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COVID-19: Special measures under Companies Act 2013 and LLP Act 2008

CS Tanveer Singh Saluja 
on 26 March 2020


By addressing all the Regional Directors, Registrar of Companies and Stakeholders the Ministry of Corporate Affairs with its circular dated 24th March, 2020, has provided the following measures in order to support and enable Companies and Limited Liability Partnerships (LLPs) in India to focus on taking necessary measures to address the COVID-19 threat, including the economic disruptions caused by it:

 

SR.NO.

MEASURES

COMMENTS/ REMARKS

1

No additional fees shall be charged for late filing during a moratorium period from 01st April to 30th 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 non- compliant companies/ LLPs to make a 'fresh start'. The Circulars specifying detailed requirements in this regard are being issued separately.

The MCA has decided to provide relief to all the Companies/ LLPs from additional fees for late filing during the period starting from 01st April 2020 to 30th September 2020, in respect of any document, return, statement etc. irrespective of the due date.

This will reduce the compliance and financial burden.

Further this will also provide a chance to the non-compliant Companies and LLPs to rectify their mistakes.

2

The mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (CA-13) (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 CA-13.

For the next two quarters i.e. April- June and July- September the condition of maximum 120 days gap between two board meetings shall be 180 days.

3

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.

The CARO, 2020 will now be applicable wef the next financial year i.e. 2020-2021 instead of 2019-2020. This will provide a great relief to the Companies and Auditors.

 

4

As per Para VII (1) of Schedule IV to the CA-13, Independent Directors (IDs) 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 IDs, 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.

The requirement of holding at least one meeting of the IDs in a year without the attendance of non- independent directors and members of management is taken down for the Companies who were not able to hold such a meeting and the same shall not be considered as a violation.

5

Requirement under section 73(2)(c) of CA-13 to create the deposit repayment reserve of 20% of deposits maturing during the financial year 2020- 21 before 30th April 2020 shall be allowed to be complied with till 30th June 2020.

The deadline of creating a DRR of 20% of deposits maturing during the financial year 2020-21 has been extended till 30th June 2020.

6

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 30th April 2020, may be complied with till 30th June 2020.

The deadline of investing or depositing at least 15% of amount of debentures maturing has been extended till 30th June 2020.

7

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.

An additional period of 180 is granted to the newly incorporated Companies to file a declaration for Commencement of Business i.e. now the period allowed is 180+180 days= 360 days.

8

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 CA-13 shall not be treated as non-compliance for the financial year 2019-20.

The condition of residency of minimum one director has been taken down for the financial year 2019-2020 and the same shall not be considered as violation of law.

 
 

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