ARTICLE
18 November 2021

COVID 19 | Regulatory Update

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With the rapid spread of Covid-19 pandemic, the Ministry of Corporate Affairs ("MCA") has granted corporates certain relaxations. Set out below is a snapshot of some of the relaxations announced.
India Coronavirus (COVID-19)

A. Introduction:

With the rapid spread of Covid-19 pandemic, the Ministry of Corporate Affairs ("MCA") has granted corporates certain relaxations. Set out below is a snapshot of some of the relaxations announced.

B. COVID 19: Relaxations:

- Gap between board meetings

Section 173 of the Companies Act, 2013 ("CA 2013") mandates companies to conduct board meetings at regular intervals such that not more than 120 days shall intervene between two consecutive board meetings. As a one-time relaxation, MCA has extended the gap to 180 days for the quarters April to June 2021 and July to September 2021.

The circular issued by MCA is accessible here.

- Additional fee on delayed flings

MCA has clarified that companies and limited liability partnerships will not be required to pay additional fees for any delayed filings up to July 31, 2021. This relaxation has been extended to forms which are due for filing for the period commencing April 1, 2021 to 31 May, 2021. However, such relaxation has not been extended to filing of Form CHG-1, Form CHG-4 and Form CHG-9.

The circular issued by MCA is accessible here.

- Timelines and penalties for filing forms for creation or modification of charge

MCA has granted relaxation to companies and charge holders in respect of filing of forms CHG-1 and CHG-9, as indicated in the table.

Date of creation /modification of charge Relaxation Fee
Prior to April 1, 2021 provided the prescribed timeline as set out under Section 77 of the CA 2013 has not expired

The period commencing from April 1, 2021 to May 31, 2021, will be excluded for the purposes of computing the timelines under Section 77 or Section 78 of CA 2013.

If the form is not filed within such period, the first day after March 31, 2021, will now be reckoned as June 1, 2021.

No additional fee will be levied if the form is filed on or before May 31, 2021. Accordingly, only the applicable fee as on March 31, 2021 will be payable.

If the form is filed after May 31, 2021, fee will be charged after adding the number of days commencing June 1, 2021 and ending on the date of filing - plus the time period lapsed from the creation of charge till March 31, 2021.

Form due for filing on any date which falls between April 1, 2021 to May 31, 2021 (both dates inclusive).

The period commencing from the date of creation or modification of charge to May 31, 2021, will be excluded for the purposes of computing the timelines under Section 77 or Section 78 of CA 2013.

If the form is not filed within such period, the first day after March 31, 2021, will now be reckoned as June 1, 2021.

No additional fee will be levied if the form is filed before May 31, 2021. Accordingly, only the applicable fee as on March 31, 2021 will be payable.

If the form is filed after May 31, 2021, the first day after the date of creation or modification of charge will be reckoned as June 1, 2021, and the number of days till the date of filing of the form will be counted for determining the quantum of fee payable.

The above relaxation does not apply in the following circumstances:

  • If Form CHG-1, Form CHG-9 has been filed prior to May 3, 2021;
  • Timeline for filing the form has expired under Section 77 or Section 78 of the CA 2013 prior to April 1, 2021;
  • Timeline for filing the form expires at a future date, despite exclusion of timeline provided above; and
  • Filing of Form CHG-4 for satisfaction of charges.

The circular issued by MCA is accessible here.

- Expenditure of Corporate Social Responsibility ("CSR") funds for COVID-19

By its circular dated March 23, 2020, MCA had clarified that spending CSR funds for COVID 19 related activities will classify as a CSR activity. It has now been further clarified that spending of CSR funds for 'creating health infrastructure for COVID care', 'establishment of medical oxygen generation and storage plants', 'manufacturing and supply of oxygen concentrators and ventilators' are eligible CSR activities.

The circular issued by MCA is accessible here.

C. Conclusion:

Considering some of the states in India are under lockdown, amidst the resurgence of Covid-19 pandemic, the above relaxations will provide a temporary relief to companies in meeting their day to day regulatory compliances.

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.

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