COVID-19: Measures taken by MCA for businesses in India
An e-form is deployed at the MCA website which has to be filed voluntarily by the authorized signatory of the Company confirming that they are taking all the necessary measures in accordance with the Guidelines issued by the Central/ State Government.
1. Form CAR (Companies Affirmation of Readiness Towards COVID-19)
This is a basic form that requires neither Digital signature nor any fees. This is just to ensure that Companies are also doing their bit in fighting with this pandemic. This is a Voluntary filing, no penalty or enforcement-related action is applicable on non-filing.
This is created in order to generate awareness and greater confidence in all companies/ LLPs state of readiness to deal with COVID-19 situation. This is a very simple WEB form named CAR (Company Affirmation of Readiness towards COVID-19) which is to be filed by an Authorised Signatory of Companies/ LLPs. This form was deployed on 23rd March 2020.
The Ministry is pro-actively sending the notices to all companies and LLPs for taking all preventive measures to contain the spread of COVID-19.
2. Companies (Meetings of Board and its Powers) Amendment Rules, 2020
For the period beginning from the commencement of these rules i.e. 19th march 2020 till 30th June 2020, the meetings on matters in which physical presence of Board of Directors was mandatory may be held through video conferencing or other audiovisual means in accordance with rule 3.
Also Read:LLP Compliance: How to file Annual Return?
Here is the list of Matters on which physical presence was mandatory under CA, 2013:-
- Approval of Financial statements
- the approval of the Board’s report;
- the approval of the prospectus;
- the Audit Committee Meetings for consideration of financial statement including
- the approval of the matter relating to amalgamation, merger, demerger, acquisition, and takeover.
- As the Financial year-end is around the corner, Companies may now hold their Board Meetings for Approval of Annual accounts and Board Report through Video Conferencing, the physical presence of the Directors is not mandatory till 30th June 2020.
3. Moratorium period
The Ministry has provided a Moratorium period to the Companies and businesses with Limited Liability Partnership Registration from 01st April to 30th September 2020 under which No additional fees shall be charged for any kind of late filing for any document, return or statement, etc. required to be filed at MCA 21.
This is an important step taken by the Ministry which clearly shows their idea of helping Companies /LLPs in every best possible way they can during this crisis.
Also, it provides an opportunity to all such Companies /LLPs which are having long-pending Compliance to complete them without any additional fees.
4. Board Meetings
The gap between two consecutive Board Meetings can be 180 days instead of 120 days till 30th September 2020. There is an additional relaxation of 60 days in holding two board meetings till 30/09/2020. This is a huge relief to the companies in order to keep up with their mandatory compliance.
5. CARO 2020
The Companies (Auditor’s Report) Order,2020 shall be made applicable from the financial year 2020-2021 instead of being applicable from the financial year 2019-2020 notified earlier. This will significantly ease the burden on companies & their auditors for the financial year 2019-20.
6. Independent Director’s Meeting
As per the Companies Act 2013, all the Independent Directors of the Company need to hold at least 1 meeting without the presence of Non-Independent Directors. The Ministry, for the year 2019-2020 has dispensed with this regulation. If the IDs are not able to hold such a meeting it will not be seen as a violation.
Also Read: A brief understanding of a private limited company directors
7. Extension for Declaration of Commencement of Business
This is one of the important relief the government has offered. An additional period of 180 days is allowed to the newly incorporated Companies for filing of a declaration of Commencement of business i.e. INC-20A form.
INC-20A form is supposed to be filed within 180 days of receipt of Certificate of Incorporation by all the companies incorporated after 2nd November 2018. The form can only be filed once the companies open their current account and Shareholders deposit their respective subscribed capital in the account as per the MOA of the company.
8. Requirement of Section 149 (3)
Section 149 (3) of the Act requires every company to 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.
Non-compliance with this requirement will not be treated as a Non Compliance for the Financial Year 2019-20. During this COVID-19 situation wherein all the modes of conveyance are shut in the country, this step brings in a huge relief to all companies who have foreign directors.
9. CSR funds
A clarification was provided by the Ministry stating that spending of CSR funds for COVID-19 will be treated as CSR activity. Funds may be spent under various activities related to COVID 19 under item no. (i) and (xii) of Schedule VII relating to the promotion of health care including preventive health care and sanitation and disaster management.
This way the Companies can be of utmost help to society during this tough time. Companies like Reliance, TATA, and Mahindra, etc. have come forward to help the nation during this distressing situation.
10. Requirement under section 73(2)(c) of CA-13
To create the deposit repayment reserve of 20% of deposits maturing during the financial year 2020-21 before 30th April 2020 shall be allowed to be complied with till 30th June 2020.
11. 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.
All these changes are as-on 28th March 2020. The Ministry can bring more changes if the situation doesn’t get better to support the companies and LLPs registered till now.
Labdhi, associated with LegalWiz.in since 2016, is a Company Secretary, Business Manager and Consultant for the company. She helps startups by giving them consultations and insights on their business development and growth. Labdhi is a BCom-LLB and has 4 years of Industry experience.