The provisions of the Companies Act, 2013 (the Act), and the rules framed thereunder, mandate companies to file requisite documents, including annual returns and financial statements, with the concerned Registrar of Companies (RoC) of their jurisdiction. Non-adherence to such provisions and non-filing of the requisite documents is an offence, exposing non-complaint companies and its directors to severe penal consequences, including fines and prosecution.

However, the records of the Ministry of Corporate Affairs (MCA) and the National Company Law Tribunals (NCLT) would clearly reveal that a lot of companies have been non-compliant with their filings. This non-compliance has been a menace to all the stakeholders involved, including, inter alia, (i) the companies and directors who have to face penal consequences for such non-compliances; (ii) the MCA and its administration who are engaged in the process of updating the records; (iii) the public/ shareholders who do not get access to the records of the companies; and (iv) the NCLT and the office of Regional Directors, which are burdened with compounding cases.

Therefore, with an intent to resolve these issues and to provide relief to non-compliant companies, the MCA, has introduced the Companies Fresh Start Scheme, 2020[1] (CFSS), which will help these companies to make a fresh start as fully compliant entities and avoid the consequences of noncompliance of the provision of the Act.

Before analysing the provisions of CFSS, it is worthy to note that this is not the first time that such an amnesty scheme has been introduced for non-compliant companies.  In the last decade, the MCA has introduced similar amnesty schemes, with different names, including the following:

  • Company Law Settlement Scheme, 2010[2] (CLSS-2010) and Easy Exit Scheme, 2010[3] (EES)

In 2010, the MCA, for the first time, introduced an amnesty scheme in relation to non-compliance of statutory filings. The Scheme was introduced in terms of the powers under Section 611(2) and 637B (b) of the Companies Act, 1956 (1956 Act), to provide an opportunity to defaulting companies to make their default good by filing such belated documents, and to become compliant in the future. The Scheme condoned any delay on account of non-filing of documents and granted an immunity against prosecution. However, the defaulting companies were required to pay an additional fee of 25% of the actual additional fees payable for filing belated documents under Section 611(2) of the 1956 Act.Along with CLSS-2010, the MCA had also re-introduced its old scheme, EES, under Section 560 of the 1956 Act, facilitating an easy exit for unlisted defunct companies.  A similar scheme was previously introduced in 2005 named as Simplified Exit Scheme, 2005. It gave these defunct companies an opportunity to get their names struck off with the RoC.

  • Company Law Settlement Scheme, 2011[4] (CLSS-2011) and Easy Exit Scheme, 2011[5] (EES-2011)

The provisions of CLSS-2011 and EES-2011 were similar to the schemes introduced in 2010.

  • Company Law Settlement Scheme, 2014[6] (CLSS-2014)

In 2014, the MCA, in exercise of its power under Section 403 and 460 of the Act, reintroduced the CLSS scheme. The provisions of CLSS-2011 were similar to CLSS-2014, providing the defaulting companies with an opportunity to make their delayed filings by paying fees as prescribed under the Act and rules thereunder, along with 25% additional fees.

In addition to what was provided in CLSS-2011, CLSS-2014 also introduced a provision for the defaulting inactive companies[7]. As per CLSS-2014, defaulting inactive companies, while submitting the relevant documents, could apply for the following:

    1. to get themselves declared as dormant companies under Section 455 of the Act, by filing Form MSC-1 at 25% of the fee for the said form; or
    2. to get its name struck off by filing e-form FTE at 25% of the fee payable on form FTE.
  • Condonation of delay scheme, 2018[8] (CDS-2018)

In September 2017, the MCA uploaded a list of approximately 2.09 lakhs companies whose names were struck off from the registers of companies on account of their failure to file financial statements or annual returns for three consecutive financial years.  Simultaneously, the MCA also uploaded a list of approximately 3,09,614 directors who were associated with these companies and were declared disqualified in terms of Section Section-164(2) of the Act, read with Section 167 of the Act. Pursuant to this, numerous petitions were filed by different stakeholders, before various High Courts and the NCLT, challenging the lists uploaded by the MCA, and seeking relief from the disqualification and an opportunity for the defaulting companies to become compliant.

In order to provide relief to these defaulting companies and disqualified directors, the MCA, in terms of the power exercised under Sections 403, 459 and 460 of the Act, introduced CDS-2018, which gave an opportunity to non-compliant companies to comply with the return filing provisions of the Act. The defaulting company after filing documents had to seek condonation of delay by filing form e-CODS and paying a fees of INR 30,000/-. This scheme was valid from January 01, 2018 to May 01, 2018.

In the light of the unprecedented disruptions caused by the Covid-19 pandemic, the MCA issued a circular on March 24, 2020[9], providing various reliefs and reducing the compliance burden and other risks of companies. In furtherance of this circular, the MCA also introduced the CFSS, providing relief to long-time defaulting companies to enable them to make a fresh start in terms of statutory compliances.

CFSS is complete in itself and elucidates on the companies eligible to avail the benefit, conditions applicable, the relevant forms, timelines, etc., which are examined herein below:

  • What is a defaulting company?

The scope of the term “defaulting company” is very wide. A Defaulting Company is defined under the CFSS as a company defined under the Act, and which has defaulted in filing of documents, statements, etc., with the MCA-21 Registry. Pertinently, the Scheme does not explicitly allow or disallow companies for which corporate insolvency resolution process (CIRP) has been initiated. Considering that companies undergoing CIRP are also mandated to file documents, such companies can also avail the benefits of CFSS.

  • Benefits of the Scheme

CFSS enables any defaulting company to avail the benefits of the scheme and file its pending documents with the registry, without payment of any additional fee. CFSS provides that the delay in filing of the documents will be condoned, and the defaulting company will only be liable to pay normal fees as prescribed under the Act, read with the Companies (Registration Offices and Fee) Rules, 2014.

Furthermore, the defaulting company will be granted immunity from prosecutions or proceedings for penalty imposed/ to be imposed under the provisions of the Act, on account of belated filings.

However, importantly, immunity has not been granted for any consequential proceedings, including proceedings involving interests of any other stakeholder or any officer-in-default. To elucidate, if the Act provides that certain act can only be undertaken after filing of the statutorily required form, and such act is done without filing of the form, in such a scenario, non-filing of the particular form can be condoned under CFSS, but not the act done without such filing.

  • Applicability in cases of Appeal

The CFSS also provides for cases where an appeal has been filed or could be filed. In cases, where an appeal has been filed by the company against any notice issued or complaint filed or any order of the court/ tribunal/ adjudicating authorities for violation of provisions of the Act or the 1956 Act, such appeals have to be withdrawn before availing the benefit of CFSS. Proof of such withdrawal of the appeal has to be filed along with the application.

CFSS also contemplates scenarios where penalties were imposed by an adjudicating officer under the Act, and no appeal has been preferred by the concerned company, where the last date of filing the appeal against the order of the adjudicating authority, falls between the March 1, 2020 and May 31, 2020 (both days included). In such cases, the limitation period to file an appeal is extended by another 120 days from the last date it was supposed to be filed.  Furthermore, during such additional time, no prosecution for non-compliance of the order will be initiated against the company.

  • Exclusions

 CFSS provides for companies and forms in relation to which CFSS will not be applicable, which are as under:

Companies/ cases:

    1. Companies against which an action for final notice for striking off their names under Section 248 of the Act has already been initiated by the Designated Authority;
    2. Companies which have already filed Form STK-2 for striking off of the name of their Companies with the RoC;
    3. Companies which been amalgamated or merged under a scheme of arrangement or compromise in terms of the Act;
    4. Companies which have already filed an application to obtain dormant status under section 455 of the Act, before the CFSS was introduced;
    5. Vanishing companies;
    6. Companies having management disputes pending before any court/ tribunal in India; and
    7. Cases where courts/ tribunals have ordered conviction or passed an order imposing penalty and no appeal has been preferred before April 01, 2020.


    1. E-Form SH-7; and
    2. E- Forms CHG-1, CHG-4, CHG-8 and CHG- 9 for creation, modification and satisfaction of charges.
  • How to Apply

Pursuant to filing of all the belated documents for which immunity is being sought by the defaulting company, an application under CFSS, seeking immunity has to be made electronically by submitting e-Form CFSS – 2020 (draft form annexed with the CFSS). This will include the details of all the belated forms filed to be in compliance. It is important to note that no fees is payable for filing of this form.

Based on the e-Form CFSS – 2020, the Designated Authority[10] shall issue an an immunity certificate in respect of the belated documents filed, and will also withdraw any pending proceedings before any court or tribunal.

  • Benefit for defaulting inactive companies?

CFSS has also reintroduced the benefit provided to defaulting inactive companies under CFSS – 2014. Under CFSS, a defaulting inactive company can, while filing due documents under CFSS, simultaneously apply for following:

    1. to get themselves declared as dormant companies under Section 455 of the Act, by filing e-Form MSC-1. Once a company is declared a dormant company, it can remain on the register of the companies with minimal compliance requirements; or
    2. to get its name struck off by filing e-form STK -2.

CFSS is a beneficial scheme, specifically in the current pandemic scenario, providing an opportunity to non-compliant/ defaulting companies, to have a fresh start in terms of their statutory compliances. It also provides respite to inactive companies, who will have an option to either become a dormant company, or get their names struck off from the registers.

Additionally, since there is no additional fees to avail the benefit of CFSS, all defaulting and inactive companies, should definitely consider opting for CFSS and becoming compliant with statutory filings. However, if they fail to do so and continue to be in default, the concerned RoCs having jurisdiction over the companies may take action in terms of the Act.

Besides being beneficial to companies, it will provide significant relief to overburdened NCLTs and NCLATs by reducing the number of pending compounding cases and other cases for non-compliances/ non-filing of documents. This will help in achieving the long-time objective of de-clogging these tribunals and other courts, so that cases of more serious nature could be pursued expeditiously and with enhanced rigour.

[1] Ministry of Corporate Affairs, Government of India – General Circular No. 12/2020, F. No. 02/01/2020-CL-V. See:

[2] Ministry of Corporate Affairs, Government of India – General Circular No. 01/2010, F. No. 02/7/2010-CL-V. See:

[3] Ministry of Corporate Affairs, Government of India – General Circular No. 02/2010, F. No. 02/7/2010-CL-V

[4] Ministry of Corporate Affairs, Government of India – General Circular No. 59/2011, F. No. 02/11/2011-CL-V. See: 

[5] Ministry of Corporate Affairs, Government of India – General Circular No. 06/2010, F. No. 02/7/2010-CL-V

[6] Ministry of Corporate Affairs, Government of India – General Circular No. 34/2014, F. No. 02/13/2014-CL-V. See:

{7] Inactive Company is defined in Explanation (i) to Sub-Section (1) of section 455 of the Act as “a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years.”

[8] Ministry of Corporate Affairs, Government of India – General Circular No. 16/2017, F. No. 02/04/2017-CL-V. See:

[9] Ministry of Corporate Affairs, Government of India – General Circular No. 11/2020, F. No. 02/01/2020-CL-V

[10] Designated Authority is defined in Section 6 (ii) (d) of the CFSS as “the Registrar of Companies, having the jurisdiction over the registered office of the company”

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