Special relaxations for Corporates and LLPs in view of COVID outbreak

Special relaxations for Corporates and LLPs in view of COVID outbreak

In the last few days, we have observed that due to outbreak of COVID-19, Ministry of Corporate Affairs has been issuing various Notifications relaxing the regulatory compliance requirements as applicable on a company under the Companies Act, 2013. 

To provide another support and enable Companies and Limited Liability Partnerships (LLPs) in India to focus on taking necessary measures to address the outbreak, nationwide locakdown, the following steps have been implemented by the Ministry of Corporate Affairs vide its Notification dated March 24, 2020 to reduce their compliance burden and other risks: -

1. Late e-filing fees: During the moratorium period from 01^st April, 2020 to 30^th September, 2020, no additional fees shall be charged for late filing, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date. The Circulars specifying detailed requirements in this regard shall be issued separately.
2. Board meetings for 1^st & 2^nd quarter of FY 2020-21: The mandatory requirement of holding meetings of the Board of the companies within the intervals provided in Section 173 of the Companies Act, 2013 (CA13) (i.e. 120 days) stands extended by a period of 60 days till next two quarters i.e. till 30th September. Accordingly, as a one-time relaxation the gap between two consecutive meetings of the Board may extend to 180 days till the next two quarters, instead of 120 days as required in the CA13.
3. Applicability of CARO’20: 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 as notified earlier. A separate Notificationhas been issued by the Ministry of Corporate Affairs for this purpose.
4. Meeting of Independent Directors: As per Para VII (1) of Schedule IV to the CA13, 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 may have not been able to hold such a meeting, the same shall not be viewed as a violation. 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.
5. Creation of Deposit Repayment Reserve for deposits maturing in FY 20-21: Requirement under Section 73(2)(c) of CA13 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
6. Compliance towards Investment or Deposit of Debentures 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.
7. Declaration for Commencement of Business: Newly incorporated companies are required to file a declaration for Commencement of Business within 180 days of incorporation under
8. Section 10A of the CA13. An additional period of 180 more days is allowed for this compliance.
9. Resident Director compliance for FY 2019-20: 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 CA13 shall not be treated as a non-compliance for the financial year 2019-20.