Ministry of Corporate Affairs has caused myriad amendments in the Companies Act, 2013 in the Month of December 2020. In this editorial, the author shall try to cover all such amendments along with the impact of the same on the Corporates.
Amendment THROUGH NOTIFICATIONS
1. Notifications of the Companies Amendment Act, 2020:
Most of the important amendments in December 2020 is relating to the notification of total 44 Sections of the Companies Act, 2020 out of the 65 amendments in the Companies Amendment Act, 2020.
Amendment THROUGH Circulars
2. Relaxation arose in December 2020:
2.1 Relaxation of fees & extension of date of filing of CRA-4:
On December 01, 2020, The Ministry of Corporate Affairs (MCA) vide General Circular No. 38/2020 has given the Relaxation of an additional fees and the extension of the last date of filing of CRA-4 (form for filing of the cost audit report) for the F.Y 2019-2020 under the Companies Act, 2013 till 31st December 2020.
2.2 Relaxation of holding of the Extra-Ordinary General Meeting through VC:
In the view of the pandemic situation induced by COVID-19, MCA has enabled the companies to conduct their EGMs through VC or OAVM up to June 30 2021, in accordance with MCA Circular No. 39/2020 dated December 31 2020. Beforehand, the last date was December 31 2020.
Note: This Relaxation is only given for Extra-Ordinary General Meeting, not for Annual General Meeting. W.e.f. 01st January 202, an AGM through the Video Conferencing is not allowed.
2.3 Relaxation of holding of the Board Meeting through VC:
In the view of the pandemic situation induced by COVID-19, MCA has enabled the companies to conduct their Board Meeting through VC or OAVM for the matters restricted in rule 4 up to 30th June 2021 in accordance with the MCA notification dated 31st December 2020. Beforehand, the last date was 31st December 2020.
List of the restricted matters in rule 4:
a. Approval of the annual financial statements;
b. Approval of the Board’s report;
c. Approval of the prospectus;
d. Audit Committee Meetings for consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under Section 134 (1) of the Companies Act, 2013 ; and
e. Approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover
Amendments in Rules
3.1 Amendment in the Provisions Relating to the Independent Directors:
The Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2020 passed on 18th December 2020.
a) MCA has given relief in the time period to pass the online proficiency exam. Now, an individual shall pass the online proficiency exam within a period of two years from the date of inclusion of his/ her name in the database.
b) An individual who obtains a score of 50 or more shall be deemed to have passed such test.
c) Exemption from passing the online proficiency test is given to an individual who has served for a total period of not less than 3 years as Director/ KMP in Listed Company or Public Companies having a paid-up share capital of Rs. 10 crore or more and other conditions as mentioned in circular.
3.2 Amendment in Compromises, Arrangements and Amalgamations:
The Companies (Compromises, Arrangements and Amalgamations) Second Amendment Rules, 2020 passed on 17th December 2020.
a) Addition of the definition of “corporate action”n:
“corporate action” means any action taken by the company relating to the transfer of shares and all the benefits accruing on such shares namely, bonus shares, split, consolidation, fraction shares and right issue to the acquirer.
b) Addition of a new Rule 26A:
MCA has introduced the process to Purchase of the minority shareholding held in Demat form
3.3 Amendment in e-form SH-7:
The Companies (Share Capital and Debentures) Rules, 2020, passed on 24th December 2020.
a) E-form SH-7 has been substituted.
b) Amendment in the purpose of the form at point no. 3 of e-form SH-7 by adding one more purpose in SH-7 i.e. “Cancellation of unissued shares of one class and increase in shares of another class”
3.4 Amendment in Name approval Rules:
The Companies (Incorporation) Third Amendment Rules, 2020, passed on 24th December 2020.
MCA has introduced Rule 9A i.e. Extension of Reservation of Name in certain cases.
As per the provisions of the Companies Act, 2013, the Name reserved for the incorporation of the Company shall be reserved for a maximum of 20 days. If the promoter fails to incorporate the Company within 20 days, then the name shall expire.
The promoter can get an extension in the expiry of name through Spice+ form after payment of specified fees as follow:
|S. No.||No. of Days||Fees||Condition|
|1.||40 days from the Date of Approval of the Name||Rs. 1,000||Payment required to be made before the expiry of 20 days from the approval of the name.|
|2.||Sixty Days from the date of Approval||Rs. 2,000||Payment required to be made before the expiry of 40 days from the approval of the name.|
|3.||Sixty Days from the date of Approval||Rs. 3,000||Payment required to be made before the expiry of 20 days from the approval of the name.|
Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at [email protected]).
Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.