ROC Default Clearance

Applicability under the Scheme:
To avail benefit under the Companies Fresh Start Scheme (CFSS) a company is required to follow the prescribed procedures and fulfil all the necessary requirements as outlined by the MCA.

A company needs to follow the following steps to seek immunity under CFSS:

1. Eligibility Check:The company needs to meet the eligibility criteria under the CFSS, the type of default it has made, and other relevant factors.

2. Review Defaults:Before applying for the CFSS, the company needs to review all defaults or non-compliances that are required to be rectified under the CFSS. This includes overdue filings, such as annual returns, financial statements, or other statutory documents.

3. Immunity Application:After verifying all non-compliances and defaults, the company needs to file an application seeking immunity under the CFSS with the MCA. This application requires specific details regarding the defaults rectified, the actions taken for rectification, and any other information requested by the MCA.

4. Verification and Approval:MCA shall further review the application for immunity and verify the compliance with the CFSS requirements. If all requirements are met satisfactorily, MCA shall grant immunity to the company from penalties or prosecution for the specified defaults.

5. Compliance with CFSS Requirements:After getting approval, the company needs to comply with all the regulations specified under the CFSS. It needs to adhere to the prescribed timelines, payment of applicable fees, and adherence to additional conditions or guidelines as set up by the MCA.

6. Post-Immunity Compliance:After obtaining immunity under the CFSS, the company needs to take necessary steps to rectify the identified defaults. It should file the required documents, forms, or returns with the MCA after seeking immunity under CFSS. All necessary information needs to be provided, and any outstanding fees or penalties must be paid immediately. It should comply with all statutory requirements and obligations to avoid further non-compliance issues in future.

NOTE: No fees is charged by MCA for filing the application form.

Exception from Obtaining Immunity under CFSS:

Companies are provided an opportunity to rectify their past non-compliances under the Companies Fresh Start Scheme (CFSS). Companies can seek immunity from penalties or prosecution for those defaults under this scheme. But there are certain exceptions and special scenarios where the company shall not have access to immunity under the scheme.

1. Serious Offenses: In case the company has a serious non-compliance issue or potential ssue or potential breach of policy such as, fraud, misrepresentation, or wilful misconduct, then it may not be eligible for seeking immunity under the CFSS. Separate legal proceedings and penalties will be applicable for those cases.

2. Non-Cooperation or Obstruction:in case a company fails to cooperate with the MCA or if it does not cooperate in the investigation or rectification process under the CFSS, immunity may not be granted.

3. Pending Legal Proceedings:Companies that are undergoing any legal proceedings, investigations, or prosecutions related to defaults, may not be eligible for immunity under the CFSS.

4. Non-Compliance with CFSS Requirements:Failure to comply with the requirements and procedures outlined under the CFSS, such as filing incorrect information, missing deadlines, or not paying required fees, can also refuse the grant of CFSS immunity.

5. Non-Rectification of Defaults:If a company fails to rectify the identified defaults within the deadline or do not fulfil the prescribed rectification requirements may not be granted immunity.

6. Repeated Offenses:Companies that have a history of repeated defaults or non-compliance issues might be offered with limited or restricted immunity under the CFSS.

Effects of Obtaining CFSS Immunity:On obtaining immunity under CFSS, a company can have far-reaching positive effects on its all-over business. Under the scheme, the financial health of the company shall be secured again. It shall regain its lost reputation, and a long-term sustainability of the company will be ensured. It will retrieve stakeholders’ confidence and have enhanced financial access. To maintain a steady business, companies are required to follow compliance norms as per MCA requirements to avoid future defaults.

Effect of Immunity

After granting the immunity, the Designated authority concerned shall withdraw the prosecution(s) pending, if any, before the concerned Court(s) and the proceedings of adjudication of penalties under section 454 of the Act, other than those in which order conviction in any matter or order imposing penalty has been passed, in respect of defaults against which immunity has been so granted shall be deemed to have been completed without any further action on the part of the Designated authority.

Scheme for Inactive Companies:

When Defaulting Inactive Companies files due documents under the scheme, then it can simultaneously, either:

• i. Make an application for obtaining dormant status in form MSC-1 at a normal fee.
• ii. Make an application for striking off the name of the company from register of companies in form STK-2 at a normal fee.

Upon Conclusion of Scheme: The Registrar shall take necessary action under the Companies Act, 2013 against the companies which have not availed this Scheme and are in default in filing of documents as required under the provisions of Companies Act, 2013 in a timely manner.