What are the salient features of CFSS, 2020 and LLP Settlement Scheme, 2020?
- 1. CS Meenakshi Jayaraman What are the salient features of CFSS, 2020 & LLP Settlement Scheme, 2020?
- 2. Credits and Acknowledgments Sundar Rajan S 2
- 3. Presentation Schema 3 Overview Part-I: Companies Fresh Start Scheme, 2020 Part-II: LLP Settlement Scheme, 2020
- 4. Overview 4
- 5. 5 In order to address the COVID-19 threat and to reduce the compliance burden, MCA vide its Circulars dated 30th March, 2020 has introduced Companies Fresh Start Scheme, 2020 and Limited Liability Partnership (LLP) Settlement Scheme, 2020 These Schemes provide one-time opportunity for defaulting Companies / LLPs to complete the delayed filings, comply with various filing requirements and make a fresh start
- 6. Part – I: Companies Fresh Start Scheme, 2020 6
- 7. Presentation Schema for Part-I 7 Understanding the Company Fresh Start Scheme Applicability and time period of the Scheme Benefits available under the Scheme Immunity Certificate Benefits to inactive Companies Illustrations
- 8. Legends used in Part-I of the Presentation Act Companies Act, 2013 CFSS / The Scheme Companies Fresh Start Scheme, 2020 MCA Ministry of Corporate Affairs Old Act Companies Act, 1956 Registrar / ROC Registrar of Companies Sec Section
- 9. What is Companies Fresh Start Scheme, 2020 (CFSS)? 9 In the wake of COVID-19, MCA has introduced CFSS to facilitate the Companies registered in India to make a fresh start on a clean slate The Scheme provides one-time opportunity to companies by enabling them to complete their pending compliances with MCA without paying additional fees The main objectives of the Scheme are to: •Reduce compliance burden during the unprecedented public health situation caused by COVID-19 and •Incentivise compliance by providing an opportunity to defaulting companies to make a fresh start The Scheme also gives an opportunity to defaulting inactive companies to get their companies declared as “Dormant Company” by filing e-form MSC-1 at a normal fee
- 10. Whether the Scheme is applicable for all companies registered with MCA? 10 Companies against which final notice for striking off the name of the company under Sec 248 of the Act has already issued by the ROCs Companies which have already made an application for striking off the name of the company in Form STK-2 Companies amalgamated under the scheme of compromise or arrangement under the Act Companies which have already applied for dormant status under Sec 455 of the Act before the commencement of the Scheme and *Vanishing Companies* Filing of Form SH-7 (increasing Authorised Capital), CHG-1, CHG-4, CHG-8 and CHG-9 (Charge related documents) No. The Scheme is not applicable in certain cases which are listed as follows: *Vanishing Company means a company: registered under the Act / Old Act / any other law for the time being in force and listed with Stock Exchange which has failed to file its returns with the ROC and Stock Exchange for a consecutive period of 2 years and is not maintaining its registered office at the address notified with the ROC or Stock Exchange and none of its directors are traceable
- 11. What is the meaning of Defaulting Company? 11 It means a Company defined under the Act which has made a default in filing of any documents, statements, returns, etc. including annual statutory documents on the MCA registry What is the time period of the Scheme? The Scheme commences on 1st April, 2020 and ends on 30th September, 2020
- 12. 12 What are the benefits available under the Scheme? 1. Waiver of additional filing fees in respect of e-Forms (other than those specifically excluded) by condoning the delay in filing during the duration of the Scheme 2. Immunity from launching of prosecution or proceedings for imposing penalty on account of delay associated with certain filings Grant of immunity certificate and its effects Immunity certificate is issued by ROC having jurisdiction over the registered office of the Company Companies having this certificate get immunity from: a. prosecutions pending, if any, before the concerned Courts and b. proceedings of adjudication of penalties under Sec 454 of the Act
- 13. How can a defaulting Company get the immunity certificate? 13 An application in Form CFSS – 2020 shall be filed after the closure of the Scheme and after the documents are taken on record or approved by the Registrar However, such Form shall not be filed after the expiry of 6 months from the date of closure of the Scheme (i.e.) Form shall not be filed after 31st March, 2021 There is no fee applicable in filing Form CFSS – 2020 On perusal of the Form CFSS – 2020, the Registrar shall issue the immunity certificate in respect of documents filed under the Scheme
- 14. 14 Whether the defaulting Company can get immunity against any prosecution? Immunity shall not be provided in the following two instances: 1. In case of any appeal or management dispute of the Company pending before any court of law or Tribunal However, if the pending appeal pertains to order issued for violation of provisions of the Act or the Old Act with respect to default in statutory filings, then the company may be granted immunity if the pending appeal is withdrawn before filing Form CFSS – 2020 and the proof of withdrawal of appeal shall be filed along with such Form
- 15. Contd. 15 2. In case of conviction order received from any Court in any matter or an order imposing penalty received from adjudicating authority for which no appeal is preferred before the commencement of the Scheme However, if the last date of filing appeal is between 1st March 2020 and 31st May 2020, a period of additional 120 days from such last date is allowed to file the appeal During the additional period as mentioned above, no prosecution shall be initiated against the Companies with respect to default in statutory filings in MCA-21 registry
- 16. How does the Scheme benefit inactive Companies? 16 The defaulting inactive companies while filing belated documents under the Scheme, can simultaneously apply for either of the following: a. Application for dormant status by filing Form MSC-1 at a nominal fee; or b. Application for strike-off of name of the company in Form STK-2 by paying the normal fee of Rs. 10,000
- 17. 17 What if the defaulting Companies don’t avail the Scheme? At the conclusion of the Scheme (i.e. after 30th September, 2020), the Registrar shall take necessary action under the Act against the Companies which have not availed the Scheme and are in default in filing any document as required under the Act or the Old Act in a timely manner
- 18. 18 Illustrations SSR Limited has not filed its annual returns (Form AOC-4 and MGT-7) till date for three Financial Years ended 31-03-2017, 31-03-2018 and 31-03-2019. The Company’s status is still active and has not been struck off. Whether SSR Limited can avail the Scheme and file its pending returns with normal fee?Q. A. Yes. The Scheme is applicable for all Forms except Form SH-7 and charge related forms irrespective of the due date. Hence, SSR Limited can avail the Scheme and file its pending annual returns with normal fee. MN Limited (formed by merger of M Limited and N Limited during the year 2015) has overdue returns of PAS-3, ADT-1 and SH-7. Whether MN Limited can avail the Scheme and file all its pending PAS-3 and ADT- 1 returns with normal fee?Q. A. No. The Scheme is not applicable for Companies which have amalgamated under a scheme of arrangement under the Act. Hence, the Scheme does not apply to MN Limited. Company shall file all the pending returns with late filing fees as applicable.
- 19. Contd. 19 ABC Private Limited is an ACTIVE Non-Compliant Company. Whether it can avail the Scheme and file Form INC-22A with no fee?Q. A. Yes. As per the update released by MCA dated 31st March, 2020, Form INC-22A shall be filed by ABC Private Limited with no fee during the time period of the Scheme XYZ Private Limited has made an appeal for order received from adjudicating authority to pay penalty for violation of Sec 42 of the Act (failure to allot shares within 60 days of receipt of money). The Company has then withdrawn the appeal and wanted to claim immunity by availing the Scheme. Whether the Company can do so? Q. A. No. Immunity is applicable only for default in statutory filings under the Act or the Old Act. In this case, the adjudicating order is issued for violation of provisions of the Act which is not related to default in filing
- 20. Part - II: Limited Liability Partnership (LLP) Settlement Scheme, 2020 20
- 21. 21 Legends used in Part-II of the Presentation Act Limited Liability Partnership Act, 2008 FY Financial Year LLP Limited Liability Partnership MCA Ministry of Corporate Affairs Registrar Registrar of Companies Rule(s) Limited Liability Partnership Rules, 2009 The Scheme LLP Settlement Scheme, 2020
- 22. Presentation Schema for Part-II 22 Understanding the LLP Settlement Scheme Applicability of the Scheme Time period of the Scheme Benefits available under the Scheme Non-applicability of the Scheme Illustrations
- 23. 23 LLP is a form of business entity which provides benefit of limited liability but allows its members the flexibility of organising their internal structure as a partnership based on mutually arrived agreement Applicability of additional fee on late filing becomes a financial burden to LLPs in case of inordinate delay which led to large number of LLPs remaining non-compliant, mainly on account of their inability to pay late fees for the cumulative period of delay To focus on taking necessary measures with the outbreak of COVID-19 and to support LLPs by reducing their compliance burden To give an opportunity to defaulting LLPs to make a fresh start, MCA has introduced LLP Settlement Scheme (“the Scheme”) to give one-time relaxation in additional fee on belated documents to be filed What is LLP Settlement Scheme, 2020?
- 24. 24 What is the meaning of defaulting LLP? It means a LLP registered under the Act which has made a default in filing of documents on the due date(s) specified under the Act and Rules made there under Whether the Scheme is applicable to all the forms to be filed with MCA? Yes. The Scheme is applicable to all the belated documents which are due for filing till 31st August, 2020 by defaulting LLP What does belated documents mean? It means all documents / forms which are required to be filed in MCA-21 registry under the Act and Rules
- 25. 25 What is the time period of the Scheme? The Scheme shall come into force on 1st April, 2020 and shall remain effective till 30th September, 2020 pursuant to modification of the Scheme vide MCA circular dated 30th March, 2020 (Original scheme was in force from 16th to 31st March, 2020) Hence, belated documents filed by defaulting LLP during the abovementioned time period gets covered under the Scheme Whether an LLP is required to file an application to the Registrar to avail the Scheme? No, the defaulting LLPs may themselves avail of the scheme for filing belated documents on payment of normal fee as applicable for such document
- 26. 26 What are the benefits available under the Scheme? There are 2 main benefits available under the scheme 1. Waiver of additional fee on the belated documents 2. Immunity from prosecution in respect of belated documents filed under the Scheme Whether the Scheme is applicable to all LLPs? for striking off its name from the register as per the provisions of Rule 37(1) of the Rules The Scheme shall not apply to LLPs which have made an application in Form 24 to the Registrar, What if the defaulting LLPs don’t avail the Scheme? On conclusion of the Scheme (i.e. after 30th September, 2020), the Registrar shall take necessary action under the Act against the defaulting LLPs which have not availed the Scheme and are in default in filing any document as required under the Act in a timely manner
- 27. Illustrations 27 S&S LLP defaulted in filing Form 11 for FY ended 31-03-2018 and 31-03-2019 and pursuant to which it filed Form 24 for striking off the name of LLP. Now, whether S&S LLP can file pending Form 11 for both FY under the Scheme? Q. A. No. The Scheme is not applicable for LLPs which has made an application in Form 24 for striking off the name of LLP as per the provisions of Rule 37(1) XYZ LLP failed to file notice for change of name with Registrar in Form 5 within the due date which is on 31st March, 2020. Whether XYZ LLP can avail the Scheme and benefit from it?Q. A. Yes. The Scheme is available for all belated documents which are due till 31st August, 2020. XYZ LLP can avail the Scheme by filing the belated Form during the currency of the Scheme
- 28. Contd. 28 If ABC LLP gets incorporated on 11-08-2020 and fails to file Form 3 with Registrar within the due date which is on 10-09-2020. Whether XYZ LLP can avail the Scheme and file the belated Form on or before 30-09-2020 with normal fee? Q. A. No. The Scheme is available for all belated documents which are due for filing till 31st August, 2020. Hence, ABC LLP shall not avail the Scheme since the due date is after 31-08- 2020 SRS LLP fails to file Form 8 and Form 11 (annual filings) since incorporation i.e. from FY ended on 31-03-2010. Whether the LLP can avail the Scheme and file the belated Forms with normal fee? Q. A. Yes. The Scheme is applicable for LLPs which has defaulted in filing any Form which are required to be filed with MCA that are due till 31st August, 2020
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