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Various measures taken by Ministry of Corporate Affairs (MCA) to fight COVID-19 pandemic (MCA Press release dated 20 July 2021)

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The Ministry of Corporate Affairs (MCA) primarily administers the provisions of the Companies Act, 2013 (the Act), the Limited Liability Partnership Act, 2008 and the Insolvency and Bankruptcy Code, 2016. This was stated by Minister of State for the Ministry of Corporate Affairs Shri Rao Inderjit Singh in a written reply to a question in the Rajya Sabha today.

The Minister enumerated various measures taken by the MCA to address the COVID-19 Pandemic are as under:

  1. The Companies Fresh Start Scheme, 2020 was launched to make a fresh start for companies to be a fully compliant company by allowing them to file belated documents in MCA 21 registry without any additional fees from 1st April to 31st December, 2020. The said scheme has also given immunity from prosecutions and proceedings for imposition of penalty which might arise on account of such delayed filing of documents. As per records, 4,73,131 number of Indian Companies and 1,065 number of Foreign Companies have been benefited by availing the CFSS, 2020 scheme for filing their pending documents.
  2. The MCA introduced an LLP Settlement Scheme, 2020 to provide one-time relaxation in additional fees to the defaulting Limited Liability Partnerships (‘LLPs’) to make good their defaults by filing pending documents with the Registrar of Companies (‘ROC’ or ‘Registrar’) to ease the hassle of business enterprises. The said scheme was initially rolled out from 16.03.2020 to 31.03.2020 for certain filings by LLPs. However, due to the COVID 19 pandemic the modified further expanded scheme to cover all eforms was rolled out from 01.04.2020 to 31.12.2020. Under the said scheme, the defaulting LLPs were permitted to file belated documents and the LLPs shall not be subjected to prosecution for such defaults. As per records 1,05,643 LLPs have been benefited by availing the LLP settlement scheme 2020 for filing their pending documents.
  3. Keeping in view the second COVID wave and considering the difficulties arisen due to resurgence of COVID-19 pandemic, the MCA has granted relaxation on levy of additional fees for companies / LLPs in filing certain forms (other than a CHG-1 Form, CHG-4 Form and CHG-9 Form, Charge Related Forms). Accordingly, no additional fees shall be levied upto 31st July, 2021 for the delayed filing of forms (other than charge related forms referred above) which were / would be due for filing during 1st April, 2021 to 31st May, 2021. For such delayed filings upto 31st July, 2021 only normal fees shall be payable. The said time limit has been further extended to 31st August, 2021 vide General Circular No.11/2021 dated 30.06.2021.
  4. In the wake of COVID 19 and to provide relief to law abiding companies a scheme was launched for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013 during the period from 1st March to 31st December, 2020.
  5. Considering the difficulties arisen due to resurgence of COVID-19 pandemic, the MCA vide General Circular no. 7/2021 dated 03.05.2021 has granted relaxation of timelines and condoned the delay in filing forms that are related to creation / modification of charges (CHG-1 Form and CHG-9 Form) by a company or charge holder and where the date of creation / modification of charge is (i) before 1.4.2021, but the time line for filing such form had not expired under section 77 of the Act as on 1.4.2021; or (ii) falls on any date between 1.4.2021 to 31.5.2021 (both dates inclusive). In the said circular, the detail of relaxation of time and applicable fees for filing the aforesaid forms was prescribed. The Ministry further extended the aforesaid relaxation in the time for filing forms related to creation or modification of charges under the Companies Act, 2013 by substituting the figures “31.05.2021” and “01.06.2021” wherever they appear in the General Circular No. 07/2021 dated 03.05.2021 with the figures “31.07.2021” and “01.08.2021” respectively.
  6. MCA has announced a Condonation of Delay Scheme for Companies restored by NCLT between 1st December, 2020 to 31st December, 2020 under section 252 of the Companies Act, 2013. The Scheme provides to condone delay in filing forms with the Registrar, and spares payment of additional fees. This Scheme was in operation from 1st February 2021 and was available for filing of any overdue e-forms by such companies till 31st March 2021.
  7. In order to provide relief to the companies in view of COVID-19 pandemic, the companies have been allowed to conduct Board Meetings through Video Conference (VC) or other audio-visual means for passing resolutions in respect of matters which were earlier required to be passed in meetings which required physical presence of directors by amending the Companies (Meetings of Board and its Powers) Rules 2014 from time to time during COVID-19 pandemic. Such facility to the companies was allowed till 30th June, 2021. (Initially it was till 30.06.2020, then extended to 30.09.2020 and 31.12.2020). Thereafter, considering the second COVID wave, Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 has been omitted vide notification dated 15.06.2021 to provide that all the matters can be deliberated & resolutions passed by Board of Directors through video conferencing or other audio visual means. The measure will provide increased flexibility to Boards of companies for conducting Business and further the Ease of Doing Business objective of the Government.
  8. The companies have been allowed to hold Extraordinary General Meetings (EGMs) through Video Conferencing (VC) or other audio-visual means (OAVM) complemented with e-Voting facility/simplified voting through registered emails till 30th June, 2021. Considering the second wave of COVID-19, the Ministry has extended the aforesaid time limit to 31st December, 2021.
  9. The companies have been allowed to conduct their Annual General Meetings (AGMs) by Video Conferencing (VC) or other audio-visual means (OAVM) whose AGMs were due to be held in the year 2020 or become due in the year 2021 to conduct their AGMs on or before 31.12.2021. Owing to the difficulties in sending physical copies of the financial statements, the companies are also allowed to send the financial statements, along with Board’s reports, Auditor’s reports and other documents required to be attached therewith, only through email.
  10. The Registrar of Companies on the advice of MCA had given extension of time in holding of Annual General Meeting for the financial year ended on 31 March, 2020 till 31st December, 2020 (The maximum period which can be extended by the Registrar of Companies under section 96 of the Act).
  11. Quality of disclosures strengthened through amendments made in the formats of financial statements, Companies (Accounts) Rules, Companies (Audit and Auditor’s) Rules and the Companies (Auditor’s Report) Order, 2020. The Companies (Auditor’s Report) Order, 2020 has now been made applicable from the audit of financial statements for the financial year 2021-22 to ease the compliance requirement by auditors and the companies.
  12. The Companies (Indian Accounting Standards) Rules, 2015 have been amended vide notification dated 18.06.2021 inter-alia to extend the benefits of COVID-19 related rent concession, that were introduced last year, from 30th June, 2021 to 30th June, 2022.
  13. The mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (CA-13) (120 days) were extended by a period of 60 days till next two quarters i.e., till 30th September, 2020. Considering the second COVID wave, the Ministry further extended the aforesaid relaxation for the year 2021-22 and accordingly the time gap between two consecutive meetings of the Board may extend to 180 days during the Quarter – April to June 2021 and Quarter – July to September, 2021, instead of 120 days as required in the Companies Act, 2013.
  14. Independent Directors (IDs) of a company have been given relaxation from holding atleast one mandatory meeting and accordingly for the financial year 2019-20, if the IDs of a company have not been able to hold such a meeting, the same has not been viewed as a violation.
  15. The Ministry enhanced the period to thirteen months from 1st December, 2019 within which existing Independent directors may apply online for inclusion of their names in the databank for Independent Directors vide amendments in the Companies (Appointment & Qualification of Directors) Rules, 2014 from time to time. Further, the Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 have been amended vide notification dated 18.06.2021 to provide that in case an individual has delayed in applying to the Institute for inclusion of his name in the data bank of Independent Directors or in case of delay in renewal thereof, the Institute shall allow such inclusion or renewal, as the case may be, after charging a further fees of one thousand rupees on account of such delay. Through this amendment requests made by a large number of stakeholders to grant additional time for delayed applications in view of Covid-19 pandemic have been addressed.
  16. Timeline for creation of deposit repayment reserve of 20% under section 73(2)(c) of the Act,2013 and to invest or deposit 15% of amount of debentures under rule 18 of Companies (Share Capital and Debentures) Rules, 2014 was extended till 31st December, 2020.
  17. An additional period of 180 more days has been allowed to comply with the requirement of filing a declaration for Commencement of Business by newly incorporated companies.
  18. Non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Act shall not be treated as a non-compliance for the financial year 2019-20 and 2020-21.
  19. Till 31st December, 2020, the inability to dispatch the notice for Rights Issues by listed companies to their shareholders through registered post or speed post or courier would not be viewed as violation of section 62(2) of the Act provided these companies comply with the SEBI Circulars dated 6th May, 2020 and 24th July, 2020 which inter-alia provide the mode/manner of issuance of notice by electronic transmission by listed companies.
  20. Requirement for investing 15% of amount of debentures maturing in a particular year in specified instruments has been done away with for Listed companies & NBFCs when such debentures are issued on a private placement basis.
  21. Time allowed to Auditors and Audit Firms for filing NFRA-2 form with the NFRA has been extended till a total period of 270 days in view of the difficulties faced during COVID-19 related disruption.
  22. The expenditure incurred by companies on activities relating to Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) Veterans, and their dependents including widows has been considered as CSR expenditure.
  23. Last date of submission of Cost Audit Report by the Cost Auditor to the management of the company has been extended till 31st December 2020 and additional fee has been relaxed for filing of CRA-4 (form for filing of cost audit report) for financial year 2019-2020.

Extension of last date for submission of public comments to 30th July, 2021 for Consultation Paper on Enhancing Engagement with Stakeholders

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The National Financial Reporting Authority (NFRA) has extended the last date for submission of comments on its Consultation Paper titled “Enhancing Engagement with Stakeholders: Report of Technical Advisory Committee (March 2021)” from 10th July, 2021 to 30th July 2021. Consultation paper may be viewed at https://nfra.gov.in/consultation_papers.

The comments may either be submitted by email at comments-tac.paper @nfra.gov.in or sent by post to NFRA Office at:

Secretary

National Financial Reporting Authority

7th Floor, HT House

18-20, Kasturba Gandhi Marg

New Delhi- 110001

About NFRA

The National Financial Reporting Authority (NFRA) was constituted on 01st October, 2018 by the Government of India under Sub Section (1) of Section 132 of the Companies Act, 2013. The main objective of NFRA is to protect the public interest and the interests of investors, creditors and others associated with the companies or bodies corporate governed under NFRA Rules, 2018 by establishing high quality standards of accounting and auditing and exercising effective oversight of accounting functions performed by the companies and bodies corporate and auditing functions performed by auditors.

About Consultation Paper

National Financial Reporting Authority (NFRA) has set up a Technical Advisory Committee (TAC) to, inter alia, provide NFRA with inputs from the perspective of various key stakeholders. The TAC has undertaken a consultative exercise to review NFRA’s engagement with its stakeholders, and has, in its report of March, 2021, recommended ways to enhance the same. Important recommendations of the TAC relate to formation of advisory/consulting groups, institution of fellowship programmes, publication of NFRA’s Inspection Policy, and building up of NFRA’s Regulatory Capacity. Consultation Paper has been prepared and published by NFRA incorporating its preliminary views, and proposed action plan, on the recommendations of the TAC

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Ministry of Corporate Affairs Press release dated 09th July 2021

Relaxation on levy of additional fees in filing of certain Forms(including DPT-3 & Form CFSS) under the Companies Act, 2013 and LLP Act 2008- Extension of time till 31st Aug 2021.

Posted on by Business So Simple in Company Law

MCA Vide General Circular No. 11/2021 dated 30th June, 2021 relaxing levy of additional fees in filing of certain Forms(including DPT-3 & Form CFSS) under the Companies Act, 2013 and LLP Act 2008 till 31st Aug 2021.

Circular says,

In continuation to this Ministry’s General Circular No 06/2021 dated 03 May 2021  and on account of requests for further extension of timelines specified in the said Circular, it has been decided to grant additional time upto 31st August, 2021 to companies/UPs to file forms under the Companies Act 2013 / LLP Act, 2008 (other than a CH6-1 Form, CH6-4 Form and CH6-9 Form) which were/are due for filing during 1st April, 2021 to 31st July, 2021 without any additional fees. Accordingly, only normal fees shall be levied upto 31st August, 2021 for forms (other than charge related forms referred above) required to be filed during 1st April, 2021 to 31st July, 2021. .

This Circular shall be without prejudice to any belated filings already made alongwith additional fees.

New Accounting Standards Rules for Small and Medium Sized Company (SMC) w.e.f. 01st April 2021 -Companies (Accounting Standards) Rules, 2021 (MCA Notification dated 23 June 2021)

Posted on by Business So Simple in Company Law, Financial Prudence

Dear Friends,

Please find below YouTube Video link on New Accounting Standards Rules for Small and Medium Sized Company (SMC) w.e.f. 01st April 2021 -Companies (Accounting Standards) Rules, 2021 (MCA Notification dated 23 June 2021)

✅ New definition of SMC

✅Applicability date of AS rules

✅Obligation to comply with Accounting Standards

✅Benefits of New Definition

✅News analysis/expert views

Regards,
Bipul Kumar

Companies (Indian Accounting Standards) Amendment Rules 2021 MCA notification dated 18th June 2021

Posted on by Business So Simple in Company Law

MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2021 to further amend the Companies (Indian Accounting Standards) Rules,2015. New amendments will be effective from date of publication in official Gazette.

As per amendment rules following Ind AS has been amended : 1. Ind AS 101 First-time Adoption of Indian Accounting Standards 2. Ind AS 102 Share-based Payment 3.Ind AS 103 Business Combinations 4. Ind AS 104 Insurance Contracts , 5. Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations 6. Ind AS 106 Exploration for and Evaluation of Mineral Resources 7. Ind AS 107 Financial Instruments: Disclosures 8. Ind AS 108 Operating Segments, 9. Ind AS 109 Financial Instruments 10. Ind AS 111 Joint Arrangements 11. Ind AS 114 Regulatory Deferral Accounts 12. Ind AS 115 Revenue from Contracts with Customers 13. Ind AS 116 Leases 14. Ind AS 1 Presentation of Financial Statements 15. Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors 16. Ind AS 12 Income Taxes  17. Ind AS 16 Property, Plant and Equipment 18. Ind AS 27 Separate Financial Statements 19. Ind AS 34 Interim Financial Reporting 20. Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets 21. Ind AS 38 Intangible Assets 22. Ind AS 40 Investment Property

Refer copy of MCA notification on https://mca.gov.in/content/mca/global/en/home.html

Inclusion of Independent director in databank of Independent Directors after payment of additional fees, in case of delay in applying/renewal (MCA Notification dated 18th June 2021)

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MCA has issued notification on 18th June 2021 by Companies (Creation and
Maintenance of databank of Independent Directors) Amendment Rules, 2021 inserting sub rule 8 in Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019.

As per new sub rule 8,

In case of delay on the part of an individual in applying to the institute under sub-rule (7) for inclusion of his name in the data bank or in case of delay in filing an application for renewal thereof, the institute shall allow such inclusion or renewal, as the case may be, under rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014 after charging a further fees of one thousand rupees on account of such delay.”.

Refer rule 3(7) as below

(7) The Indian Institute of Corporate Affairs, shall with the prior approval of the Central Government, fix a reasonable fee to be charged from :-

(a) individuals for inclusion of their names in the data bank of independent directors; and

(b) companies for providing the information on independent directors available on the data bank.

Refer rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014

[6. Compliances required by a person eligible and willing to be appointed as an independent director.

(1) Every individual –

(a) who has been appointed as an independent director in a company, on the date of commencement of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, shall within a period of 7[thirteen months] from such commencement; or

(b) who intends to get appointed as an independent director in a company after such commencement, shall before such appointment,

apply online to the institute for inclusion of his name in the data bank for a period of one year or five years or for his life-time, and from time to time take steps as specified in sub-rule (2), till he continues to hold the office of an independent director in any company:

Provided that any individual, including an individual not having DIN, may voluntarily apply to the institute for inclusion of his name in the data bank.

(2) Every individual whose name has been so included in the data bank shall file an application for renewal for a further period of one year or five years or for his life-time, within a period of thirty days from the date of expiry of the period upto which the name of the individual was applied for inclusion in the data bank, failing which, the name of such individual shall stand removed from the data bank of the institute:

Provided that no application for renewal shall be filed by an individual who has paid life-time fees for inclusion of his name in the data bank.

(3) Every independent director shall submit a declaration of compliance of sub-rule (1) and sub-rule (2) to the Board, each time he submits the declaration required under sub-section (7) of section 149 of the Act.

(4) Every individual whose name is so included in the data bank under sub-rule (1) shall pass an online proficiency self-assessment test conducted by the institute within a period of 8[Two years from] the date of inclusion of his name in the data bank, failing which, his name shall stand removed from the databank of the institute:

9[Provided that an individual shall not be required to pass the online proficiency self-assessment test when he has served for a total period of not less than three years as on the date of inclusion of his name in the data bank,-

(A) as a director or key managerial personnel, as on the date of inclusion of his name in the databank, in one or more of the following, namely:-

(a) listed public company; or

(b) unlisted public company having a paid-up share capital of rupees ten crore or more; or

(c) body corporate listed on any recognized stock exchange or in a country which is a member State of the Financial Action Task Force on Money Laundering and the regulator of the securities market in such member State is a member of the International Organization of Securities Commissions; or

(d) bodies corporate incorporated outside India having a paid-up share capital of US$ 2 million or more; or

(e) statutory corporations set up under an Act of Parliament or any State Legislature carrying on commercial activities; or

(B) in the pay scale of Director or above in the Ministry of Corporate Affairs or the Ministry of Finance or Ministry of Commerce and Industry or the Ministry of Heavy Industries and Public Enterprises and having experience in handling the matters relating to corporate laws or securities laws or economic laws; or

(C) in the pay scale of Chief General Manager or above in the Securities and Exchange Board or the Reserve Bank of India or the Insurance Regulatory and Exchange Board or the Reserve Bank of India or the Insurance Regulatory and Development Authority of India or the Pension Fund Regulatory and Development Authority and having experience in handling the matters relating to corporate laws or securities laws or economic laws :

Provided further that for the purpose of calculation of the period of three years referred to in the first proviso,any period during which an individual was acting as a director or as a key managerial personnel in two or more companies or bodies corporate or statutory corporations at the same time shall be counted only once.]

Explanation: For the purposes of this rule,-

(a) the expression “institute” means the ‘Indian Institute of Corporate Affairs at Manesar’ notified under sub-section (1) of section 150 of the Companies Act, 2013 as the institute for the creation and maintenance of data bank of Independent Directors;

(b) an individual who has obtained a score of not less than 10[fiftypercent]. in aggregate in the online proficiency self-assessment test shall be deemed to have passed such test;

(c) there shall be no limit on the number of attempts an individual may take for passing the online proficiency self-assessment test.

Ministry of Corporate affairs eases rules for board meetings conducted through virtual mode

Posted on by Business So Simple in Company Law

Amid the coronavirus pandemic, MCA  amended  new rules shifting from physical board  meetings to meeting through virtual mode. MCA has amended the Companies (Meetings of Board and its Powers) Rules, 2014, omitting Rule 4 by Companies (Meetings of Board and its Powers) Amendment Rules, 2021 vide MCA Notification dated 15th June 2021.

To curb the difficulties for corporates to conduct Board meetings during an outbreak of the Covid pandemic, MCA had granted relaxation from the above restriction in a phased manner up to June 30, 2021. Now the said restriction is permanently deleted.

Rule 4 of  Companies (Meetings of Board and its Powers) Rules, 2014 related to  restriction of conducting Board Meeting through Video Conferencing/Other Audio-Visual Means for selected agenda items.

In Rule 4 there are those matters not to be dealt with in a meeting through video conferencing or other audio-visual means-

(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 under sub-section (1) of Section 134 of the Act; and

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

Due to the COVID pandemic, MCA granted relaxation for conduction meeting through VC till 30th June 2021, which now permanently allows virtual resolutions on matters referred in rule 4. Boards of Directors of the Companies can now approve annual financial statements, Board’s report, Prospectus and matters related to mergers, amalgamations, at meetings held through video conferencing and other audio-visual means. No physical presence of director is required more.

This step would go a long way in ensuring that the hurdles faced by companies are reduced and business can be carried on smoothly with the aid of technology. Permitting audio-visual means for all matters will also enable companies to fulfil compliances promptly and will thereby ease the pressure on stakeholders.

For video, refers YouTube Link https://youtu.be/80Y3bP6t0Rw

Issue of Securities-Public offer, Rights issue, Private placement, Offer for Sale, IPO, FPO

Posted on by Business So Simple in Company Law

A company can raise funds through issue of securities.  Issues of Securities can be classified as a 1. Public   2. Rights or 3. Preferential issues /private placements.

While public and rights issues involve a detailed procedure, private placements or preferential issues are relatively simpler. :

Public offer : “Public offer” includes initial public offer or further public offer of securities to the public by a company, or an offer for sale of securities to the public by an existing shareholder, through issue of a prospectus (Explanation to Section 23).

Private placement: Private placement as any offer or invitation to subscribe or issue of securities to a select group of persons by a company (other than by way of public offer) through private placement offer-cum-application, which satisfies the conditions specified in this section 42 (Explanation I to Section 42)

Offer for sale (OFS) :

Public Offer includes or an offer for sale (OFS) of securities to the public by an existing shareholder, through issue of a prospectus.

Offer for Sale (OFS) is when the promoters (owner) of a listed company sell their shares to the general public. It is a transparent process which takes place on the stock exchange. Only the top 200 companies as per market capitalisation can initiate an OFS.

Unlike IPOs or FPOs, the concept of OFS is fairly new for Indian investors. The Securities and Exchange Board of India (SEBI) introduced OFS in February 2012. This was following a guideline issued by SEBI that promoters cannot hold more than 75% stake in listed companies. Earlier only promoters could participate in an OFS. But now, any shareholder holding more than 10% shares can offer their shares for sale.

Further issue of Shares:

Refer PPT and YouTube Video Link on Issue of Securities-

Thank You !

Bipul Kumar

Business Consultant

RSBK Business Services Private Limited

(A team of CA,CS & Lawyers)

Website: https://businesssosimple.com

Email: rsbkeducationalservices@gmail.com

Contact us: +91-6541-296060,  9304027546 Whatsup no. -9122050937

Fund raising options available for Private Limited Company

Posted on by Business So Simple in Business Consultancy, Company Law

Every business needs fund for plant/machinery/fixed assets, working capital, business expansion etc. In this video, I have listed some fund raising options available for Private Limited Company as under-
A. Further Issue of Capital–
Right Issue, Employee stock optional plan (“ESOP”), Private Placement/ Preferential Allotment B. Loan and Debenture– Loan, Unsecured Loan from Director and his Relatives, Debenture C. Deposit D. Inter-corporate Deposit E. Angle Investor F. Venture Capital G. Misc– Trade Payble/Creditors , Customer advance.

Please refer YouTube video link (PPT) for details

Regards,
Bipul Kumar