Covid-19 has wreaked havoc worldwide, and the lockdown imposed to contain the deadly virus has impacted the economy and hit the small and medium businesses hard. Govt understands that to revive our economy and help businesses recover from this unexpected shock, they need support and help. And they need it fast.
In this endeavor, Govt has launched CFSS 2020, which experts believe is one of the best and most beneficial schemes to have come out in recent times, for entrepreneurs across India. CFSS 2020 or Companies Fresh Start Scheme is a one-time opportunity for micro, small, and medium enterprises to revive and refresh their business operations with Govt help.
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This article shares everything about CFSS 2020 you wish to know: CFSS scheme 2020 applicability, non-applicability, and precisely what is CFSS.
We will cover the 7 major highlights of the CFSS 2020 program and will share how it benefits all entrepreneurs.
What is CFSS 2020?
As per the Companies Act 2013, several mandatory and statutory requirements registered businesses should follow and report. These compliances are divided into annual, quarterly phases, and penalties exist if they are not completed.
Some of these compliances under the Companies Act 2013 include filing annual returns, financial statements, conducting Board meetings, audits, removal of Directors before expiry, filings of resolutions, agreements, mergers, and more.
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Since the lockdown and Covid-19 disrupted regular proceedings of all businesses, especially small and medium scale enterprises, they were not able to fulfill these mandatory compliances.
CFSS 2020 or Companies Fresh Start Scheme (often misspelled as Company Fresh Start Scheme) has been devised by Govt to help companies that cannot comply with these mandatory requirements and help them start afresh.
The most significant benefit of CFSS 2020 is that the entrepreneurs have been granted immunity from prosecution and penalties if they could not complete the filings, as mandated under the Companies Act 2013. This enables the businesses to stop worrying about legal action for not filing documents and papers and instead focus on their core business and start reviving the economy at the earliest.
CFSS Duration
CFSS 2020 was applicable between April 1st, 2020, to September 30th, 2020.
Hence, during this period, if any registered business or enterprise couldn’t comply with some of the mandatory compliances under the Companies Act 2013, then they are protected from penalties and legal action.
CFSS Scheme 2020 Applicability & Non-Applicability
The CFSS Scheme 2020 is applicable to these companies:
- Registered companies that could not file Annual Returns and Financial Statements with the Registrar Of Companies under the Ministry of Corporate Affairs. The forms which were not filed include Form AOC-4, AOC-4 XBRL, AOC-4 CFS, Form MGT-7.
- Registered companies that couldn’t file these e-forms: Form MGT-14, ADT-1, Form DPT-3, Form DIR-12, Form 20A, INC 22 except SH-7 & Charge related forms; as mandated to be filed with Registrar Of Companies under Ministry of Corporate Affairs.
The CFSS Scheme 2020 is not applicable for these companies:
- If the designated authority has already decided to strike off any company’s name under the Companies Act 2020.
- If any company has already filed Form STK – 2 to strike off their name from the Register of Companies, along with the required fees.
- If any company has already been amalgamated, under the various schemes of arrangement or compromise.
- If a company has filed the Form MSC – 1 with required fees to placing their firm under the dormant status.
- Vanishing companies
- Companies that have been marked for Corporate Insolvency Resolution Process or Liquidation.
- Companies that have filed for Form SH – 7 (increase in authorized capital)
- Companies that have filed for CHG – 1, CHG – 4, CHG – 8, CHG – 9
CFSS 2020: 7 Major Highlights & Benefits
- Defaulting companies that failed to file the required documents with RoC (Registrar Of Companies) will not be charged any penalties or fines. Only the normal fees as prescribed under the Companies Act 2013 needs to be paid.
- Full immunity and protection will be granted against prosecution and legal action for not complying with the filing of documents. No case will be initiated for eligible companies and Directors, founders.
- In case any company had filed any previous appeal against any prosecution for the late filing of documents, then they will have to withdraw that appeal in order to get the benefits under CFSS 2020.
- Once a company files for CFSS 2020, that company will receive immunity and benefits until six months from the scheme’s closure. That is, the benefits can be availed till March 2021.
- Directors whose DIN has expired can file the DIR-3KYC/DIR-3 KYC-Web, without paying Rs 5000 fees.
- Under CFSS 2020, inactive companies can file the Dormant Status under Section 455 of the Companies Act, 2013, via e-Form MSC – 1 along with prescribed fees.
- Inactive companies have been allowed to file e-Form ACTIVE between April 1st to September 30th, 2020, without paying the extension fees of Rs 10,000.
Hence, the primary benefits of availing of CFSS 2020 include full immunity from prosecution and waiver of some fees, which are otherwise charged as per Companies Act 2013.
At the same time, the eligible companies have been allowed to file the normal documents and e-forms without paying any extra charges or penalties for the same.
Do you wish to know more about the CFSS 2020 scheme and want to know how it can benefit your business operations?
MSMEx can help you right away! MSMEx is a micro-advisory platform, which connects entrepreneurs and MSMEs with some of the sharpest, most experienced business leaders and mentors from diversified niches. You can consult with MSME advisors, coaches, business experts and get empowered with knowledge and experience, live!
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