Regulations & Compliances under Companies Act, 2013 – Shaparia Mehta & Associates LLP

REGULATIONS AND COMPLIANCES UNDER COMPANIES ACT, 2013

In order to give opportunity to the defaulting companies and to enable them to file the belated return, the Central Government has introduced ‘Companies Fresh Start Scheme, 2020 (CFSS-2020)’
“Defaulting Company” means a company defined under the Companies Act, 2013, and which has made a default in filing of any of the documents, statement, returns, etc. including annual statutory documents on the MCA-21 registry in due time.
“Inactive Company” means a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years;
The basic thumb rule of the scheme is that the “Immunity will be provided to defaulting companies only in case of belated filings by waiving off additional fees however, where proceedings involving interest of any shareholder or its director, or key managerial person or any other person belonging to the company than immunity shall not be provided”.

All necessary documents including annual documents of the company can be filed with normal fees only, as additional fees are waived off.
Inactive company can also take status of “Dormant Company u/s 455” by filing simple application in form MSC-1 or can also apply for striking off the name by filing e-form STK-2 with normal fees.
Immunity from the launch of prosecution or proceedings for imposing penalty shall be provided only to the extent it pertains to any delay associated with the filings of belated documents. Any other consequential proceedings which involves interests of any shareholder or any other person qua the Company or its Directors or its KMP will not be covered by such immunity under the scheme.
It further clarifies that where penalties were imposed by an adjudicating officer due to delayed filing, and no appeal has been made before the Regional Director then-
If last date for filing the appeal falls between March 1 2020 to May 31, 2020, additional 120 days shall be allowed for filing the appeal, and
During this additional period no prosecution shall be initiated against the company or its officers, insofar as it relates to delay in filing.

Immunity will be Granted only for those defaulting companies who file forms in the period starting from April 01, 2020 to September 30, 2020:
The Scheme shall not have any ‘Retrospective Effect’
To avail the benefit of the scheme existing directors of defaulting companies compulsorily have to file form “DIR 3 KYC”;
Only the companies whose status is “Active” will be eligible to take the benefit of the scheme. If, the status of the Company is not Active then company have to file form ‘INC-22A’ at the earliest;
The Ministry has uploaded the list of 76 “Eligible Forms” in the public domain which waives off additional fees for belated filings which comprises of e-forms under the Companies Act 2013, Companies Act 1956 .
On completion of scheme, the company shall file e-form CFSS-2020 (yet to be deployed) with no fee and obtain immunity certificate.

To 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,
Where any application has already been filed by the Companies for action of striking off the name of the Company from the Registrar of Companies,
Companies which have amalgamated under a scheme of arrangement or compliance under the Companies Act, 2013;
Companies which has already filed application for obtaining dormant status u/s 455 of the Act;
To Vanishing Companies;
Where any increase in authorized capital is involved (Form SH-7) and all charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9);

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