As the world is fighting against the COVID-19 pandemic, the Ministry of Corporate Affairs introduced a scheme namely the Companies Fresh Start Scheme, 2020 to give a new and fresh start kick to the defaulting companies and safeguard against any kind of prosecution to such companies by filing CFSS E-Form 2020.
This scheme helps in enabling companies to make the best of any filing-related defaults irrespective of the timely defaults and start a fresh start after complying with the norms. All the companies that have fulfilled all necessary requirements with the Registrar of Companies (ROC) shall avail of the benefit and those companies who have committed default will get immunity from any prosecution.
- According to the Economic Times report, this scheme has received around 1.68 million applications out of which 473,000 companies and 160,000 limited liability partnership firms have so far benefitted that made up nearly 50% of active companies.
- The late applications of CFSS shall be allowed only on a case to case basis and the rule of blanket extension of the scheme has been canceled despite many applications filed before Registrar of Companies (ROC) offices for an extension. The scheme was already extended twice and the last date was 31st December 2020.
- The companies that are struck off for default and had applied before the National Company Law Tribunal (NCLT) for restoration and after the approval from NCLT, they filed an application before the Registrar of Companies (ROC) for the revival of the firm.
- Only the limited number of firms and cases, the delay for filing for CFSS shall be entertained and accepted. The Ministry after a brief verification and certain representations stated that pandemic is not a reasonable excuse to cause a delay in the filings that were pending for a long time.
Latest Update on CFSS, 2020
In the recent notification of the Ministry of Corporate Affairs, it has made clear that CFSS -2020 E-Form shall be available for filing from 16th January 2021 and also instructed to Stakeholders to take note and plan accordingly.
What should E-form CFSS-2020 consist of?
- The e-form for the Application of the issue of immunity certificate shall be filed with all the pending documents and highlighting the Service Request Number (SRN) of the e-form. This form shall be filed as per the prescribed format with the Ministry of Corporate Affairs.
- The E-Form for the issue of immunity certificate shall be filed within six months after the ending of this scheme. There is no fee for filing the CFSS-2020 E-Form. The certificate of immunity will be issued by the Registrar of Companies (ROC).
- Once the Certificate of Immunity is issued, no prosecution or legal action shall be taken against the company. Simultaneously, the company shall withdraw all the appeals against any prosecution and on the other hand, the Registrar of Companies will also withdraw all the proceedings.
This Scheme has numerous benefits such as reducing the financial burden on the Companies under the Companies Act, 2013 and Limited Liability Partnership Act, 2008. It is more beneficial for those that have long-standing defaults and therefore, providing them the opportunity to ‘Fresh Start’. This Scheme also protects the companies from penal provisions including the penalties for late submission and giving extra time for filing an appeal before the concerned authority.