In order to support and enable Companies and Limited Liability Partnerships (“LLP”) in India to focus on taking necessary measures to address the COVID-19 threat, including the economic disruptions caused by it, the following measures have been implemented by the Ministry of Corporate Affairs (“MCA”) to reduce their compliance burden and other risks:
1. Waiver of additional fees: No additional fees shall be charged for late filing during a moratorium period which has been given by the MCA from 01 April to 30 September 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date, which will not only reduce the compliance burden, including financial burden of companies/ LLPs at large, but also enable long-standing noncompliant companies/ LLPs to make a fresh start.
2. Waiver of conducting Board meetings: The mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (120 days) stands extended by a period of 60 days till next two quarters i.e. till 30th September. Accordingly, as a one-time relaxation the gap between two consecutive meetings of the Board may extend to 180 days till the next two quarters, instead of 120 days as required in the Companies Act, 2013
3. Applicability of The Companies (Auditor's Report) Order, 2020: The Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2020-2021 instead of being applicable from the financial year 2019-2020 notified earlier. This will significantly ease the burden on companies & their auditors for the financial year 2019-20. A separate notification has been issued for this purpose.
4. Exemptions to Independent Directors: As per Para Vll (1) of Schedule lV to the Companies Act, 2013, lndependent Directors (“lDs”) are required to hold at least one meeting without the attendance of Non-independent directors and members of management. For the financial year 2019-20, if the lDs of a company have not been able to hold such a meeting, the same shall not be viewed as a violation. The lDs, however, may share their views amongst themselves through telephone or e-mail or any other mode of communication, if they deem it to be necessary.
5. Extension to the timelines for creating repayment reserve for deposits: Requirement under section 73(2)(c) of the Companies Act, 2013 to create the deposit repayment reserve of 20% of deposits maturing during the financial year 2020-21 before 30 April 2020 shall be allowed to be complied with till 30 June 2020.
6. Extension to the timeline for investing or depositing of debentures which are being matured: Requirement under rule 18 of the Companies (Share Capital & Debentures) Rules, 2014 to invest or deposit at least 15% of amount of debentures maturing in specified methods of investments or deposits before 30 April 2020, may be complied with till 30 June 2020.
7. Extension to the timelines for filing declaration for commencement of Business: Newly incorporated companies are required to file a declaration for Commencement of Business within 180 days of incorporation under section 10A of the CA-13. An additional period of 180 more days is allowed for this compliance.
8. Waiver on non-compliance of minimum residency criteria: Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Companies Act, 2013 shall not be treated as a non-compliance for the financial year 2019-20.
The content of this article is intended to provide a general guide to the subject matter and is not intended to be a legal opinion. Specialist advice should be sought about your specific circumstances. Should you have any questions or queries in relation to the legal developments in these VUCA (Volatile, Uncertain, Complex, and Ambiguous) times, please drop us an email at firstname.lastname@example.org