Fresh Start Scheme for Companies and LLP’s

Fresh Start Scheme for Companies and LLP’s

During announcing “Tax Relief Package on account of Covid 19 Crises”, Finance Minister has announced one time waiver scheme for all defaulter companies and LLPs. As per this scheme, Ministry of corporate affair will provide waiver from late fee and penalties for non filings of forms which was supposed to filed within due date.

To bring the said scheme into the effect, Ministry of Corporate Affair has issued press release dated 30 March 2020 which are as below:

In pursuance of the Government of India’s efforts to provide relief to law abiding companies and Limited Liability Partnerships (LLPs) in the wake of COVID 19, the Ministry of Corporate Affairs, has introduced the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020” which is already in vogue to provide 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 during the unprecedented public health situation caused by COVID-19. 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.

The Schemes, apart from giving longer timelines for corporate to comply with various filing requirements under the Companies Act 2013 and LLP Act, 2008, significantly reduce the related financial burden on them, especially for those with long standing defaults, thereby giving them an opportunity to make a “fresh start”.

Both the Schemes also contain provision for giving immunity from penal proceedings, including against imposition of penalties for late submissions and also provide additional time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed. However, the immunity is only against delayed filings in MCA 21 and not against any substantive violation of law.

Details of the both the Schemes may be perused from the Circulars dated 30.03.2020, issued by the Ministry of Corporate Affairs.

Considering the above press release, its an opportunity for all those companies  who did not file their various forms like AOC 4, MGT 7, 22A, 20A etc can now file these return with normal fee and waiver will be granted for additional fee.

However Company Fresh Start Scheme 2020 (CFSS 2020) shall not apply on following:

  • Companies against which final notice for striking off has been issued
  • Application has been filed by company for striking off
  • Companies which has been amalgamated
  • Application have been filed for obtaining dormant status
  • Vanishing Companies
  • Forms related to increase in capital and creation of charge

Procedure for Inactive Company:

Inactive company, while filing documents under this scheme can also apply for:

  • Getting Dormant status or
  • Strike off of name of company

Effects of Scheme:

Companies shall not be liable for payment of additional fee if they filed pending forms and returns between 1st April 2020 to 30th September 2020. For waiver of penalty companies are required to obtain immunity certificate from Registrar of company.

How to make payment under Scheme:

Normal filing fee is to be paid on the date of filing of forms whereas no additional fee has to be paid.

How to obtained immunity from Penalty:

Company Fresh Start Scheme 2020 (CFSS 2020) has provide a Form which shall be filed by every company for issue of immunity certificate to obtain immunity from penalty and persecutions.  Such form can be filed any time after closure scheme but not later than six month from end of scheme. To obtained immunity, appeals which was filed against any notice, order etc has to be withdrawn before initiating immunity application.

Further a Revised LLP settlement Scheme also issued in similar manner.

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