{"id":30205,"date":"2020-04-02T12:04:54","date_gmt":"2020-04-02T06:34:54","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=30205"},"modified":"2020-11-18T18:24:51","modified_gmt":"2020-11-18T12:54:51","slug":"a-brief-overview-on-companies-fresh-start-scheme-2020","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/a-brief-overview-on-companies-fresh-start-scheme-2020\/","title":{"rendered":"A Brief Overview on Companies Fresh Start Scheme, 2020"},"content":{"rendered":"

The Ministry of Corporate Affairs introduced the Companies Fresh Start Scheme, 2020 on 30th<\/sup> March 2020 vide it’s general Circular 12\/2020. This scheme provides an opportunity for all defaulted companies to make a fresh start. As the name itself suggests, Companies Fresh Start Scheme (CFSS), provides the platform to all the companies who are under default to file all the documents afresh without any additional fees<\/strong>. The Ministry of Corporate Affairs (MCA) had earlier introduced various such schemes on the request of various stakeholders. The Ministry had introduced schemes like company law settlement scheme 2014 and cods scheme 2018 earlier. The CFSS 2020 scheme<\/strong> shall be for initial period of six months. It will come into force from 1st April 2020 and shall be effective till 30th September 2020. In this article, we shall have a brief overview of this new scheme introduced by the government.  <\/p>\n\n\n\n

What was the need for CFSS, 2020?<\/h2>\n\n\n\n

The Ministry of Corporate Affairs has taken quite strict measures in the last two years. It has struck off a large number of companies on its own motion and has disqualified the directors of those companies from being a director for five years. This is because of the fact that the companies have not filed due to statutory annual returns for the last three consecutive financial years. These large companies have a sound business track, and compliant background is also stuck because of the same Director of anyone disqualified director in those large companies and due to this their compliances are also at stake. <\/p>\n\n\n\n

The cost of compliances of the above-mentioned companies is also much costlier than normal companies due to huge additional fees applicable under section 403 of the Companies Act, 2013<\/strong>. As a result, there is a need to come up with a detailed scheme by providing an extra chance of making their default good therefore the various stakeholders have requested to the government for grant of an opportunity to file all the requisite belated documents or returns.<\/p>\n\n\n\n

The CFSS, 2020 has been introduced to facilitate the companies registered in India to have a fresh start. The ministry<\/a><\/strong> has taken various steps to help out the companies which are under default and especially to the small and inactive companies. The government, considering the representation and the request of the stakeholders, has come up with this novel scheme.<\/p>\n\n\n\n

Definition of Defaulting Companies and Inactive Companies<\/h2>\n\n\n\n

A\ncompany that has made a default in filing the documents, statement, return etc.\nincluding the annual statutory documents on the MCA-21 registry in due time is\nknown as a Defaulting company under the Companies Act, 2013.<\/p>\n\n\n\n

A\ncompany that has not been working nor doing any business has not made any\naccounting<\/a> transaction of significant nature during the last two financial\nyears or hasn’t filed any financial statements and annual returns since last\ntwo financial years is known as an inactive company. <\/p>\n\n\n\n

Applicability of the scheme<\/h2>\n\n\n\n

The Companies Fresh Start Scheme (CFSS)\nscheme shall be applicable from 1st April 2020 till 30th<\/sup> September\n2020<\/strong>. It\nwill be applicable to any defaulting company. The scheme provides the\nopportunity for defaulting companies to file documents that were due to be\nfiled and without any additional charges except two documents. The documents\nare mentioned below:<\/p>\n\n\n\n

Annual based forms-<\/em><\/strong><\/p>\n\n\n\n