In pursuance of the Government’s efforts to provide relief to law abiding companies and LLPs in the wake of COVID 19, the Ministry has introduced the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020” 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 LLP Settlement Scheme incentivize compliance and reduce the financial burden during the unprecedented public health situation caused by COVID-19. Both the schemes provides a one-time waiver of additional filing fees for delayed filings by the companies or LLPs with the Registrar during the currency of the Schemes, i.e. during the period starting from 1st April, 2020 and ending on 30th September, 2020.
Companies Fresh Start Scheme, 2020
The Ministry (MCA) vide its General Circular dated 30th March, 2020 has come up with the ‘Companies Fresh Start Scheme 2020’ to enable companies to make good of any filing related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity.
Features of the Scheme:
- This Scheme remains enforce from 1st April 2020 to 30th September 2020.
- During the currency of scheme, every defaulting company i.e Company which is failed to file any statutory documents including annual statutory documents, is permitted to file any belated documents with normal fees except following forms:
- This Scheme provides immunity to companies in relation to prosecution or proceeding for imposing an additional penalty for not filing of belated documents.
- The application seeking immunity in respect of belated documents filed under the scheme may be made in E-form “CFSS-2020” without any fees with ROC after filing/approval of all pending documents. Based on declaration in this form, an immunity certificate shall be issued by the authority to the defaulting company.
- The scheme also provides additional time of 120 days for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed and last date of filing an appeal falls between 1st March, 2020 to 31st May, 2020.
Scheme not to apply in certain cases
- To Companies against whom final notice for striking off the name of the company under section 248 of the companies act, 2013 already issued by the ROCs;
- To Company which made an application for striking off the name of the company from ROCs;
- To Companies which are amalgamated under the scheme of Compromise & Arrangement;
- To Company applied for dormant status under section 455 of the companies Act, 2013 before the scheme introduced;
- To Vanishing Companies.
LLP Settlement Scheme, 2020
To provide a similar facility to Limited Liability Partnerships (LLPs), the MCA has also issued ‘LLP Settlement Scheme, 2020’ which is now modified and extended till 30th September, 2020.
Features of the Scheme
- This scheme remains enforce from 1st April 2020 to 30th September 2020.
- Any defaulting LLP is permitted to file belated documents which are due for filing till 30th August, 2020 with normal fees only upto 30th September, 2020.
- The defaulting LLPs which have filed their belated documents till 30th September, 2020 shall not be subject to any prosecution.
- This scheme not applies to LLPs which have made application in form 24 for striking off their name from the register.
Both the schemes, apart from giving longer timelines for corporates 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. However, the immunity is only against delayed filings and not against any substantive violation of law.