MCA has vide its circular no. 30/2020 dated 28th September, 2020 extended the Companies Fresh Start Scheme 2020 by 3 months upto 31st December, 2020. This scheme allows companies to file select forms without payment of additional filing fee.
MCA has vide its circular no. 31/2020 dated 28th September, 2020 extended the LLP Settlement Scheme by 3 months upto 31st December, 2020. Again just like CFSS, this scheme allows LLPs (limited liability partnerships) to file select back dated forms without incurring any additional filing fee.
MCA has vide its circular no. 32/2020 dated 28th September, 2020 allowed the charge creation or modification forms i.e. form CHG-1 to be filed late without any additional filing fee, upto 31st December, 2020.
Lastly vide its circular no. 33/2020 dated 28th September, 2020 MCA has allowed extra-ordinary general meetings (EGM) to be conducted by video conferencing or any other audio visual means upto 31st December, 2020.
MCA has issued a circular dated 30th March, 2020 wherein it has given companies a one time opportunity to file old forms without any additional filing fee between 1st April 2020 and 30th September, 2020. Immunity from launch of prosecution or proceedings for imposing penalty shall be provided only to the extent of delay in filings and not with substantive violation of law. Any other consequential proceedings including proceedings involved interest of shareholders vis-a-vis the company concerned shall not be covered by the immunity.
Where the company has filed an appeal against a notice issued by the ROC for violation of the provisions of the Act with respect to delay in filings, then the company should first withdraw the appeal before filing for immunity under this Scheme. But this is applicable only with respect to statutory filing under the Act and will not apply in cases where company has filed a petition before the NCLT where the company has been struck off under the provisions of section 248 of the Act, due to non conduct of any business activities for two years consecutively, for revival of the company. Also it is not clear where companies have been under strike off due to non filings and their directors DIN disqualified – whether the disqualifications would be removed so that they can do the filings. Ideally that should happen so that companies in the fault can then revive their companies with little cost involved. There are many such companies in that category and it would be great if MCA can redress that aspect.
Where orders have been passed against the company for non filings and penalties levied but the appeals could not be lodged and if the last date for filing appeal falls between March to May 2020 then a period of 120 additional days shall be provided to that company to file its appeal to the relevant authorities. During that 120 days additional period no action shall be taken against the company concerned in so far as it pertains to delay in filing
Companies who have taken advantage of this fresh start scheme have to further file an immunity form called CFSS-2020. This is required to be filed only after closure of the Scheme AND after all the forms have been taken on record or approved by the MCA but not before 6 months from the closure of the scheme. There shall be no immunity in case of appeal pending before any court of law or in respect of management disputes in the company before any court or tribunal. Also there is no immunity where the court has already ordered conviction OR an order imposing penalty has been passed and no appeal has been preferred against such orders before the Scheme has come into force.
This Scheme will not apply in following cases
a) company against which final notice for strike off has already been initiated u/s 248 of the Act;
b) where strike off application has already been made by the company;
c) companies which have been amalgamated under a scheme of amalgamation or compromise under the Act;
d) where company has filed application for obtaining Dormant status for the company under section 455 of the Act;
e) to vanishing companies;
f) to forms for increase in authorised share capital (SH-7) or charge related documents
After the immunity is granted, the ROC/ RD shall withdraw the prosecution proceedings, if any, pending before the concerned court and prosecution for adjudication of penalties u/s 454 of the Act, other than those where the court has already ordered conviction or penalty has been imposed by the court/ tribunal or adjudicating authority.
Further the defaulting inactive companies can, after all the filings have been made uptodate, take advantage of the dormant company provisions or strike off company provisions under the Act.
Simultaneously a LLP settlement scheme is also running for delayed filings of form 3 & 4
Section 403 of the Companies Act, 2013 is a wake up call for companies in India. Not any more they can afford to relax and file documents months and years after they are supposed to do so.
Section 403(1) provides that documents should be submitted, filed, registered or recorded within the time specified in the relevant section for the same. For eg. most of the forms require to be filed within 30 days of the event, save for a few provisions such as Auditors appointment within 15 days, annual return within 60 days and charge registration/ modification within 300 days of the event.
The first proviso to section 403(1) provides for additional time within which the documents can be filed by paying additional filing fees. This additional period is 270 days beyond the original period of filing. Therefore in most cases a 300 days period is given for filing the document by paying the normal fees and additional filing fees.
The second proviso to section 403(1) provides that such documents can be filed beyond the said 300 days but it says “without prejudice to any other legal action or liability under the Act”
Section 403(2) provides that where the company fails to submit/ deliver the documents within the time specified including the additional time given, the company and every officers of the company shall be liable for penalty or punishment provided under the Act. This is apart from the fees and additional filing fees payable by the company for filing the document.
The various sections give different penalties for delayed filing beyond the normal period and additional period given thereunder, for eg.
1) delayed filing of annual return under section 92 is liable for a penalty of minimum Rs.50,000 but which may extend to Rs.5 lakhs and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than Rs.50,000/- but which may extend to Rs.5 lakhs or with both;
2) for failure to file documents required under section – minimum penalty is Rs.5 lakhs but which may extend to Rs.25 lakhs for the company and every officer of the company who is in default shall be punishable with fine which shall be minimum Rs.1 lakh but which may extend to Rs.5 lakhs;
3) Audited financial statements under section 137 – Fine of Rs.1000/- per day during which the failure continues but which shall not be more than Rs.10 lakhs and MD and CFO (or in the absence of MD/ CFO, any director who is charged by the Board of complying with this section, or in the absence of any such director, all directors of the company) shall be punishable with imprisonment for a term which may extend to six months or with fine, which shall not be less than Rs.1 lakh but which may extend to Rs.5 lakhs or both;
Apparently the system will not allow filings to take place after the period stipulated in section 403 unless the company applies for a an application for condonation of delay with the prescribed authorities which in this case is the REgistar of Companies of the respective jurisdiction.
Therefore Compliance is the Need of the Hour for every company in India. Gone are the days when the companies can sleep for years on end without doing any filings whatever.