to non-filing of annual documents i.e. Annual Returns?
The struck off companies have to approach the NCLT for reviving their companies first and a copy order of NCLT approving for such revival under section 252 of the CA 2013 to be filed in Form NO.INC-28. Later on, they can take the benefit of this scheme.
24. With regard to LLP settlement Scheme, should the Indemnity Bond be executed on Non-Judicial Stamp Paper? If yes, then on what denomination?
No indemnity bond is required under the LLP Settlement Scheme.
25. Is there any applicability of CFSS to a foreign company having a Project Office in India.? (FC Forms to be filed in ROC).
Yes. CFSS is applicable to foreign companies.
26. For filing MGT 14, AOC-4 for the past year, do we need to apply for condonation also?
For filing MGT-14 beyond 300 days, condonation is required. However, AoC-4 for the past year(s) can be filed without any condonation.
27. If the Company is in Active Mode, but the directors’ DINs are deactivated, what should we do?
Deactivated DINs for not filing the DIR-3 KYC can be activated by filling it now without the fee of INR 5000 during the currency of the CFSS, 2020 provided such director is not disqualified under section 164 of the CA 2013
28. In our case, the company was struck off and as a result, both directors were disqualified. Now the Company was Revived by NCLT and Revival order has been passed.
(i) How to remove the disqualification of director u/s 164(2)(a)?
The removal of disqualification is not automatic and the same cannot be cured under the provisions of CA, 2013.
(ii) INC 28 is not filed to date (as it is required to be filed within 30 Days)?
INC-28 can be filed by an authorized signatory who can be added from the back end by the jurisdictional RoC based on evidence produced by the company.
(iii) How to do Annual filing of Past year?
Past year filings can be made as per applicable norms.
29. Can a company also file its old annual returns for 3 to 4 years without late fees?
Yes, a company can file its old annual returns for 3 to 4 years without additional fees.
30. The company is an inactive company. The company has defaulted in filing form SH-7. It now wants to file Form SH-7 under CFSS 2020 scheme and simultaneously make an application for striking off the name by filing Form STK 2. Is this possible?
SH-7 can be filed with the applicable fees and additional fees. The additional fee waiver is not applicable for SH-7 and charges related forms.
31. A Company was not able to file Satisfaction of charge in CHG 4 as the DIN of the director was deactivated. Now with this scheme can the company first update its returns, get the din activated, and then file CHG 4 under this scheme even though there is a delay of 1 year?
Deactivated DIN can be reactivated by filing DIR-3 KYC now without payment of INR 5000. Filing of CHG-4 towards satisfaction of charges beyond 300 days is NOT permissible, however for the delay in filing satisfaction of charges, form no.CHG-8 may be filed and the power for such Condonation of delay (satisfaction) is vested with Regional Director(s).
32. Is the CFSS-2020 scheme applicable to subsidiaries of a foreign company registered in India and the foreign company itself?
Yes. The CFSS 2020 is applicable to both subsidiaries of a foreign company registered in India and a foreign company.
33. Can LLP with Under Strike off or 'Defunct’ status file form 8 and form 11 for the past 3-4 years?
No. As the rules of the revised LLP Settlement Scheme, 2020 has clearly mentioned that the LLPs which have 'Defunct’ status will not be able to take the benefit of the scheme.
34. Can we file STK-2 without filing INC-20A in this scheme? As the company has not started its business and even the bank account is not opened by the company. So I want to strike off the name and close the company to avoid any defaults and penalties.
STK-2 can be filed by a company that has not filed INC-20A within 180 days of incorporation. After a period of 180 days of incorporation, filing of form INC-20A is allowed to be filed first. Thereafter, they can file STK-2 if they desire so by following the relevant provisions of the Act relating to Strike off procedure.
35. How to rectify AOC 04 filed with inadvertent errors?
AOC-4 or any other STP form filed with inadvertent errors can be marked as 'defective’ by the jurisdictional ROCs based on evidence and formal request. Once the particular STP is marked as defective fresh filing has to be made.
36. A Company already filed MGT-7 but AOC-4 is not yet filed. Can it file AOC-4 now?
Yes. AOC 4 can be filed under the CFSS 2020 scheme without any late or additional fees.
37. Where orders have been passed by Hon’ble NCLT to restore the name of the company under section 252/253 subject to the filing of all the pending documents and returns and no time limit is given in the order to file pending documents /forms/returns. The company has not yet filed a copy of the order of NCLT with ROC. Can a company avail this scheme and file all the pending documents without any additional fee?
Yes, a company may file all the pending documents after filing INC-28 with a copy of the order passed by NCLT.
38. What about the additional fee already paid by the entities? Is this not a hardship for those who have already paid heavy additional fees in order to abide by the compliance?
The CFSS 2020 and LLP Modified Settlement Scheme 2020 have been notified in view of the COVID19 To provide a first of its kind opportunity to both Companies and LLPs to make good any filing related defaults, irrespective of the duration of default, and make a fresh start as a fully compliant entity.
39. In the CFSS,2020 please suggest whether it would be applicable to the Project office of a company in India having FCRN no.?
Yes. The CFSS 2020 is applicable to the project office of a company in India having FCRN no.
40. For filing commencement of business form to newly incorporated companies now additional 180 days is allowed but which companies are allowed such benefit. What is the cut-off date for newly incorporated companies i.e. to companies incorporated from which date this benefit will get passed on?
All newly incorporated companies are required to file a declaration for Commencement of Business within 180 days of incorporation under section 10A of the Companies Act, 2013. An additional period of 180 more days has been allowed for this compliance.(please see circulars issued in March 2020)
41. In the case of a company whose status as per MCA is active (for filing) but whose all directors are disqualified, what is the way out to avail the benefits of the fresh start scheme?
Disqualification of Directors cannot be cured under the scheme.
42. An LLP is under non-compliance with one form. The LLP has applied for a strike-off in February 2020. Whether such an LLP can withdraw a strike-off application and file the form?
There is no specific process available for the withdrawal of Form 24. If Form 24 is not yet approved, LLP may approach the jurisdictional ROC to 'reject’ the form so that the status of LLP gets marked to 'Active’ and relevant filings can be made.
43. Can companies with paid-up capital between 5 crores to 10 crores which did not file Active form since CS has not appointed file the form now since the threshold was increased to 10 crores from 5 crores from 01.04.2020?
The ACTIVE form can be filed without the fee of INR 10000.
44. What are options available to a company the name of which has been struck off by the ROC but is having business activities for availing this scheme?
The company has to approach NCLT and get an Order for reviving. Thereafter the company can take the benefit under CFSS.
45. Does the scheme cover default for DIR-3 KYC?
DIR-3 KYC can be filed without the fee of INR 5000.
46. Does the CFSS 2020 allow a refund of the late filing fee and penalty which are already paid on Company fillings made before March 2020?
No. The CFSS 2020 does not allow any refund.
47. Whether an immunity certificate will be generated automatically once the CFSS form is uploaded or if it will be subject to the approval of the concerned ROC.?
Subject to examination and approval by the jurisdictional RoC.
48. Whether late fees/additional fees be waived off after filing of Immunity Form i.e. full amount will be paid in advance (while filing of any form out of 76 forms) and refunded back after filing of Immunity Form?
Additional fees would not be charged in respect of the 76 forms and such forms have already been displayed in the MCA-21 portal.
49. Will MCA be refunding the Additional fees received as clients have paid the same while filing the same in ROC during 2019-20?
An additional fee waiver becomes applicable only during the currency of the scheme.
50. Can a company whose director has been disqualified use this scheme?
The CFSS 2020 is applicable for defaulting companies to file the belated documents and does not extend to curing the disqualification of Directors.
51. In the original LLP Settlement Scheme, the additional fee was to be paid at INR 10 per day up to a maximum of INR 5000, in the modification LLP Settlement Scheme there are no additional fees. Is the understanding correct?
Yes. The additional fees has been waived off for late filings for LLP under the revised LLP settlement Scheme, 2020.
52. If the director has been disqualified in FY 2016-17 and filling is pending, can still the benefit of the Companies Fresh Start scheme (CFSS 2020) can be availed by the company (if the status of the company is still active)?
CFSS 2020 does not cure the disqualification of the Director. If there are no authorized signatories left in the company, the company may approach the jurisdictional RoC with a formal request to add one authorized signatory from back end. Later on, the company may file the belated documents under the scheme.
53. Whether the Companies Fresh Start scheme is applicable for companies already struck off by MCA and not voluntarily filed by the company?
The struck off companies may approach the NCLT for revival. Once the company is revived the belated documents may be filed.
54. Which form to file earlier E form CFSS-2020 or belated forms?
Belated forms have to be filed first. E form CFSS-2020 would be made available w.e.f 1st October, 2020.
55. Will Companies Fresh Start scheme be applicable on filing, if the due date is falling between the period April 2020 to September 2020?
Irrespective of the due date additional fee waiver can be availed during the currency of the scheme.
56. Is every company availing this scheme need to file FORM CFSS-2020 before filling all the belated documents or should we file the documents directly?
Belated documents have to be filed during the currency of the scheme. If the scheme benefits are availed, such a company has to file the CFSS E- form on or after 1st October, 2020 and before 31st March 2021.
57. Annual Returns as well as Auditor Appointment is not done since April 2015. Can the private limited company avail this scheme?
All companies can avail the scheme for filing belated documents.
58. If the company is under NCLT, and Operations are managed by IP, whether he can opt under this scheme?
Yes, if the company status is not struck off and if it struck off it can take the benefit after it is revived.
59. As under CFSS, E Form CFSS 2020 needs to be filed between 01st October to 31st March, do we need to file any such form under LLP Modified Settlement Scheme to get immunity?
No such requirement for LLPs who have availed the benefit under the LLP Modified Settlement Scheme.
60. Is the Form CFSS 2020 currently available in the MCA portal for e-filing? If not, when will the form be made available?
The form CFSS 2020 would be made available w.e.f 1st October 2020 and till 31st March 2021 for filing purposes.
61. Form 8 is not allowing prefill for an LLP which is under defunct status. How should we avail the scheme for such LLP? Is the scheme available? Will new forms be made available then?
An LLP under struck off(Defunct) status cannot avail the benefit of LLP Modified Settlement Scheme.
The Scheme, Companies Fresh Start Scheme, 2020 will prove to be a breather for non-filers or defaulting companies. The Government has taken a brave step by introducing this scheme which will not only reduce the burden of late fees but also to provide immunity from the prosecution in this regard. Hope you will make the most out of it.
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