[MCA General Circular No. 36/2020 dated 20th October, 2020 – Special Measures under the Companies Act, 2013 and Limited Liability Partnership Act, 2008 in view of COVID-19 outbreak- Extension-reg.]
Looking at continuous widespread of COVID-19, pandemic, Ministry of Corporate Affairs (‘MCA’) has further issued General Circular No. 36/2020 dated 20th October, 2020 whereby MCA has further released the residency requirement for directors in India, for Financial Year (‘FY’) 2020-21 also.
It has been mentioned in the above circular that-
“In continuation to General Circular No. 11/2020, dated 24th March, 2020., keeping in view the requests received from various stakeholder seeking relaxation from the residency requirement of 182 days in a year and after due examination, it is hereby clarified that non-compliance of minimum residency in India for a period of at least 182 days in a year, by at least one director in every company, under section 149 of the Companies Act, 2013 shall no be treated as non-compliance for the financial year 2020-2021 also.”
It is stated that in order to support and enable Companies and Limited Liability Partnerships (LLPs) in India to focus on taking necessary special measures to address the COVID-19 threat, including the economic disruptions caused by it, the MCA has announced and implemented many measures to reduce their compliance burden and other risks vide General Circular No. 11/2020, dated 24th March, 2020.
Out of several measures provided under circular, one measure was to provide relaxation regarding compliance of minimum residency in India for a period of at least 182 days in a year, by at least one director in every company, under Section 149 of the Companies Act, 2013 (‘the Act, 2013’).
As per the clause VII of General Circular No. 11/2020, dated 24th March, 2020,
“Non-compliance of minimums 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-1 3 shall not be treated as a non-compliance for the financial year 2019-20.”
The relevant provisions of Section 149 of the Act, 2013 and Section 7 of the Limited Liability Partnership Act, 2008 (‘the LLP Act’) as amended till date:-
Section 149 (3) of the Act, 2013 – Every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial year:
Provided that in case of a newly incorporated company the requirement under this sub-section shall apply proportionately at the end of the financial year in which it is incorporated.
Section 7(1) of the LLP Act – Every limited liability partnership shall have at least two designated partners who are individuals and at least one of them shall be a resident in India.”,
Explanation.—For the purposes of this section, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty-two days during the immediately preceding one year”.
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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.
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