Relaxation by MCA from March 19 till April 25 during Lock out which is continued

List of Relaxation in compliance of the Companies Act 2013 granted by the Ministry of Corporate Affairs during Pandemic of COVID-19 

World Health Organization (WHO) Director-General declared the COVID-19 outbreak as a Pandemic on March 11, 2020.  Italy, witnessed a huge surge in COVID-19 cases, with a steep rise in the number of deaths as well. Post that Italy, France and Spain announced lock downs for their citizens.  India declared lock out under Disaster Management Act, 2005 (DMA) for 21 days with effect from March 25, 2020 to take preventive measures to prevent the spread of COVID-19 in the country.

During this lock out period it is difficult for the companies to ensure various compliances in time and hence all regulators including the Ministry of Corporate Affairs (MCA) had immediately started declaring relaxation in compliances during this lock out period.

Following are all list of relaxations granted by MCA since lock out that is immediately from March 19, 2020 till date.

(1) March 19, 2020- Thursday – Notification for Board Meeting through Video Conferencing

Informally Corporate Affairs Secretary Mr. Injeti Srinivas has written a Letter to the Confederation of Indian Industry informing that corporate sector would be required to play a key role in implementing various policy decisions of social distancing for reducing the spread of COVID-19. He has also requested Corporate to implement “Work From Home” Policy and file a web based Form CAR-2020 which will be deployed on March 23, 2020 confirming readiness of the Companies and LLP to deal with COVID-19 threat.

MCA has Notified on March 19, 2020 an amendment in the Companies (Meetings of Board and its Powers) Rules, 2014 and allowed companies to hold the meetings for the following matters through video conferencing or other audio visual means in accordance with Rule 3 from March 19, 2020 being the date of the commencement of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 and ending on June 30 ,2020.

(i) the approval of the Annual Financial Statements;

(ii) the approval of the Board’s Report;

(iii) the approval of the Prospectus;

(iv) the Audit Committee Meetings for consideration of Financial Statement including Consolidated Financial Statement if any, to be approved by the board and

(v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover

The link for the aforesaid Notification is as mentioned below:

https://taxguru.in/company-law/companies-meetings-board-powers-amendment-rules-2020.html

(2) March 23, 2020 – Clarification on spending of CSR funds for COVID-19 

MCA on March 23, 2020 vide its General Circular 10/2020 has clarified that the spending of funds by the Companies for COVID-19 is eligible as activities under its Corporate Social Responsibilities (CSR). Accordingly the Company may spent funds for various activities related to COVID-19 under item nos. (i) and (xii) of Schedule VII under the Companies Act, 2013 relating to promotion of health care including preventive health care, sanitation, and disaster management and all such spent will be eligible to be CSR spent.

The link for the said Circular is mentioned below:

https://taxguru.in/company-law/spending-csr-funds-covid-19-eligible-csr-activity-mca.html

(3) March 24, 2020- Increase in threshold limit to trigger Insolvency process/ proposal of suspension of Insolvency Law for 6 months to a year

Due to unprecedented COVID-19 Pandemic there may be disruption in the economy and many companies may face financial difficulties and liquidity crutches, MCA has issued a Notification on March 24, 2020 in exercise of its powers under section 4 of the Insolvency and Bankruptcy Code, 2016, revising the current lower threshold limit of Rs.1 Lac to Rs.1 Crore to initiate any insolvency proceedings against any company.  This may be permanent amendment as there is no date mentioned for its expiry.  The government has also decided to amend the Insolvency law to suspend up to one year provisions that trigger insolvency proceedings against defaulters, according to PTI sources. An ordinance would be promulgated to suspend three sections of IBC (Section 7, 9 and 10) for up to one year and a decision in this regard was taken by the Union Cabinet on Wednesday.

The link for the said Notification is mentioned below:

https://taxguru.in/corporate-law/threshold-limit-initiation-insolvency-proceedings-raised-rs-1-crore.html

4) March 24, 2020 –Special Measure in view of COVID-19 outbreak 

MCA vide its General Circular 11/2020 dated March 24, 2020 issues the Special Measures under Companies Act, 2013 (CA-2013) and Limited Liability Partnership Act, 2008 in view of COVID-19 outbreak. In order to support and enable Companies and LLPs in India to focus on taking necessary measures to address COVID-19 threat, including the economic disruptions caused by it, the following measures have been implemented by the MCA to reduce their compliance burden and other risks:

a) No additional fees shall be charged for late filing during a moratorium period from  April 01, 2020 to September 30, 2020 in respect of any document, return, statement etc.

b) The mandatory requirement Board Meetings (BM) within the intervals provided in section 173 of the CA, 2013 (i.e. 120 days) stands extended by a period of 60 days till next 2 quarters. Accordingly, as a onetime relaxation, the gap between 2 consecutive BM meetings may extend to 180 days till the next 2 quarters, instead of 120 days as required in the CA, 2013.

c) The Companies (Auditor’s Report) Order, 2020 (CARO 2020) shall be made applicable from the financial year 2020-2021 instead of being applicable from the financial year 2019-2020 notified earlier. Link of Notification dated March 24, 2020 is as below.

d) As per Schedule IV of the CA, 2013 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 IDs of a company have not been able to hold such a meeting, the same shall not be viewed as a violation.

e) Requirement under section 73(2)(c) of the CA, 2013 to create the deposit repayment reserve of 20% of deposits maturing during the financial year 2020-21 before April 30, 2020 shall be allowed to be complied with till June 30, 2020.

f) 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 April 30, 2020, may be complied with till June 30, 2020.

g) Newly incorporated companies are required to file a declaration for Commencement of Business within 180 days of incorporation under section 10A of the CA, 2013. An additional period of 180 more days is allowed for this compliance.

h) Non-compliance of minimum residency in India for a period of at least 182 days by at least 1 director of every company, pursuant to Section 149 of the CA, 2013 shall not be treated as a non-compliance for the financial year 2019-20.

The link for the aforesaid Circular is mentioned below:

https://taxguru.in/company-law/covid-19-special-relief-measures-companies-llp.html

https://taxguru.in/company-law/mca-defers-applicability-caro-2020-1st-april-2020-fy-2020-21.html

(5) March 28, 2020 – Clarification on spend of CSR funds  for COVID-19

The Government of India has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) with the primary objective of dealing with any kind of emergency or distress situation such as that posed by COVID-19 pandemic.

MCA on March 28, 2020 through Office Memorandum has clarified that item no. (viii) of the Schedule VII of the Companies Act, 2013, which enumerates activities that may be undertaken by companies in discharge of their CSR obligations, inter alia provides that contribution to any fund set up by the Central Government for socio-economic development and relief qualifies as CSR expenditure.  PM-CARES Fund has been set up to provide relief to those affected by any kind of emergency or distress situation and any contribution made to the PM CARES Fund shall qualify as CSR expenditure under the Companies Act, 2013.

The link for the aforesaid office memorandum is as mentioned below:

https://taxguru.in/company-law/contribution-pm-cares-fund-qualify-csr-expenditure.html

(6) March 30, 2020 – New Scheme COMPANIES FRESH START SCHEME, 2020

MCA vide its General Circular 12/2020 dated March 30, 2020 issued Companies Fresh Start Scheme, 2020 (CFSS-2020) in order to facilitate all the defaulting companies ( including Foreign Companies) to make a fresh start on a clean slate and CFSS2020 shall be in force from  April 01, 2020 and till September 30, 2020. This is in pursuance of the Government of India’s efforts to provide relief to defaulting companies to make good any filing related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity.

Broad feature of CFSS-2020 is as follow :

> Which Company can take benefit of CFSS-2020 : Any “defaulting company” is allowed to file its belated e-forms which are yet to be uploaded and which otherwise would have attracted huge additional fees, which can be filed under CFSS-2020 with the normal filing fees.

> Which type of Companies cannot take benefit of CFSS-2020

1. Companies struck off by the Registrar of Companies under section 248 of the Companies Act,2013;

2. Companies voluntarily applied for strike off;

3. Companies amalgamated/merged;

4. Companies applied for dormant status under section 455 of the Companies Act,2013;

5. Vanishing Companies;

6. Forms relating to increase in authorized share capital under e-Form SH-7;

7. Forms with respect to charges and mortgage under e-Form CHG-1, CHG-4, CHG-8 and CHG-9.

> This Initiative has been taken for the company to start a fresh with clean slate as Compliant entity :

1. to condone the delay in filing of any e-forms like AOC-4, MGT-7, ADT-1, PAS-3, etc. except two e-forms i.e. SH-7 & Charge related forms;

2. to immune from launch of prosecution [only pertaining to delay associated with filing of belated documents];

3. to immune from proceedings for impose of penalty due to delay in filing of e-forms.

[Note: Companies which has appealed against any prosecution launched for imposing penalties shall withdraw the appeal before availing the scheme]

> On completion of CFSS-2020, the Company has to apply in e-Form CFSS-2020 to seek immunity in respect of belated documents filed under CFSS-2020. [No fee applicable for filing of such e-form CFSS-2020]. The designated authority shall issue the Immunity Certificate.

> CFSS-2020 offers the defaulting Inactive companies to choose either following two option after filing due documents under CFSS-2020:

• • Apply for Dormant Status, or
  • Apply for Striking off

Big Relief:

DIN holders of DINs marked as ‘Deactivated’ due to non-filing of DIR-3KYC/ DIR-3 KYC Web and those Companies whose compliance status has been marked as “ACTIVE noncompliant” due to non-filing of e-form ACTIVE are encouraged to become compliant once again in pursuance of the General Circular No. 11 dated  March 24, 2020 & General Circular No.12 dated March 30, 2020 and file DIR-3KYC/DIR-3KYC-Web/ ACTIVE as the case may be between  April 01, 2020 to September 30, 2020 without any filing fee of INR 5000/INR 10000 respectively.

The link for the aforesaid Circular is as mentioned below:

https://taxguru.in/company-law/companies-fresh-start-scheme-2020.html

(7) March 30, 2020 – LLP SETTLEMENT SCHEME, 2020—- MODIFIED

> MCA in continuation with its General Circular 06/2020 dated March 04, 2020 , modified LLP Settlement Scheme, 2020 vide its General Circular 13/2020 dated March 30, 2020 in order to provide relief to defaulting LLPs registered in India to focus on taking necessary measures to address COVID-19 threat and to reduce their compliance burden. Following are the changes/modification made to Scheme:

Sr. No.	Changes	LLP Settlement Scheme, 2020	Modified LLP Settlement Scheme, 2020
1.	Time limit of the Scheme	From March 16, 2020 to June 13, 2020	From April 01, 2020 to September 30, 2020
2.	Applicability	Any defaulting LLP for filing belated documents due till October 31, 2019.	Any defaulting LLP for filing belated documents due till  August 31, 2020.
3.	Non-Applicability	LLP which have applied for Striking off the name	LLP which have applied for Striking off the name
4.	Fees Payable	Pay Normal fees, and additional fee payable Rs. 10 per day of default subject to maximum of Rs. 5000 per document	only Normal fees applicable no additional fee payable
5.	Immunity From	Launch of prosecution [only pertaining to delay associated with filing of belated documents]	Launch of prosecution [only pertaining to delay associated with filing of belated documents]
6.	Forms	Only following forms: Form 3 – Information regarding to LLP Deed and changes; Form 4 – Notice of Appointment / cessation, Change in name/ address/ designation and Consent to become in relation to partner or designated partner; Form 8 – Statement of Account & Solvency; Form 11– Annual Return	All e-forms required to be filed by LLP

The link for the aforesaid Circular is as mentioned below:

https://taxguru.in/company-law/mca-modifies-llp-settlement-scheme-2020.html

8. April 08, 2020 and April 13, 2020– Relaxation in conducting Extra Ordinary General Meeting through video conferencing facility

MCA vide its General Circular 14/ 2020 dated April 8, 2020 has issued relaxation for holding Extra-Ordinary General meeting (not Annual General meeting) of members of the company through video conferencing (VC) or other audio-visual means (OAVM) till June 30, 2020 or till further order whichever is earlier.

MCA has further issued clarification under General Circular 17/ 2020 dated April 13, 2020 clarifying on various difficulties faced by the Company in serving Notice for conducting EGM and gave more clarity on modalities/mechanism to follow while conducting EGM or transacting items through Postal Ballot without conducting EGM.

The links for the aforesaid Circulars and our brief Articles are mentioned below:

https://taxguru.in/company-law/mca-allows-companies-hold-egms-through-vc-oavm.html

https://taxguru.in/company-law/mca-further-clarifies-passing-ordinary-special-resolutions-covid-19.html

http://amitadesai.com/uploads/Convening%20of%20EGM%20as%20per%20MCA%20two%20Circulars%20-%20Amita%20Desai14042020.pdf 

9. April 10, 2020—FAQS on Corporate Social Responsibility

MCA vide its General Circular 15/ 2020 dated April 10, 2020 has provided various clarification in the form of FAQs on the contributions made in certain fund will be treated as CSR contribution or not.  It clarifies as follow :

a) Contribution made to ‘PM CARES Fund’ shall qualify as CSR expenditure under item no (viii) of Schedule VII of the Companies Act, 2013 and it has been further clarified vide Office memorandum F. No. CSR-05/1/2020-CSR-MCA dated 28th March, 2020

b) Contribution made to ‘Chief Minister’s Relief Fund’ or ‘State Relief Fund for COVID-19’ is not included in Schedule VII of the Companies Act, 2013 and therefore any contribution to such funds shall not qualify as admissible CSR expenditure

c) Contribution made to State Disaster Management Authority to combat COVID-19 shall qualify as CSR expenditure under item no (xii) of Schedule VII of the 2013 and clarified vide general circular No. 10/2020 dated 23rd March, 2020.

d) Ministry vide General Circular No. 10/2020 dated March 23, 2020 has clarified that spending CSR funds for COVID-19 related activities shall qualify as CSR expenditure. It is further clarified that funds may be spent for various activities related to COVID-19 under items nos. (i) and (xii) of Schedule VII relating to promotion of health care including preventive health care and sanitation, and disaster management. Further, as per general circular No. 21/2014 dated 18.06.2014, items in Schedule VII are broad based and may be interpreted liberally for this purpose.

e) Payment of salary/ wages in normal circumstances is a contractual and statutory obligation of the company. Similarly, payment of salary/ wages to employees and workers even during the lock down period is a moral obligation of the employers, as they have no alternative source of employment or livelihood during this period. Thus, payment of salary/ wages to employees and workers during the lock down period (including imposition of other social distancing requirements) shall not qualify as admissible CSR expenditure.

f) Payment of wages to temporary or casual or daily wage workers during the lock down period is part of the moral/ humanitarian/ contractual obligations of the company and is applicable to all companies irrespective of whether they have any legal obligation for CSR contribution under section 135 of the Companies Act 2013. Hence, payment of wages to temporary or casual or daily wage workers during the lock down period shall not count towards CSR expenditure.

g) If any ex-gratia payment is made to temporary / casual workers/ daily wage workers over and above the disbursement of wages, specifically for the purpose of fighting COVID 19, the same shall be admissible towards CSR expenditure as a onetime exception provided there is an explicit declaration to that effect by the Board of the company, which is duly certified by the statutory auditor.

The link for the aforesaid Circular is mentioned below:

https://taxguru.in/company-law/covid-19-related-faqs-corporate-social-responsibility-mca.html

10. April 13, 2020 –RELAXATION IN FILING FORMS U/S 124 AND 125 OF THE COMPANIES ACT, 2013:

MCA vide its General Circular 16/ 2020 dated April 13, 2020 clarified that MCA has noted that there are difficulties in complying with the procedures relating to transfer of money remaining unpaid or unclaimed for a period of 7 years in terms of provisions of Section 124 (5) of the Companies Act, 2013 and transfer of shares under section 124 (6) of the Companies Act, 2013 read with the IEPFA (Accounting, Audit, Transfer and Refunds) Rules, 2016, the relaxation  is already provided to file the below mentioned forms without an additional fee levied till  September 30, 2020 as per General Circular 11/ 2020 and 12/2020 dated March 24, 2020 and March 30, 2020, respectively.

1. IEPF-1: Statement of amounts credited to Investor Education and Protection Fund
2. IEPF-1A: Statement of Amounts credited to Investor Education and Protection Fund Pursuant to Rule 5(4A)
3. IEPF-2: Statement of unclaimed and unpaid amounts
4. IEPF-3: Statement of shares and unclaimed or unpaid dividend not transferred to the Investor Education and Protection Fund
5. IEPF-4: Statement of shares transferred to the Investor Education and Protection Fund
6. IEPF-5: Application to the Authority for claiming unpaid amounts and shares out of Investor Education and Protection Fund (IEPF)
7. IEPF-7: Statement of amounts credited to IEPF on account of shares transferred to the fund

The link for the aforesaid Circular is mentioned below:

https://taxguru.in/company-law/mca-allows-filing-ieff-e-forms-till-30-09-2020-without-additional-fees.html

11. April 21, 2020 — Relaxation in holding Annual General Meeting by Companies whose Financial Year ended on  December 31, 2019

MCA vide its General Circular 18/ 2020 dated April 21, 2020 provided relaxation to the Companies whose financial year (other than first financial year) has ended on December 31, 2019 to hold its Annual General Meeting (AGM) for such financial year within a period of nine months from the closure of the financial year (i.e. by September 30, 2020) and the same shall not be viewed as a violation. The references to due date of AGM or the date by which the AGM should have been held under the Act or the rules made thereunder shall construed accordingly.

The link for the aforesaid Circular is mentioned below:

https://taxguru.in/company-law/companies-allowed-hold-agm-till-30-09-2020-fy-ending-31-12-2019.html

12. April 22, 2020 – Period/days of extension for names reserved and resubmission of forms

 The Name Availability or the name can be reserved for formation of a Company for a period of 20 days and in case of change in name of the company the name can be reserved for maximum 60 days. Apart from this, in case of LLP the name is reserved for 90 days for new incorporation as well as for change in name of LLP. However considering the difficulties faced during lock down period, the names expiring any day between March 15, 2020 to May 03, 2020 would be extended by 20 days beyond May 03, 2020.

Also, where the last date of re-submission for any form for the company or LLP falls between March 15, 2020 to May 03, 2020 would be extended by additional 15 days beyond May 03, 2020. However, for SRNs already marked under NTBR, extension would be provided on case to case basis.

Note: Forms will not get marked to (Not to be taken on Record)’NTBR’ due to non-resubmission during this extended period as mentioned above.

The link for the aforesaid clarification is mentioned below:

https://taxguru.in/company-law/extension-names-reserved-resubmission-forms-mca.html

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This notes are updated till April 22, 2020 for MCA Relaxations and amendments

Compiled by Ms. Anu Priya Article and edited by Amita Desai