The Indian Ministry of Corporate Affairs ("MCA") has taken numerous steps in the wake of the COVID to ensure the smooth functioning of Indian companies.
The steps taken by the MCA include the follows:
I. Introduction of Form CAR (Companies Affirmation of Readiness to COVID -19)
The MCA has introduced a new Form CAR which may be filed by an authorised signatory of an Indian company. The purpose of the said form is for the concerned company to confirm that it has been adhering to guidelines prescribed by the Central/State government with respect to the precautionary measures to be adopted for COVID -19. The form is a voluntary filing and is not mandatory.
II. Companies (Meetings of the Board and its Powers) Amendment Rules 2020
The MCA on 19th March 2020 notified the Companies (Meetings of the Board and its Powers) Amendment Rules 2020 ("Amendment Rules"). The Amendment Rules dispensed with the requirement of a physical meeting of the board of directors of Indian companies as prescribed under Section 173(2) for the approval of the annual financial statements, board reports etc. The Amendment Rules provided that till June 30th 2020 such meetings may be held by video conferencing or other audio visual means in accordance with Rule 3 of the Companies (Meetings of the Board and its Powers) Rules, 2014.
III. Clarification on the passing of ordinary and special resolutions
On 8th April 2020 the MCA issued a general circular stating how ordinary and special resolutions can be passed through postal ballot / e-voting. On 13th April 2020 the MCA further issued clarification setting out in detail how such resolutions should be passed.
IV. No late fee under the Companies Act, 2013 and the LLP Act, 2008
No additional fee shall be charged for late filing during the moratorium period from 1st April to 30th September 2020 for any document, return, statement etc to be filed in the MCA registry.
V. Board meetings under the Companies Act, 2013
The gap between two consecutive board meetings can be 180 days instead of 120 days till 30th September 2020. 120 days is the gap prescribed under Section 173 of the Companies Act, 2013. This has been relaxed by the MCA till September 30th 2020.
VI. Companies (Auditor's Report) Order, 2020
The Companies (Auditor's Report) Order shall be made applicable for the financial year 2020-21 instead of 2019-20 as notified earlier. This will significantly reduce the burden on companies and their auditors for the year 2019-20.
VII. Meeting of Independent Directors
As per Schedule lV to the Companies Act 2013, independent directors ("lDs") 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 lDs of a company have not been able to hold such a meeting, the same shall not be viewed as a violation by the MCA. The lDs, however, may share their views amongst themselves through telephone or e-mail or any other mode of communication, if they deem it to be necessary.
VIII. Deposit Repayment Reserve
The requirement under section 73(2)(c) of Companies Act 2013 to create the deposit repayment reserve of 20% of deposits maturing during the financial year 2020-21 before 30th April 2020 has been allowed to be complied with till 30th June 2020.
IX. Deposits of Debenture Maturing
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 30th April 2020, may be complied with till 30th June 2020.
X. Filing of Declaration of Commencement of Business
Newly incorporated companies are required to file a declaration for Commencement of Business within '180 days of incorporation under section 10A of the Companies Act 2013. An additional period of 180 more days has been allowed by the MCA for this compliance.
Comments: The steps taken by the MCA for smooth operations of Indian companies during the COVID pandemic are indeed commendable and will go a long way in assisting Indian companies to function during this difficult period.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.