CIRCULAR 11/2020 DATED 24/03/2020 ISSUED BY CENTRAL GOVERNMENT (I.E MINISTRY OF CORPORATE AFFAIRS) FOR SPECIAL MEASURES TAKEN UNDER COMPANIES ACT, 2013 (CA-2013) AND LIMITED LIABILITY PARTNERSHIP ACT, 2008 IN VIEW OF THE COVID-19.
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, the following measures have been implemented by the Ministry of Corporate Affairs to reduce their compliance burden and other risks: –
Companies Fresh Start Scheme 2020
There would be no additional fees shall be charged for the late filing of any document, return, statement, etc. during a moratorium period from 01sr April to 30th September 2020, required to be filed in the MCA-21 Registry, irrespective of its due date.
This 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’. The Circulars specifying detailed requirements in this regard are being issued separately.
One-time Extension of period for holding of Board Meeting
As per Section 173 of the Companies Act, 2013 there is mandatory requirement of holding Board meetings within the intervals of 120 days. This interval of 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.
Deferment of Applicability of CARO, 2020
The Companies (Auditor’s Report) Order,2020 shall be made applicable from the financial year 2O2O-2O21 instead of being applicable from the financial year 2019-2020 notified earlier. A separate notification has been issued for this purpose.
Relaxation to hold Separate Meeting of Independent Director as Per Section 149(8) of Companies Act, 2013-Code of Independent Director-
As per Para Vll (1) of Schedule lV (i.e. Code For Independent Director) of the Companies Act, 2013, independent 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 has 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.
Extension of Time to Create Deposit Repayment Reserve
As per section 73(2)(c) of Companies Act, 2013 there is the requirement to create the deposit repayment reserve before 30th April 2020 for 20% of deposits maturing during the F.Y 2020-21. Now, this requirement shall be allowed to be complied with till 30th June 2020 instead of 30th April 2020.
Extension of time to deposit into Debenture Redemption Fund
Requirement under rule 18 of the Companies (Share Capital & Debentures) Rules, 2014 to invest or deposit at least 15% of the amount of debentures maturing in specified methods of investments or deposits before 30th April 2020, maybe complied with till 30th June 2020.
Extension of time limit 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 Companies Act, 2013. An additional period of 180 more days is allowed for this compliance.
Director minimum residency rule shall not be treated as non-compliance.
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.