The Ministry of Corporate Affairs (MCA) is fully cognizant of the difficulties faced by the companies on account of ongoing nation-wide lockdown and social distancing requirement due to COVID 19. In furtherance of the Government’s objective of facilitating corporate compliances during the current lockdown period in taking certain emergent/ urgent measures. Ministry of Corporate Affairs has announced several important relief measures, especially on statutory and regulatory compliance matters, in the face of extreme disruptions and dislocation caused by the pandemic.
Source: Notification: G.S.R. 186(E) dt.19/03/2020
Relaxation in conducting Physical Board Meetings under Companies Act, 2013
- Whether the Board meeting of the company can be conducted through Video Conferencing or any other audiovisual means due to the outbreak of COVID-19 rather than physical board meeting?
Yes, The Ministry of corporate affairs has relaxed the requirement of holding Board meetings with physical presence of directors and allowed to hold through video conferencing or other audio visual means by duly ensuring compliance of Rule 3 of Companies (Meetings of Board and its Powers) Rules, 2014. (Originally restriction imposed to conduct as Audio Visual meeting as per Rule 4 of the said rules)
- What kind of board meetings can be conducted through Video Conferencing or any other audiovisual means?
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- Relaxation is given for below Board Meetings as a precautionary step to overcome the outbreak of the Covid-19 which was restricted as not to be dealt with in a meeting through Video Conferencing or any other audiovisual means;
- The approval of the annual financial statements;
- The approval of the Board’s report;
- The approval of the prospectus;
- The Audit Committee Meetings for consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under subsection (1) of section 134 of the Act; and
- The approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.
- Until when this relaxation of conducting board meeting through Video conferencing & any other audiovisual means is applicable?
This relaxation is applicable for the Board meetings to be conducted from 19.03.2020 till 30.06.2020
Source: General Circular: 11/2020 dt.24/03.2020
Filing of statutory Forms with RoC (Registrar of Companies) after due date:
- Any Moratorium period allowed under Companies Act or LLP Act due to COVID-19 Outbreak?
Yes, Moratorium period announced by MCA from 01.04.2020 to 30.09.2020
- What are the benefits extended during this Moratorium period?
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- No Additional filing fees are charged for late filing during this moratorium period in respect of any document, return, statement etc., required to filed with MCA -21 Registry irrespective of due dates.
- Reduction in compliance burden of Companies & LLP’s.
- Reduction in the financial burden of Companies & LLP’s by waiving of additional filing fees, penalties etc.,
- Enabling Non -Compliant companies & LLP’s to be compliant
Relaxation on the gaps between 2 consecutive meetings under Companies Act, 2013.
- Whether the companies need to maintain the mandatory requirement of holding meetings within an interval of 120 days as per the Companies Act’2013 even during the nationwide lockdown due to COVID-19?
No, one-time relaxation is given for the companies, it can conduct the meeting within the interval of 180 days (i.e Gap between 2 consecutive meetings of the Board may extend to 180 days instead of 120 days)
- Until when this relaxation prevails for conducting the meeting with extended 180 days interval?
Relaxation of 180 days interval is applicable only for the next 2 quarters Q1 FY 2020- 21 & Q2- FY 20-21) (i.e from 1st Apr’2020- 30th September 2020)
Relaxation extended for Independent Directors:
- What if, when the Independent Directors of a company not conducted at least 1 meeting without the attendance of Non – Independent Directors & Members for FY 2019-20 due to COVID-19 outbreak? Will it be treated as a violation of Para VII (1) of Schedule IV?
No, One-time relaxation is given, not conducting a separate meeting by independent directors as per Para VII(1 ) of Schedule IV for FY 19-20 shall not be viewed as violation due to COVID-19 outbreak.
- If the independent director intended to share or discuss any matters without conducting a separate meeting, how it can be done in the event of an absence of a separate meeting?
If at all required, the independent Directors may share their views amongst themselves through telephone or e-mail or any other mode of communication, if they deem it to be necessary for discussion & deliberation.
Relaxation on creating Deposit Repayment Reserve by Companies:
- Is there any change in the due date for creating Deposit Repayment Reserve by companies for FY 19-20 due to COVID -19 outbreak?
One Time relaxation is given for creating a separate Deposit Repayment Reserve of 20% of deposits maturing during the financial year 2020-21 by companies as per Section 73(2)(c ) till 30th June 2020 ( Instead of 30th April 2020)
Review of adequacy of Debenture Redemption Reserve by Listed & Unlisted companies
- Any extension provided for the listed and unlisted companies for maintaining the adequacy of Debenture Redemption Reserve for FY 19-20, due to COVID 19 Outbreak?
Yes, it can be complied within 30th June’2020 ( instead of 30th Apr’2020) for Financial Year 19-20 as per the requirement under rule 18 of the Companies (Share Capital & Debentures) Rules, 2014 to invest or deposit at least 15% of the number of debentures maturing in specified methods of investments or deposits.
Filing of declaration of commencement by New Companies:
- Whether filing of a declaration of commencement by the newly incorporated companies still to be filed within 180 days from incorporation date in the event of COVID-19 outbreak?
No, the newly incorporated companies can file their declaration for Commencement of Business within 360 days of incorporation (Additional 180 days provided for filing the declaration as a COVID 19 Relief measures)
Relaxation on Minimum Residency by any one director residing outside India
- Whether any relaxation is provided for Directors of a company who are residing outside India to comply on the minimal residency in India, on account of COVID -19 nationwide lockdown?
Yes, relaxation is provided, if anyone Non-Resident Director has not fulfilled the minimum residency in India for a period of at least 182 days under Section 149(3) which shall not be treated as a non-compliance for the financial year 2019-20 as a relief measure extended for COVID-19 Outbreak.
Source: Notification S.O. 1219(E) dt.24/03/2020
Relaxation for implementation of CARO 2020 from FY 2019-20
- Are Companies (Auditor’s Report) Order, 2020 applicable from the financial year 2019-20?
No, Companies (Auditor’s Report) Order, 2020 shall be made applicable only from the Financial year 2020-21 to ease the burden on Companies & their auditors as a relief measure for COVID -19 outbreak.
Source: General Circular No.16/2020 dt.13/04/2020
Relaxation in filing various belated forms under IEPFA (Investor Education and Protection Fund Authority)
- Will, there be any relaxation given for filing statutory forms under Investor Education and Protection Fund Authority, in view of difficult situation emerging out of the outbreak of COVID-19
Yes, relaxation is provided in the filing of various belated IEPF e-forms i.e. IEPF-1, IEPF-1A, IEPF-2, IEPF-3, IEPF-4, IEPF -7 and IEPF-5 (e-verification of claims) without additional fees till 30 September 2020 irrespective of due date as per Rule 5- Rule 8 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules,2016.
Source: General Circular No.18/2020 dt.21/04/2020
Relaxation in holding of Annual General meeting by Companies whose financial year has ended on 31st December’2019
- Is there any relaxation is extended to conduct an annual general meeting for the companies, those who are following financial year as 01st January’2019 to 31st December ‘2019 based on the approval obtained & intimated to RoC?
Yes, based on the representations received the MCA has clarified that for companies whose financial year ended on 31st December’2019, if the AGM is not conducted within the due date ( 9 months from the closure of financial year i.e 30th September’2020) shall not be viewed as a violation.
- Whether this relaxation is available for all the companies who are following financial year as 01st Januray’2019- 31st December’2019?
No, the relaxation is not available to the company for which January’2019- 31st December’2019 is the first financial year. (i.e ) This relaxation is available only for the existing companies for whom the financial year January 2019- December 2019 is not the first financial year.
In pursuance of the Government of India’s efforts to provide relief to law-abiding Limited Liability Partnerships (LLPs) in the wake of COVID 19, the Ministry of Corporate Affairs (MCA), has revised the “LLP Settlement Scheme, 2020” which is already in vogue to provide a first of its kind opportunity to LLPs to make good any filing related defaults, irrespective of the duration of default, and make a fresh start as a fully compliant entity. The modified LLP Settlement Scheme incentivize compliance and reduce compliance burden during the unprecedented public health situation caused by COVID-19.
Source: General Circular.13/2020 dt.30/03/2020
Modification in Original LLP Settlement Scheme, 2020
- Is the availability of the scheme still holds from 16th March’2020 to 13th June’2020
No, as per Modified LLP settlement Scheme 2020 issued on 30th March’2020 to address the COVID-19 threat and to reduce the compliance burden modified availability date of the scheme from 01st April’2020 – 30th September 2020
- What will the availability period of original LLP Settlement Scheme’2020?
The Availability period of original LLP Settlement Scheme 2020 shall be from 16th March’2020- 31st March’2020.
- Whether the LLP can file the belated returns which are due till 31st October’2019 as per the original Scheme, Any benefits extended amidst COVID-19 Outbreak?
Yes, as per modified LLP settlement Scheme 2020, the defaulting LLP is permitted to file belated documents which were due for filing till 31st August’2020.
- Is there any change in the additional filing fee as imposed by the original LLP Settlement Scheme’2020?
Yes, with effect from 01st April’2020 no additional fees shall be payable for filing belated documents under the modified Scheme to reduce the financial burden. (Instead of Rs.10/- additional filing fee capped with Rs.5000/- per form as per Original Scheme)
- Any revised date declared for the immunity from prosecution in the Modified LLP Settlement Scheme’2020?
Yes, the revised date as per modified scheme for Immunity from Prosecution extended to 30th September 2020 (Instead of 13th June’2020)
- What will be the end date of the Modified LLP Settlement Scheme’2020?
The Conclusion of the Modified LLP Settlement Scheme is 30th September’2020 (Instead of 13th June’2020)
- What if when the scheme is not availed by defaulting LLP during the availability period?
Additional fees would be back to Rs.100 per day without any upper cap and the Registrar shall take action against the Defaulted LLPs which have not availed the scheme and which may attract monetary penalty to designated partners as well, after the expiry of the scheme.
- Whether this scheme applies to all forms to be filed by defaulting LLP’s?
The scheme shall not apply to LLPs which has already submitted an application in LLP Form 24 to strike off its name from the register as per Rule 37(1) of LLP Rules, 2009.
- What are the belated Forms can be filed using this modified LLP Settlement Scheme’2020?
The following belated forms can be filed through this scheme:
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- LLP Form 3 – Information relating to Initial agreement or changes made therein.
- LLP Form 4 – Notice relating to appointment/cessation/changes in name & Address of designated partner.
- LLP Form 5 – Notice for change of name
- LLP Form 8 – Statement of Accounts and Solvency
- LLP Form 11 –Annual Return
- LLP Form 12 – Form for intimating other address for service of documents
- LLP Form 22 – Notice of intimation of Order of Court/ Tribunal/CLB/ Central Government to the Registrar
- LLP Form 23- Application for direction to Limited Liability Partnership (LLP) to change its name to the Registrar
- LLP Form 27- Form for registration of particulars by Foreign Limited Liability Partnership (FLLP)
- LLP Form 29- Notice of (A) alteration in the certificate of incorporation or registration; (B) alteration in names and addresses of any of the persons authorised to accept service on behalf of a foreign limited liability partnership (FLLP) (C) alteration in the principal place of business in India of FLLP (D) cessation to have a place of business in India
- LLP Form 31- Application for compounding of an offence under the Act
The Government of India has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund) with the primary objective of dealing with any kind of emergency or distress situation such as that posed by COVID 19 pandemic. In order to clear the ambiguities, MCA has issued clarification for spending eligibility of CSR funds
Source: General Circular: 10/2020 dt.23/03.2020
Eligibility of Spending of CSR Funds for COVID-19
- Will the amount spent on various activities related to COVID-19?
Yes, since COVID-19 is declared as a notified disaster by GOI, the spending of CSR funds for COVID -19 is eligible as CSR activity.
- What are the activities related to COVID -19 for which CSR Funds can be spent?
Various activities falling under Schedule VII of Item (i) & Item (xii) related to the promotion of health care, including preventive healthcare & sanitation and disaster management and can be interpreted liberally for spending for COVID-19 Measures.
- When a company made any contribution to Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund), will that be qualified for CSR Expenditures under Companies Act, 2013?
Yes any contribution made to the PM CARES Fund shall qualify as CSR expenditure since its falls under Schedule VII of Item (iii) ((i.e.) any contribution to any fund set up by the Central Government for socio-economic development and relief measures
To address the difficulty faced by MSMEs on account the lockdown due to COVID-19, the Insolvency and Bankruptcy Board of India (IBBI) amended the threshold limit to prevent triggering of insolvency proceedings against MSME’s and other companies on account of large scale economic distress
Source: Notification No: S.O. 1205(E) dt.24/02/2020
Increase in threshold limit for default under IBC 2016
- Is any relief measures available for MSME’s for emerging financial distress caused by COVID 19?
Yes, in order to prevent triggering of insolvency proceedings against MSME’s and other companies on account of large scale economic distress the threshold limit for Default under Section 4 of Insolvency And Bankruptcy Code, 2016 raised to Rs. 1 Crore (from the existing threshold of Rs.1 Lakhs)
Thenmozhi Krishnakumar
Manager-Finance
Aparajitha Corporate Services Private Limited
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