With the outbreak of COVID-19 across India, measures were taken by the Ministry of Corporate Affairs (MCA) for reducing the compliance and financial burden on the companies operating in India.
The relaxations are also aimed at providing defaulting companies with an opportunity to restart their businesses by filing pending documents with no penalty for delay.
Following were the relaxations provided by the ministry applicable to all companies in India:
A. Companies Fresh Start Scheme, 2020
1. Companies Fresh Start Scheme, 2020 is launched mainly for providing an opportunity to defaulting companies who have defaulted in filing any documents, returns or forms within the prescribed time period with the designated authority to file such documents, forms or returns as the case may be between 1st April 2020 to 30th September 2020 without any penalty i.e. no additional fees shall be levied on any of the forms filed under this scheme.
2. The above scheme allows all pending forms, documents or returns to be filed except those relating to charge (CHG-1, CHG-4, CHG-8, CHG-9) and increase in authorised capital (Form SH-7).
3. The above scheme also provides that, if the company has made an appeal against any notice or order relating to imposition of penalty can make an application under the CFSS, 2020 provided it has withdrawn such appeal and a proof of withdrawal is submitted in form CFSS 2020 while making an application for grant of immunity certificate.
4. An application for seeking immunity under this scheme has to be filed after the closure of scheme and after the documents are taken on file or approved by the authority but not after 6 months from the expiry of the scheme i.e. within March 2021. On declaration under the scheme an immunity certificate will be issued granting the immunity from any legal action in relation to such documents, forms or returns filed under this scheme. Where any prosecutions or proceedings are pending they shall stand withdrawn by the designated authority relating to the filing made under this scheme.
5. Also under the above scheme, Inactive Companies are given an option to apply for “DORMANT STATUS” by filing of form MSC-1 with regular fees under section 455 or apply for Strike off under section 248(2) by filing STK-2 with regular fees.
B. Other relaxations by MCA:
1. Companies that are tagged as “ACTIVE- Non Complaint” due to default in filing form INC-22A can file the form without any penalty which was earlier Rs 10,000 and gain the status of “ACTIVE- Compliant.
2. Directors whose DIN are deactivated due to non-filing of DIR-3 KYC/ DIR-3 KYC WEB can regain their status by filing the respective KYC form without any penalty which was earlier Rs 5000.
3. Gap between two Board Meetings is relaxed by additional 60 days for first two quarters of current Financial Year i.e. upto 30th September 2020. So now gap between two board meetings which was normally 120 days is 180 days now.
4. It has been permitted that the meeting for matters relating to approval of financial statements and board report can be held through video conferencing mode or other audio-visual mode till 30th June 2020 instead of physical presence of directors.
5. Applicability of CARO, 2020 has been shifted to next financial year i.e. FY 2020-21 instead of its proposed application from current financial year i.e. FY 2019-20.
6. Meeting of Independent Directors which is to be held atleast once a year without the presence of other directors if not held within FY 2019-20 shall not be treated as violation of the provisions of the act. If the independent directors feel the need, they can share their views amongst themselves by email or telephone or any other mode.
This relaxation gives leniency to the company for delaying the meeting which is ideally supposed to be held in the financial year.
7. Relaxation in filing of form for commencement of business from 6 months to 1 year from the date of incorporation.
8. In order to curb over the liquidity crisis due to lockdown, relaxation is provided to companies by extending the last date of deposit or investment compliance wherein companies are required to invest or deposit a sum not less than 15% of the amount of debentures maturing during the year ending 31st march of the following year to 30 June 2020 in respect of debentures maturing during the FY ending 31st March 2021 which are normally required to be done on or before 30 April.
9. Extension is also provided for maintenance of deposit repayment reserve for deposits maturing in the FY 2020-21 from 30th April to 30th June 2020.
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