Recently the Ministry of Corporate Affairs came up with a Settlement Scheme for LLP which gave a one time relaxation to Defaulting LLPs in terms of paying the Additional Government Fees in case they wish to make their compliance good. This was widely appreciated by various stakeholders and hence the Government announced “Companies Fresh Start Scheme,
2020” on 30th March, 2020 which is a similar relaxation scheme on Companies. They have also modified “LLP Settlement Scheme” so that both the scheme are in sync with each other. Together, it is 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 incentivize compliance and reduce compliance burden on the entrepreneurs. 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.

COMMON QUESTIONS ON COMPANIES FRESH START SCHEME 2020

Question 1- I have a Private Limited Company which has been incorporated in the year 2018. My first annual filing was due in the year 2019 but for certain reason I missed the annual filing and now I am told I have to pay a penalty of INR 100 per day. Under this scheme can I file the requisite forms without the payment of additional fees?

Ans: Yes, according to the new Companies Fresh Start Scheme, 2020, a Private Limited Company which has defaulted to file belated documents can opt for this scheme. Therefore, you can file the pending annual filing forms without any additional fees.

 

Question 2- What is Form CFSS 2020?

Ans. This is the Form that needs to be filed after all the requisite filings are done so as to get immunity from prosecution for any default that has been caused in this regard. Hence, at first every defaulting company needs to file the pending forms and within six months from the end of the scheme they need to file the form CFSS 2020 along with the SRNs of all the pending forms that has been filed so that the Ministry can take cognizance of the same and provide immunity in regards to the delayed filing.

 

Question 3- I have a Pvt Ltd company and have not filed PAS-3 for the allotment of shares, but have utilised the money. Does the scheme cover both the penalty amount for late filing of form PAS-3 as well as the penalty for utilization of money without filing form PAS-3?

Ans: No, the scheme clearly states that the immunity shall only be available in respect of the late filing of the form ie PAS-3 and will not provide immunity in respect to utilization of money prior to filing of the form PAS-3.

 

Question 4- I have an inactive company. Can I directly file for closure under Companies Fresh Start Scheme, 2020?

Ans: No, the company has to file their Annual return and then apply for closure. However, there are underlying benefits for the Company under this scheme. An Inactive defaulting Company while filing pending form under this scheme can simultaneously apply for following:

– Apply for dormant company u/s 455 or
– Apply for Strike off u/s 248

without paying any additional fees in regards to the Annual Filing. For companies who have been inactive from 2017 and have not done the Filing this can be huge breather as they will be saving more than INR 2,00,000 in Government Fees if  they are taking help of the scheme. 

 

Question 5- I have got the Final notice under Section 248 of Companies Act, 2013 from the ROC. Can I take the benefit of the Scheme? 

Ans: No, this scheme shall not be applicable to those companies against which action for final notice for striking off the name u/s 248 of the Act has already been initiated by the designated authority. However, if the Company has received a show cause notice and not the Final Notice then the Company can take the benefit of the same.

 

Question 6- On March, 2019 I increased my Authorized Share Capital from 1,00,000 to 10,00,000. However, I did not file SH-7. Can I take the help of this scheme and pay only G.Fees and not the Additional Fees?

Ans: No, the scheme clearly states that it is not applicable on compliance like increase in Authorized share capital of the company, therefore the company will have to pay the government fee as well as the additional fees.

 

Question 7- I understand that I do not have to pay Additional Government Fees. However, what about penal consequences on the director/company. Will I get any immunity on that too? 

Ans: Yes, if a liability arises on the director/company for not filing of a particular form and the Company take help of the scheme and makes the default good then there  will be no penal consequences against the company as well as the directors of the company. 

Question 8- I haven’t been able to file Form – INC 20 A which is for commencement of business and needs to filed within 6 months from Incorporation. Will I get the benefit of this scheme?

Ans: There is a ambiguity over here as INC 20A is under Companies (Incorporation) Rules 2014 and CFSS is guided by Companies Act 2013 and Companies (Registration Offices and Rules) 2014. However if we look closer to the scheme we will find that it clearly states that it is not applicable only in below cases-

– those companies who have received final notice of strike off u/s 248 
– those companies who have already applied for strike off 
– amalgamated companies 
– dormant companies
– vanishing companies
– in case of increase in authorized share capital of the company
– filing related to creation of charge 

So, referring the above, one can imply that he should get the benefit of the scheme and make the default good if they file INC 20-A within this period. However, a clarification from the Ministry should  help to resolve all ambiguity in this regard.

 

Question 9- What is the Government Fee for filing Form CFSS 2020 and till when is the scheme valid?

Ans: This is no filing fees for the Form CFSS 2020 which needs to be done within 6 months from the date of end of the Scheme. The Scheme shall conclude on 30th September, 2020.

 

Question 10- Penalties are imposed by the adjudicating authority on my company for delayed filing of a return and due to the ongoing situation my company has not been able to file any appeal regarding this before Regional Director u/s 454(6). Can I avail any benefit under CFSS?

Ans: If the last date date of filing appeal against the order imposed by the adjudicating authority under 454(6)falls between 1st March,2020 to 31st May,2020 then under this scheme, additional 120 days shall be allowed from last day to all the companies and their officers to file the appeal before Regional Director and during such additional period the prosecution under 454(8) shall not be initiated against those companies.

 

In case you have a query in this regards or wish our assistance in availing the scheme feel free to write to us at info@taxmantra.com and we shall be glad to assist.