Ministry of Corporate Affairs has introduced the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020” to provide an opportunity to both companies and LLPs to make good any filing related defaults and make a fresh start as a fully compliant entity.
Both the schemes grant 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 also contain provision for giving immunity from prosecution, penalties for late submissions, and provide additional time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed. However, it may be noted that the immunity is only against delayed filings in MCA 21 electronic registry.
Companies Fresh Start Scheme, 2020
Apart from annual return and financial statements, Companies are required to file various other statements, documents, returns, etc., on the MCA electronic registry within prescribed time limits. The Companies Fresh Start Scheme, 2020 as announced by General Circular No. 12/2020, dated 30-3-2020, for this purpose, condones the delay in filing these documents insofar as it relates to charging of additional fees and granting of immunity from launching of prosecution or proceedings for imposing penalty on account of delay associated with these filings. However, it may be noted that the immunity provided under the Scheme would not cover any other consequential proceedings and that companies would be required to pay the normal fees on the date of filing the delayed documents. The Scheme also gives an opportunity to inactive companies to get declared as “dormant companies”.
An application for seeking immunity in respect of belated documents filed under the Scheme must be made electronically in a prescribed form within 6 months of closure of scheme.
It may be noted that immunity will not be applicable,
- Where Court has ordered conviction in any matter or an order imposing penalty has been passed, and no appeal has been preferred before the Scheme.
- In matters of any appeal pending before Court and in case of management disputes pending before Court or Tribunal.
Further, the Scheme will not apply,
- where final notice of striking off the name of the company has been initiated
- where application has been filed by company for striking off the name
- where companies have amalgamated under a scheme of arrangement or compromise
- where application for dormant status has already been filed
- to vanishing companies
- where any increase in authorised capital is involved and also charge related documents.
Modified LLP Settlement Scheme, 2020
The Ministry of Corporate Affairs has also modified the LLP Settlement Scheme earlier issued by it on 6th of March. According to the scheme prevalent from 1st of April till 30th of September, 2020, the defaulting LLP is permitted to file belated document which are due for filing till 31st of August, 2020. The defaulting LLPs which make good the default by filing the belated documents, will not subjected to prosecution by the Registrar for such defaults. It may be noted that this scheme also is not available to LLPs which have made applications for striking off their names from the register as per provisions of Rule 37(1) of the LLP Rules, 2009.