Major relief for companies: MCA extends deadline for various schemes till December-end; check schemes

In an effort to provide greater ease of doing business, the Ministry of Corporate Affairs has extended the duration of several schemes till the end of the year 2020 in the wake of continued disruption caused by the coronavirus pandemic in certain parts of the country. Nirmala Sitharaman’s Office said that the Companies Fresh Start Scheme 2020, which was introduced by the MCA and was valid from 1 April 2020 to 30 September 2020, has now been extended. The scheme aimed to enable companies to clear their previous defaults. 

In addition, the scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013, and the time for conducting EGMs through video conference or other audio-visual means has also been extended till December-end. The  LLP Settlement Scheme 2020, has also been extended till the end of 2020, which was aimed at enabling the LLPs to settle their previous defaults. 

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It is to be noted that the LLP Settlement Scheme 2020 is a one-time relaxation provided to LLPs which have defaulted in filing the statutory documents within the required due dates. The LLPs which opt for this scheme are not required to pay additional fees. A large number of LLPs have defaulted leading to the electronic registry not being updated.

Meanwhile, all companies are required to follow statutory compliances such as annual returns, financial statements, and all the other necessary forms, documents, and statements annually. Non–compliance of the same results in the imposition of penalties and fines and if the company fails to adhere to the compliances, it is labeled as a defaulting company. However, considering the underlying conditions that arose due to the pandemic, the MCA had introduced the Companies Fresh Start Scheme (CFSS) to provide some cushion to the companies’ operations. However, if the final notice of striking off the name as per the Companies Act, 2013 has already been initiated by the designated authority, CFSS 2020 will not be applicable.