In view of COVID-19, Nirmala Sitharaman, Finance and Corporate Affairs Minister, announced certain relief measures on March 24, 2020 which were then officially notified by the Ministry of Corporate Affairs (“MCA”) through its General Circular 11/2020 dated March 24, 2020. This alert follows up on our last update of March 24 available here http://www.psalegal.com/mca-initiatives-to-deal-with-covid-19/:
1. Additional fee: All additional fee on account of late filing of e-forms has been done away with for 6 months. This moratorium period is from April 1, 2020 till September 30, 2020. The MCA will issue a separate circular with detailed clarifications;
2. Board Meetings: As per section 173 of the Companies Act, 2013 (“the Act”), every company has to convene at least four BMs in each calendar year with a maximum gap of 120 days between two consecutive BMs. The MCA has relaxed this requirement by extending the period of 120 days to 180 days till September 30, 2020.
3. CARO 2020: The MCA had notified the Companies (Auditor’s Report) Order, 2020 (“CARO 2020”) on February 25, 2020 to be effective for auditor’s reports from FY 2019-20 onwards. CARO 2020 prescribed a revised format of audit reports by introducing additional reporting requirements. MCA has delayed its application by 1 year. CARO 2020 shall now be made applicable from FY 2020-21 onwards.
4. Meeting of Independent Directors: As per Para VII(1) of Schedule lV of the Act, companies having independent directors have to convene at least one meeting of independent directors in every FY. No other directors or members of the management should be present in such meeting. MCA has relaxed this requirement for independent directors for FY 2019-20.
5. Declaration of commencement of business: As per section 10A of the Act, newly incorporated companies have to file a declaration for commencement of business within 180 days from the date of incorporation. This period has now been extended by another 180 days giving companies more time to complete comply.
6. Resident Director: As per section 149 of the Act, every company should have at least 1 director who stays in India for at least 182 days in each FY. Due to travel restrictions, MCA has relaxed this requirement as well for this FY.