Compliance default: ICSI urges govt to extend waiver scheme to more firms

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Updated: Jul 14, 2020 1:08 PM

The company secretaries’ (CS) body requested MCA to extend the benefit of immunity from prosecution and proceedings for imposing a penalty on account of delay to companies who could not file their documents under the Fresh Start scheme.

In March, MCA introduced the Fresh Start scheme, which is applicable from April to September 2020, to offer an avenue to companies for clearing their compliance backlog without facing prosecution. In March, MCA introduced the Fresh Start scheme, which is applicable from April to September 2020, to offer an avenue to companies for clearing their compliance backlog without facing prosecution.

The Institute of Company Secretaries of India (ICSI) has urged the ministry of corporate affairs (MCA) to increase the scope of the so-called Fresh Start scheme to include defaulting firms which had filed their documents along with late fees before the scheme was implemented. The exercise will help in reducing their compliance burden.

In March, MCA introduced the Fresh Start scheme, which is applicable from April to September 2020, to offer an avenue to companies for clearing their compliance backlog without facing prosecution. It allows firms a waiver on payment of additional fees and immunity from launch of prosecution as well as proceedings for imposing penalty.

The scheme was introduced to help companies meet compliance norms at a time when they face a tough situation due to Covid-19 pandemic which adversely impacted trade and disrupted businesses across all the sectors.

However, firms against whom MCA initiated prosecution following which these entities filed documents and the exercise was conducted prior to the Fresh Start scheme’s implementation cannot avail the benefits. It is also not applicable to filings made with late fees prior to the scheme’s enforcement.

In a letter to MCA secretary, Rajesh Verma, ICSI said that “some of the companies may be put in a disadvantaged position as compared to others as the scheme does not provide immunity to companies that came first in compliance prior to the coming into force of the scheme”.

The company secretaries’ (CS) body requested MCA to extend the benefit of immunity from prosecution and proceedings for imposing a penalty on account of delay to companies who could not file their documents under the Fresh Start scheme.

Sandeep Jhunjhunwala, a partner at Nangia Anderson, said meeting compliances in a timely manner has always been a key issue for corporates. “The withdrawal of ongoing penalty and prosecution proceedings would help companies to focus on revival of business without worrying about these additional hassles. With the looming uncertainty and economic crisis, these relaxations provide much needed respite and assurance to business hours,” he added.

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