In order to reduce compliance burden during the unprecedented public health situation caused by COVID-19, the Ministry of Corporate Affairs, on 30 March 2020 issued a press release pertaining to the introduction of the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020” (the revised LLP Settlement Scheme, 2020 is available here), which is already in effect, to provide a first of its kind opportunity to both companies and LLPs to make good any filing related defaults, irrespective of the duration of default, and make a fresh start as a fully compliant entity.
During the period starting from 1st April 2020 and ending on 30th September 2020, the following benefits are available to companies and LLPs, under the Fresh Start Scheme and Modified LLP Settlement Scheme, respectively:
- It incentivizes compliance and reduces compliance burden;
- Companies and LLPs are permitted to file any and all belated filings i.e., filings that the company or LLP are yet to carry out and for which the statutorily prescribed time limit has expired;
- A one-time waiver of additional filing fees for delayed filings by the companies or LLPs with the Registrar of Companies;
- Provides longer timelines for entities to comply with various filing requirements under the Companies Act, 2013 and Limited Liability Partnership Act, 2008;
- Significantly reduces certain financial burden on companies and LLPs, especially for those with long standing defaults, thereby giving them an opportunity to make a “fresh start”;
- Provides the opportunity to file for immunity from penal proceedings, including against imposition of penalties for late submissions and provides additional time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed. However, the immunity is only against delayed filings in MCA21 and not against any substantive violation of law. The application seeking immunity shall be filed after 30 September 2020, and can be filed only if there are no pending appeals against notices or adjudicated orders (appeals, if any, are to be withdrawn before filing application for immunity).