Highlights and Benefits - Companies Fresh Start Scheme, 2020 and LLP Settlement Scheme, 2020

In pursuance of the Government of India’s efforts to provide relief to law abiding companies and Limited Liability Partnerships (LLPs) in the wake of COVID 19, the Ministry of Corporate Affairs, has introduced the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020. These have been implemented to reduce compliance burden during these difficult times. The highlights are as follows –

1.      A one-time waiver of additional filing fees for delayed filings by the companies (example – annual return, various statements / documents required to be filed by 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.

2.      Significantly reduce the financial burden, especially for those with long standing defaults, thereby giving them an opportunity to make a “fresh start”. Only normal filing fees to be paid.

3.      Immunity from penal proceedings, including against imposition of penalties for late submissions and also provide additional time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed (immunity is only against delayed filings in MCA 21 and not against any substantive violation of law).

4.      Those DIN holders of DINs marked as ‘Deactivated’ due to non-filing of DIR-3KYC/DIR-3 KYC-Web can now file DIR-3KYC/DIR-3KYC-Web between 1st April, 2020 to 30th September, 2020 without any filing fee of INR 5000.

5.      Those Companies whose compliance status has been marked as “ACTIVE non-compliant” due to non-filing of Active Company Tagging Identities and Verification(ACTIVE) eform can also become compliant once again by filing ACTIVE between 1st April, 2020 to 30th September, 2020 without any filing fee of INR 10,000.

6.      The scheme gives an opportunity to inactive companies to get their companies declared as ‘dormant company’ by filing a simple application at nominal fees.

7.      Withdrawal of appeal against any prosecution launched or proceedings for imposing penalties initiated – and thus get an immunity certificate.

8.      Certain special measures for cases where the order of the adjudicating authority was passed but the appeal could not be filed.

9.      In case of defaulting LLPs, they can avail the benefits under the scheme and file the forms which have not been filed with an additional fee of Rs. 10 per day subject to a maximum cap of Rs. 5,000 per document.

This scheme shall not apply in case of –

1.      Companies/LLPs against which action for final notice for striking off the name has already been initiated by the designated authority.

2.      Where any application has already been filed by the Company for action of striking off the name of the Company from the ROC.

3.      Those companies which have amalgamated under a scheme of arrangement or compromise under the Act.

4.      In cases where applications have already been filed for obtaining Dormant Status.

5.      In case of vanishing companies.

6.      Where any increase in authorized capital / charge related documents are involved.

The above initiatives would be of immense help for those with backlogs in filings. This is surely a beneficial shortcut to regularize the compliance deficiencies in Companies and LLPs.