Fresh start scheme for defaulting companies

Fresh start scheme for defaulting companies

As India is under lockdown for a week now, Ministry of Corporate affairs launched a scheme “Companies Fresh Start Scheme,2020” vide circular dated 30^th March 2020. The purpose of the scheme is to give chance to the companies which defaulted in filing mandatory forms with the Registrar of companies earlier and to make their default good without paying the additional fees and thus bring back businesses to life. Basically, this scheme is for condoning the delay in filing the forms which the company missed/ defaulted in. Also, it enables inactive companies to remain on the register of companies with minimal compliance requirements.

In addition to filing of belated documents/ forms, the defaulted company can also file form for obtaining the status of Dormant Company without paying additional fees.

Amid the Corona crisis, this is good news for defaulting companies. Defaulting companies can opt for fresh start scheme starting from 1^st April 2020 until 30^th September 2020.

Benefits of Companies Fresh Start Scheme 2020

1)    To waive off additional fees

2)    To grant immunity from launching prosecution

3)    To grant immunity from proceedings for imposing penalty on account of delay associated with filings

Forms which can be filed under this scheme

1)    eForm MGT 7 i.e. Annual Return

2)    eForm AOC 4 i.e. Financial Statements

3)    eForm PAS 3 i.e. for Allotment of securities

4)    eForm MGT 14 i.e. for filing resolutions

5)    eForm ADT 1 i.e for appointment of Statutory Auditors

6)    Any other forms

Please note that MCA is going to upload on 2nd April, 2020, a list of 76 forms which can be filed under this scheme

Forms which cannot be filed under this scheme

1)    eForm SH 7 i.e. for increase in Authorised share capital

2)    eForm CHG 1, CHG 4, CHG 8 or CHG 9 i.e. related to Charges

Eligibility Criteria to opt for this scheme

Any company which has Active status can take benefit of this scheme except in the cases as below;

1)    Companies which have received final notice from ROC for striking off the name of the company

2)    Companies which have voluntarily applied for striking off their names from the register of ROC

3)    Companies which have amalgamated under the scheme of compromise and arrangement

4)    Companies which have applied for Dormant status already before the launch of scheme

5)    Vanishing companies

6)    Companies where there is any increase in Authorised capital or charge related documents

Process to opt for this scheme

In order to take benefit of this fresh start scheme, the inactive company is required to do the following steps

1)    File belated forms without paying additional fees; and

2)    File

a.    Apply for dormant status or;

b.    Apply for voluntary Striking off

3)    File declaration for obtaining Immunity certificate mentioning the details of belated forms filed (Like SRN, fees paid etc.)

There is no fees associated with CFSS form for getting immunity from prosecution and proceedings.