An Opportunity: MCA relaxes payment of additional fee in case of pending filings

April 2020

In the wake of COVID-19, the Ministry of Corporate Affairs (“MCA”) has announced a Companies Fresh Start Scheme, 2020 (“the CFSS Scheme”) through a general circular 12/2020 dated March 30, 2020 and a Limited Liability Partnership Settlement Scheme, 2020 (“the LLP Scheme”) through general circular 6/2020 of March 4, 2020 read with general circular 13/2020 of March 30, 2020.

Applicability: The schemes provide companies and Limited Liability Partnerships (“LLPs”) an opportunity to remain compliant by filing pending forms, returns, statements, documents which were required to be filed with the MCA.

Benefit: Companies and LLPs can avail benefit under their respective schemes between April 1 – September 30, 2020 by filing all their pending forms under the Companies Act, 2013 (“the Act”) and LLP Act, 2008 respectively. That said, it is not specifically mentioned how far back these entities can go to file these pending forms. The CFSS Scheme also includes KYC filings by directors in form DIR-3KYC and by companies in form ACTIVE. In fact, LLPs are permitted to file belated documents for future defaults up until August 31, 2020. No penalty or late fee will be levied under both schemes.

Exclusions: The CFSS Scheme excludes (a) companies against which final notice for striking off u/s 248 of the Companies Act, 2013 has been initiated; (b) companies which have filed an application for strike off; (c) companies amalgamated under a scheme of arrangement or compromise under the Act; (d) companies which have already filed an application for obtaining a dormant status under the Act; (e) vanishing companies defined by the MCA vide a clarification dated January 20, 2010; (f) companies marked for CIRP or liquidation under the Insolvency and Bankruptcy Code, 2016; and (g) filings related to charges (e-forms CHG-1, CHG-4, CHG-8 and CHG-9) and increase in authorized capital (e-form SH-7). The LLP Scheme excludes the LLPs which have already filed an application for strike off.

Impact: Once the pending filings are complete, companies will have to file form CFSS-20 (a no-fee form) for procuring an immunity certificate. LLPs, on the other hand, are not required to file this. Upon completion of pending filings, the Registrar of Companies will not initiate any proceedings and will also withdraw all ongoing ones. However, this immunity is only with respect to the prosecution/proceedings for any delay associated with filings. Any other consequential proceeding involving interests of shareholders, directors, key managerial personnel, etc. is not covered under this “immunity”. In case an appeal has been filed against any notice or order passed by a court or adjudicating authority, the applicant companies will have to withdraw such appeal before applying for this immunity. No such restriction has been put on LLPs.

By:

Jaya Moorjani