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Company Law Updates

1. Introduction of New Scheme for condonation of delay for companies restored on the Register of Companies by MCA:

  • Ministry of Corporate Affairs(MCA) had earlier introduced the Companies Fresh Start Scheme, 2020 (CFSS-2020) vide General Circular No. 12/2020, dated 30 March 2020 which was initially applicable for the period starting from 1 April 2020 to 30 September 2020, which was further extended till 31 December 2020.
  • MCA now released another General Circular No. 30/2020 dated 15 January 2021, stating that CFSS is no longer applicable for these filings under the Companies Act 2013 beyond 31 December 2020.
  • However, at the same time, MCA received many representations by companies who had filed an appeal under section 252 of the Companies Act, 2013 before the National Company Law Tribunal (NCLT) for restoration against the order of striking off their company names. Since such companies could not avail the benefit of filing under the CFSS-2020 by 31 December, 2020 and would otherwise be liable to be levied additional fees upon filing overdue e-forms, as a result MCA introduced a new scheme “Scheme for condonation for delay for companies restored on the Register of Companies between 1 December, 2020 and 31 December, 2020 under Section 252 of the Companies Act, 2013” (Condonation Scheme). The purpose of this Condonation Scheme is to condone the delay in filing e-forms with the Registrar, with respect to charging of additional fees on account of delay in such filing at the same time without any immunity from civil/ criminal proceedings. This Condonation Scheme is applicable to companies restored on the Register of Companies between 1 December 2020 and 31 December 2020 under Section 252 of the Companies Act, 2013.
  • The Scheme shall be applicable in respect of all e-Forms, except where any increase in authorized capital is involved (e-Form SH-7) and charge related documents (e-Forms CHG-1, CHG-8 and CHG-9).

 

2. MCA has introduced relaxation of additional fee in filing all AOC-4 e-forms:

  • Vide General Circular No. 04/2021 dated 28 January 2021, MCA had imposed relaxation of levy of additional fees in filing e-Forms AOC-4, AOC-4(CFS), AOC-4 XBRL and AOC -4 Non-XBRL for the financial year ended on 31 March 2020. No additional fees were payable up to 15 February 2021.

 

3. Clarification on holding of Annual General Meeting (AGM) through video conferencing or other audio visual means (OAVM) :

  • MCA in continuation of its General Circular No. 20/2020, dated 5 May 2020 , has issued a new General Circular No. 02/2021 dated 13 January 2021 to allow companies whose AGMs were due to be held in the year 2020, or become due in the year 2021, to conduct their AGMs on or before 31 December 2021, in accordance with the requirements provided in paragraph 3 and 4 of General Circular No. 20/2020. Further, it is also clarified that this present new General Circular hall not be construed as conferring any extension of time for holding of AGMs by the companies under the Companies Act, 2013, and the companies which have not adhered to the relevant timelines shall remain subject to legal action under the Companies Act, 2013.

4. MCA has further notified certain sections of the Companies Amendment Act, 2020

  • MCA has further notified certain sections of the Companies Amendment Act, 2020 with effect from 21 January 2021, 22 January 2021, 11 February 2021, 5 March 2021. Amongst other sections notified under the Companies(Amendment) Act, 2020, the main highlights are as follow:

a. Section 62(1) of the Companies Act,2013 is amended to reduce the mandatory time line of 15 days to  shorter period as may be prescribed to the existing shareholders for the purpose of acceptance of offer of subscribing to share capital proposed to be issued by the company.

 

b. New section 129-A has been inserted which deals with requirement of periodical financial results for such class or classes of unlisted companies, as may be prescribed : to prepare the financial results of the company on such periodical basis and in such form as may be prescribed; to obtain approval of the Board of Directors and complete audit or limited review of such periodical financial results in such manner as may be prescribed; and to file a copy with the Registrar within a period of thirty days of completion of the relevant period with such fees as may be prescribed.

 

5.  Notification of amendments in various Companies Rules have been notified by MCA

  • MCA vide notification dated 22 January 2021 has amended the Companies (Corporate Social Responsibility Policy) Rules, 2014 for CSR Implementation, among other things, where every entity who intends to undertake any CSR activity shall register itself with the Central Government by filling the e-Form CSR-1 with the Registrar, with effect from 1 April 2021.
  • The amendment in Companies (Incorporation) Rules, 2014, via notification dated 1 February 2021, shall come into force on 1 April 2021 which allows for conversion of One Person Company (OPC) into a Public company or a Private company after altering its memorandum and articles by passing a resolution and making necessary changes as well as increasing the minimum number of members and directors and maintaining the minimum paid-up capital as per the requirements and also shall file an application in e-Form No. INC-6 along with required documents for the same.
  • MCA has also amended the Companies ( Management and Administration) Rules, 2014 via notification dated 5 March 2021 which states that every company shall file its annual return in Form No. MGT-7 except OPC and Small Company. OPC and Small Company shall file annual return from the financial year 2020-2021 onwards in Form No. MGT-7A.

 

Company Secretarial (CS) compliances for Private Limited Company

Below is the summary of the compliances which need to be adhered to in the next quarter

(April 2021 – June 2021) :

 

 

Ordinance issued by the President of India under the Insolvency and Bankruptcy Code, 2016 (IBC).

  • Government has introduced the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 (Ordinance) for distressed Micro, Small and Medium Enterprises for mitigation distress caused by the Covid-19 pandemic.
  • The said Ordinance highlights several measures taken by the Government of India to mitigate the distress caused by the pandemic , including increasing the minimum amount of default for initiation of corporate insolvency resolution process (CIRP) to INR 10 million and suspending filing of applications for initiation of CIRP in respect of the defaults arising during the period of one (1) year beginning from 25 March 2020. It may be noted that this suspension of filing of applications for initiation of CIRP has ended on 24 March 2021.
  • Pursuant to this Ordinance , a new chapter IIIA has been inserted under the IBC which provides for pre-packaged insolvency resolution process for corporate persons classified as micro, small and medium enterprises (MSMEs). One of the feature of this pre-packaged insolvency resolution process is it allows for coming up with an informal plan worked out by creditor and debtor debt resolution which is approved by NCLT. The idea behind this is to ensure quicker, cost-effective and value maximizing outcomes for all the stakeholders, in a manner which is least disruptive to the continuity of their businesses and which preserves jobs.

 

Reserve Bank of India (RBI) amends its Master Directions on Know Your Customer (KYC)

Reserve Bank of India (RBI) as on 23 March 2021 issued a notification to amend the Master Direction Know Your Customer Direction dated 25 February 2016. Pursuant to this amendment, the Regulated Entities (REs) have been instructed, inter alia, that the procedure laid down under the Unlawful Activities (Prevention) Act, 1967 (UAPA), as provided shall be followed strictly.

 

  • The Employees’ Provident Fund Organization launched an electronic facility, unified portal, for principal employers, i.e. establishments engaging contract labor through contractors/manpower service providers, whereby they may be able to add the details of its contractors as well as the Universal Account Number (UAN) of each contract worker deployed at the principal employer’s establishment.
  • This unified portal enables the principal employer to view whether correct remittances towards Employees’ Provident Fund (EPF) is being made by the contractors/ manpower service providers in respect of its contract workers deployed at the principal employer’s establishment in order to ensure compliance with the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.

 

2. The state of Karnataka amends the Karnataka Shops and Commercial Establishments Act, 1961

  • The Labour Department of Government of Karnataka has, through notification dated 2 January 2021 allowed all shops and establishments in the State of Karnataka, employing 10 or more persons to operate on a 24x7 basis throughout the year for a period of three years on a conditional basis.
  • The recent notification requires employers to appoint additional staff in a manner that every employee can take a day off every week on a rotational basis.
  • The notification also stipulates the working hours of any employee as well as the employment of women employees shall not be allowed beyond 8 PM under normal circumstances. Provided such restriction to work post 8 PM is lifted subject to having received written consent of women employees also the employer shall be responsible for undertaking various arrangements for their safety and dignity.
  • By the way of notification dated 19 February 2021, the Government of Karnataka amended certain provisions of the Karnataka Shops and Commercial Establishments Act, 1961, which has not increased the maximum accumulation of earned/ plaid leaves from 30 days to 45 days.

 From The Newsletter

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