With Novel Coronavirus declared as pandemic, the countries are taking stringent steps like lockdown, curfew to control the damage. Realizing the hardships of the corporate, the Ministry of Corporate Affairs (“MCA”) vide its General Circular No.11/2020 dated 24 March 2020 has introduced various relaxation on the compliance.
With Novel Coronavirus declared as pandemic, the countries are taking stringent steps like lockdown, curfew to control the damage. The global economy is under deep distress and similar to other countries, Indian government is also taking slew of measures to deal with the impact of COVID 19 outbreak. The rampant spread of the virus has also presented challenges for businesses to comply with the statutory and regulatory norms given in Companies Act 2013 due to disruptions in their operations. Realizing the hardships of the corporates, the Ministry of Corporate Affairs (“MCA”) vide its General Circular No.11/2020 dated 24 March 2020 has introduced various relaxation on the compliance.
Key Announcements:
- In order to reduce the compliance and financial burden, the Ministry of Corporate Affair relaxed the additional fee on filing of any e-form or documents with the MCA from the period 1st April 2020 to 30th September 2020.
- Every company is required to hold a board meeting within a period of 120 days from the date of the last Board meeting. The Ministry of Corporate Affair extended the time gap between two consecutive board meetings to a maximum of 180 days. This one-time relaxation is available for the next two quarters i.e. up to 30th September 2020.
- The Companies (Auditors Report) order, 2020 shall be applicable from the financial year 2020-2021 instead of 2019-2020 which was notified earlier.
- The Ministry of Corporate Affairs relaxed the requirement of Para VII(1) of Schedule VI of the Act, the Independent Directors may share their views among themselves through telephone, e-mail or any mode of communication, if they deemed necessary instead of conducting a separate Independent Directors meeting.
- The newly incorporated company required to submit the declaration for the commencement of new business within 6 months of its incorporation. However, the Ministry of Corporate Affair has extended the timeline for such compliance from 6 months to 1 year from the date of incorporation.
- The companies are required to create a deposit repayment reserve of 20% of deposit maturing during the financial year 2020-2021 before 30 April 2020. The said date has been extended to 30 June 2020.
- As per Rule 18 of the Companies (Share Capital & Debenture) Rules, 2014 the companies are required to invest or deposit at least 15% of the amount of the debenture maturing before 30 April 2020. The Ministry of Corporate Affairs has extended the due date to 30 June 2020.
- Every company must have a resident director who stayed in India for a period of atleast 182 days. Due to travel ban across several countries (including India), the Ministry of Corporate Affairs not considered as a non-compliance for the financial year 2019-20.
The above measures are a welcome move by the Ministry of Corporate Affairs and will provide relief and clarity on compliances under the Companies Act. These measures would certainly help to address some of the issues faced by the organization. However, considering the current scenario, more regulatory changes may require in case COVID-19 Coronavirus Outbreak continued for more than three months.
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