Companies Get Relaxation from Some Mandatory Compliance
Since the declaration of Covid-19 as a pandemic, the company professionals have locked themselves down – afraid of two things. One, what might happen to them if they leave the house and two, what will happen to their finances if they aren’t compliant.
In an effort to provide some relaxation in the second matter, the government of India has provided some levity by relaxing certain compliances. Furthermore, it has also provided special regulatory measures to make the company’s life a bit more comfortable.
CSR funds can and to be used for COVID 19
CSR funds or corporate Social Responsibility funds has to spent for an eligible CSR activity. In these trying times, COVID-19 preventive measures are considered an eligible activity. These activities include:
- Healthcare promotion
- Preventive healthcare and sanitation
- Disaster management.
Directors not required at board meetings
Before you try to wriggle your way out of this one, read this carefully. Directors are not physically required to attend board meetings. For the following matters, audio and video conferencing is to be considered sufficient:
- Approval of financial statements
- Approval of board’s report
- Approval of prospectus
- Audit committee meetings for consideration of financial statements, and
- Approval related to merger, amalgamations, takeover and acquisition
All companies and LLPs are advised to work from home
To contain the spread of COVID 19 and to ensure that all the company professionals and directors are protected, MCA has created a special advisory in which it has strongly advised those companies to work from home. The Work from Home policy consists of the following:
- Implementation of work from home in the headquarters and field offices as much as possible.
- If essential staff is present, the time is to be reduced to reduce physical interactivity.
- All the dos and don’ts mentioned in the public advisory have to be followed diligently.
CAR form to confirm compliance with COVID-19 measures
The ministry has said that companies has to file a CAR form to show their readiness to deal with COVID 19. The online form would require the signature of company’s signatories.
Extension of time to declare commencement of business
Companies who once had to make a declaration of commencement of business within 180 days of business registration, without which, they couldn’t start their business are now given extension of another 6 months or additional 180 days.
No late fee for MCA-21 Registry
No penalty shall be levied on companies of late filing the documents required in MCA 21 registry.
Extension in requirement to conduct board meeting every quarter
All the companies are traditionally required to conduct board meeting every 120 days. However, with the pandemic looming, the ministry has increased that interval to 180 days.
Minimum residency requirement removed
Even if the company doesn’t have at least one non-resident director who stays in India for 182 days, the company won’t be given a penalty.
Auditor report postponed
Companies aren’t required to file auditor’s report 2019-20 anymore. All the details of that report can be moved forward to the report of 2020-21 and can be filled as such.
Exclusive meeting not required for independent required
As per the Schedule IV that dictates the code of independent directors, the independent directors should have an exclusive meeting. However. That has been changed for the financial year 2019-20 and as such, no exclusive meeting is required.
Deadline extended to deposit specific amount in deposit repayment reserve account
The deadline to deposit specific amount in deposit repayment reserve account has been extended till June 30th, 2020.
Deadline extended for investing 15% of matured debentures
The deadline to invest/deposit 15% of matured debentures has been extended to June 30th 2020.
Threshold increased for triggering Corporate Insolvency resolution process
The current threshold of INR 1,00,000/- to trigger insolvency resolution process for companies to INR 1,00,00,000/-
IBC Sections suspended for MSMEs
Insolvency and Bankruptcy Code Sections 7,8,9 and 10 in regards to MSMEs (Micro, Small and Medium Enterprises) have been suspended till the pandemic situation gets better.
Coronavirus has shut down the nation in many regards. Through the aforementioned relaxations, your company can still function amidst the lockdown. Just follow the COVID-19 measures, take heed of the time you’ve been given and for any help, consult with our business consultants.