The unprecedented covid 19 situation affected almost every sphere of business activities around the globe and brought down even the major global economies to their knees. The economy of India also faced a huge setback in view of the covid 19 crisis. Companies were worst affected by this pandemic. They suffered huge losses and faced a financial crunch. Even many of the companies were forced to shut down in view of the huge losses suffered by them. In an attempt to revive the inactive and financially crunched companies, the government of India has introduced a new scheme called the Companies Fresh Start Scheme(CFSS) in the year 2020. The Ministry of Corporate Affairs is the nodal agency for this scheme.
Did you know?
If any company misses mentioning the SRN of such forms in CFSS, then the company will not get any kind of protection from the fines occurring due to late filing of such DPT-3, and the company would then stand liable for actions from the ROC.
What Is the CFSS Scheme?
Companies Act, 2013 requires companies to adhere to the statutory compliances yearly, and these compliances encompass annual financial statements, annual returns and other documents that are mentioned.
If any company does not adhere to compliances, it leads to the imposition of penalties, and also the company becomes or comes into the list of defaulting companies. Companies Fresh Start Scheme(CFSS) was for the period ranging from April 1st, 2020, to September 30th,2020, for those companies that have become defaulted and inactive. However, the time period for the Companies Fresh Start Scheme (CFSS) was extended till 31st December 2020 by the Ministry of Corporate Affairs.
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CFSS Scheme Applicability and Non-Applicability
Applicability of CFSS 2020
The following statements speak about the applicability of the CFSS form in the case of the following defaulting companies.
- The defaulting companies are expected to pay only the minimal fees as mentioned under the companies rule 2014 for all the requirements for all the filings within the MCA 21 registry. They are also not supposed to pay any other additional fees.
- Defaulting companies are protected against perpetration, and measures for imposing fines wear in the perpetration and measures arose due to the delay in filing documents in the backdate.
- In circumstances where the company already files an appeal in counter to any notice complaint or order which might have been issued in context with the perpetration and measures in accordance to the delay in statutory filing, in such cases, the following steps should be followed:
- Before a case is registered under the CFSS 2020, an appeal registered by the company should be taken back.
- When the application for the scheme is being filed, the company must produce a copy of such withdrawal besides the application as evidence.
- In cases where the order has been given by the court and the company has failed to file an appeal in a counteraction to the above situations upon the beginning of the CFSS scheme:
- The company in question is given a period of 120 days to register and appeal in the regional director's office.
- But in cases if an order passed by the court has not been complied with within a period of 120 days, in conditions where a delay has been incurred in the submission of a document, the punishment against the company shall be done away with.
- There are also certain cases wherein immunity is not granted
- When there is a pending appeal against the company in any court of law
- If any dispute related to management spending in any court
- When the court has given an order, and no appeal has been produced before the scheme got implemented.
Non-applicability of the CFSS 2020
In the following conditions, the CFSS scheme is not applicable:
- In some cases, the action as per the ultimate notice of removing the name in accordance with the Companies act 2013 has already been started by the respective authority.
- In cases where the company has already registered the required form in addition to the required fees for removing the name of the company from the list of companies.
- In situations where the bunch of companies have already been collated under the CFSS scheme of patterning.
- In conditions where the application for slumbering status has been registered through the prescribed form along with the required fees.
- In cases of disappearing companies.
- In situations where the companies are marked for the corporate insolvency resolution process or eradication.
CFSS 2020: 7 Major Highlights and Benefits
- The pertinence of the LLP settlement scheme 2020 ranges from 1st April 2020 to 30th September of the same year.
- The CFSS 2020 is relevant to the backtracking LLPs for registering documents late, which were left for submission until the 31st of August 2020.
- No extra fees will be imposed on the submission of documents from the backdate other than the general application fees.
- The registrar shall levy no fines or punishment for those defaulting LLPs who finished submitting all the documents from the backdating by the 30th of September 2020.
- The CFSS scheme is not relevant for the LLPs who have applied to remove their names from the registrar in accordance with the LLP rules 2009.
- A further extension to the LLP settlement scheme was given by the Ministry of Corporate Affairs, which was made until 31st December 2020.
Due to the covid-19 pandemic in the country, almost everything came to a halt, and this virus was so deadly that the government had to impose a nationwide lockdown, which forced all businesses to close across the country. Because of this, our Indian economy suffered a huge setback, and many companies were forced to shut down. They incurred huge losses, and the companies took large amounts of debt that they were unable to pay later on as a result, they were completely shut down. In order to revive all the inactive companies and to give them a sigh of relief, the Government of India has introduced the CFFS scheme. This scheme helped those debt-ridden companies, relieved them from the financial crunch and gave them new energy and zeal to work efficiently and productively. The CFSS scheme made a huge success only after a few years of its launch.