Ministry of Corporate Affairs unveils companies fresh start scheme - (30 Mar 2020)

Company

Ministry of Corporate Affairs has introduced the Companies Fresh Start Scheme and modified the Limited Liability Partnership (LLP) Settlement Scheme to provide companies and LLPs with the opportunity to make good on any filing defaults irrespective of the duration and start afresh as fully compliant. The Fresh Start scheme and modified LLP Settlement Scheme incentivize compliance and reduce compliance burden during the unprecedented public health situation caused by COVID-19. The USP of both the schemes is a one-time waiver of additional filing fees for delayed filings by the companies or LLPs with the Registrar of Companies. The Scheme is effective from 1st April 2020 to 30th September 2020.

The Schemes, apart from giving longer timelines for corporates to comply with various filing requirements under the Companies Act 2013 and LLP Act, 2008, significantly reduce the related financial burden on them, especially for those with long standing defaults, thereby giving them an opportunity to make a “fresh start”. Both the Schemes also contain provision for giving immunity from penal proceedings, including against imposition of penalties for late submissions. However, the immunity is only against delayed filings in MCA 21 and not against any substantive violation of law.

Further, in order to provide relief in corporate insolvency resolution process due to COVID-19 outbreak, the Insolvency and Bankruptcy Board of India (IBBI) has also amended CIRP Regulations on 29th March 2020. The amendment provides that, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to the lockdown. This would, however, be subject to the overall time-limit provided in the Code. The amended regulations are effective from 29th March 2020.

Tags : SCHEME INTRODUCTION TIMELINE WAIVER