Companies Fresh Start Scheme 2020 and its Provisions

Dashmeet Kaur
| Updated: Apr 02, 2020 | Category: MCA Notification, Private Limited Company

MCA or Ministry of Corporate Affairs has issued a new scheme, namely, Companies Fresh Start Scheme 2020. It is intended for those stakeholders who were unable to file any documents such as Annual Filing to ROC. CFSS-2020 is a boon for the Companies that have made Filing-defaults as it protects them from any legal proceeding or prosecution on account of delay in filing documents. MCA has decided to provide a second chance or exclusive opportunity to such Companies to make a fresh start.

Provisions of CFSS-2020

Ministry of Corporate Affairs is providing one-time opportunity to Stakeholders for filing all the pending documents without penalties being charged. Here are the provisions of Companies Fresh Start Scheme 2020:

  • The enforcement of CFSS-2020 shall remain from 1st April 2020 to 30th September 2020.
  • MCA has exercised its power under Section 403 and 460 of Companies Act, 2013 to introduce the scheme of CFSS-2020
  • This scheme also fosters inactive Companies to gain a dormant status under Section 455 of Companies Act, 2013 by filing Form MSC-1 with moderate fees. Thus, it helps inactive Companies to remain on ROC’s register with minimum compliance requirement.
  • The Company that had done default can file the documents like Annual Filing by paying nominal fees (without including any additional fees imposed) under Companies (Registration Offices and Fees Rules, 2014).
  • CFSS-2020 provides hope to the Companies in regards to prosecution or proceeding for delayed filing of documents.
  • The scheme does not safeguard against any other consequential proceedings such as proceeding related to the interest of Directors or (KMP) key managerial personnel etc.
  • If a Company files an Application of the appeal against the prosecution for penalty passed by the Court or Adjudicating Authority, then the Company first needs to withdraw its Application and provide the proof of withdrawal to avail support under CFSS-2020.
When the  Adjudicating Authority or Court has passed an order to prosecute while the Company didn’t file an appeal under Section 454(6) of Companies Act, 2013 as on commencement of CFSS-2020, then the following things shall be applied:-

1. The Company gets a period of 120 days to file an appeal before Regional Director if the last Filing date of an appeal falls between 1st March 2020 and 31st March 2020;

2. No prosecution has been initiated against the Company for non-compliance of Adjudicating Authority’s order under Section 454(8) of Companies Act, 2013.

How to make maximum use under Companies Fresh Start Scheme 2020? 

To avail immunity, the Companies need to file Eform “CFSS-2020” with ROCs through the official portal of MCA without paying any fees. ROCs shall approve all the documents within six months from the closure of this scheme, except: 

  • No immunity shall be granted to the Companies that have any appeal pending in the Court against the management disputes;
  • No support shall be given to the Companies against which the Court or Adjudicating Authority has passed any conviction & no appeal was preferred by the Company before this scheme came into force.

Conditions under which CFSS-2020 isn’t Applicable

CFSS-2020 shall not apply under the following cases:

  • ROC has already issued the Final Notice for striking off the Company’s name under Section 248 of Companies Act, 2013 [1] ;
  • The Company has filed an Application STK-2 for striking off its name with ROC;
  • Companies amalgamated under The Compromise and Arrangement Scheme;
  • A Company that has applied to obtain dormant status under Section 455 of Companies Act, 2013, prior to CFSS-2020 scheme introduction;
  • Vanishing Companies;
  • Companies having a pending appeal before the Court of Law;
  • Companies with management dispute pending before Tribunal or Court;
  • A Company that was convicted by the Court and no appeal was preferred against such order of the Court before CFSS-2020 came into force;
  • A Company which was convicted by an Adjudication Authority and no appeal was preferred against it before CFSS-2020 came into effect.

CFSS-2020 is a rare opportunity that every Company that made the default must employ to rectify their mistakes and give a fresh start to their business.

Read, Also:Superior Fraud Risk Management Guide

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Dashmeet Kaur

Dashmeet Kaur is an experienced content writer, having proficiency in writing Legitimate content with comprehensive research. She also has a keen eye to detail and incorporating accurate facts.

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