NO EXTENSION FOR CFSS SCHEME, RELIEF ONLY FOR FRACTION OF COMPANIES
The Recent circular of MCA states that CFFS is no longer applicable for various filings done under the provisions of the Companies Act.
Only some companies had preferred appeals under section 252 of the Act against the orders of striking off the names of the companies before the respective Benches of the National Company Law Tribunals [NCLTs] and the order(s) by NCLT Benches were issued during December, 2020 will be eligible in new Scheme
Subject: Scheme for condonation of delay for companies restored on the Register of Companies between 01 December 2020 and 31 December 2020, under section 252 of the Companies Act, 2013 -reg.
The Companies Fresh Start Scheme, 2020 [CFSS-2020], operationalized vide General Circular No. 12/2020, dated 30.03.2020 and extended vide General Circular No 30/2020, dated 28.09.2020 is no longer applicable for various filings done under the provisions of the Companies Act, 2013 [the Act].
Representations have been received in this Ministry requesting for relief as some companies had preferred appeals under section 252 of the Act against the orders of striking off the names of the companies before the respective Benches of the National Company Law Tribunals [NCLTs] and the order(s) by NCLT Benches were issued during December 2020. In view of this, such companies could not avail the benefit of filing under CFSS-2020 by 31″ December, 2020 and are liable to be levied additional fees upon the filing overdue e-forms.
The matter has been examined and it has been decided that the aforementioned companies may be provided the benefit of waiver of additional fees in respect of overdue filings to be made by them pursuant to the NCLT Order under section 252 of the Act, without any immunity from civil/criminal proceedings, etc.
Accordingly, the Central Government in the exercise of its powers conferred under section 460 read with section 403 of the Act has decided to introduce the Scheme namely, “Scheme for condonation of delay for companies restored on the Register of Companies between 01 December 2020 and 31 December 2020, under section 252 of the Companies Act, 2013” for the purpose of condoning the delay in filing forms with the Registrar, insofar as it relates to the charging of additional fees on account of delay in such filings.
The details of the Scheme are as under:-
(i) The Scheme shall come into effect from 01 February 2021.
(ii) Applicability: The Scheme shall be applicable in respect of companies in respect of whom the appeal filed under section 252 of the Act with the respective NCLT Bench for the restoration of the name of the company was disposed of between 01.12.2020 to 31.12.2020, with an order for restoration of the company.
iii) Duration of the Scheme: The last date for filing of any overdue e-forms by such companies under the scheme shall be 31.03.2021.
(iv) Forms for which the Scheme shall be applicable: The Scheme shall be applicable in respect of filing of all e-forms [except where any increase in authorized capital is involved (e-Form 51-1-7) and charge related documents (e-forms CHG-1, CHG-4, CHG-8 and CHG-9)) which are required to be filed with the Registrar.
(v) Applicable Fees: Every company shall be required to pay normal filing fees under the Companies (Registration Offices and Fees) Rules, 2014 on the date of filing and no additional fees shall be payable for the forms for which the scheme is applicable.
General Circular No.03/2021
F. No 02/01/2021-CL-V Government of India Ministry of Corporate Affairs
5th Floor, ‘A’ Wing, Shastri Bhawan, Dr. R. P. Road, New Delhi
Dated: 15th January 2021
To The DGCoA, All Regional Directors, All Registrar of Companies, All Stakeholders.
Benefits of MCA Scheme:
The Ministry of Corporate Affairs, Government of India (MCA), introduced a one of its kind “Fresh Start” Scheme for all companies and Limited Liability Partnerships (LLPs) as a one-time opportunity, in the backdrop of the widespread disruption caused by the COVID-19 pandemic, vide its general circular nos. 12/2020 and 13/2020 dated 30th March 2020.
Highlights of The Companies Fresh Start Scheme (CFSS):
No additional fee charged for late filing during a moratorium period from 1st April 2020 to 30th September 2020 irrespective of the due date (later extended to 31st December 2020 vide circular no. 30/2020 dated 28th September 2020). Only normal filing fees, depending on the form, is payable.
• Immunity granted from prosecution or proceedings for imposing a penalty on account of delay associated with certain filings (note that for the delay in filing only and not for other non-compliance). An immunity certificate shall be issued by the designated authority of MCA based on declaration in the form CFSS-2020.
• Inactive companies (having no operations during the last two financial years) may opt to be declared as a “dormant company” by filing a simple application at a normal fee, i.e., filing e-form MSC-1 or apply for strike off in e-form STK-2 at normal fee.
• Director, whose DIN has been deactivated but who is not disqualified under section 164 of the Companies Act, 2013 (“the Act”), can file KYC e-form without any fee payment for non-filing and activate his DIN.
• A period of additional 120 days from the last date of appeal falling between 1st March, 2020 to 31st May, 2020, allowed to a company and its officers for filing an appeal against an order of adjudicating officer (for adjudicating penalty) under section 454(6) of the Act before the Regional Director. Any prosecution for non-compliance of order of adjudicating officer related to delayed filing shall not be initiated against the company and its officers.
CONSEQUENCES OF NO EXTENSION OF CFSS SCHEME/SETTLEMENT SCHEME:
Huge additional fee would be required to be paid by the defaulting company/LLP for filing the delayed e-form with ROC.
The general rule for charging additional fee depending upon the period of delay is:Period of delay Quantum of additional fee Up to 30 days 2 times of normal fees
More than 30 days and up to 60 days - 4 times of normal fees
More than 60 days and up to 90 days - 6 times of normal fees
More than 90 days and up to 180 days - 10 times of normal fees
More than 180 days - 12 times of normal fees
In addition, for any delay in filing of annual returns or balance sheet/financial statement under the Companies Act, 1956 of the Companies Act, 2013 beyond 30/06/2018: Form Period of delay Quantum of additional fee Annual Return MGT-7 Delay beyond 60 days from the date on which the annual general meeting is held Rs. 100 per day
Financial statement AOC-4 Delay beyond 30 days of the date of annual general meeting Rs. 100 per day
For instance, a small company that has not filed its financial statements since the year 2018, considering would have to shell out (Rs. 300 * 12) plus Rs.100/- for each day of delay, which adds up to approximately Rs. 80,000/- and another 80,000 approx to be paid for filing its annual return. Mind you, these are small companies with little capital and hence it would be a tremendous financial burden on such companies that too at a time when companies are struggling to cope up and thrive in this pandemic situation. The very purpose of introducing these schemes was to reduce the compliance and financial burden especially of the numerous small companies and LLPs having long-standing defaults. Hence, the purpose would be absolutely defeated if such companies are not given enough time to cope with the situation.
• As the immunity granted to defaulting companies/ LLPs would expire, action including levy of penalty and/or prosecution would be initiated against the defaulting company/ LLP and its officers. The circular no. 12/2020 dated 30th March 2020 relating to CFSS, 2020, itself states that “At the conclusion of the Scheme, the Designated Authority shall 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.”
• Payment of penalty imposed by an adjudicating officer of MCA as determined by them.
• Directors have to pay a fee of Rs. 5,000/- for eKYC of directors or the DIN of all those directors who have not filed DIR-3KYC would be deactivated by the Registrar. MCA has already informed us that “The process of deactivating the non-compliant DINs is in progress and will be completed shortly…the web service DIR-3 KYC shall not be available for filing during the pendency of this activity.” Thereafter, the form shall be available for filing on the payment of a fee.
• It has also been informed by MCA that post 31st December 2020, an additional fee shall be applicable from the actual date of AGM or due date/extended due date of AGM + 30/60 days as the case may be and Rs.100 per day shall be charged starting from such day even if such date falls prior to 31st December 2020.
• Most companies that were struck off by the Registrar due to non – filing of statutory returns and awaited the order of the Hon’ble National Company Law Tribunal (NCLT), which under the pandemic situation wasn’t working regularly, would not be able to avail the benefit of the schemes now as it has “missed the bus”. If they are again not able to regularize their filings now due to huge compliance cost, is another strike off action awaiting them? Conclusion
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