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Company Law Updates

  1. MCA, on 23 March 2020, had released a General Circular for inclusion of Covid care expenses of a company being booked as CSR (Corporate Social Responsibility) expenditure. Further, vide notification G.S.R 40 (E) dated 22 January 2021, MCA had issued Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“Amendment”). The Amendment expanded the scope of CSR activity to provide that funds may be spent for various activities related to Covid-19 under item nos. (i) and (xii) of Schedule VII relating to promotion of health care, including preventive health care and sanitation, and disaster management. Further items given Schedule VII are broad based and may be interpreted liberally for this purpose. MCA further released a clarification vide General Circular 09/2021 dated 5 May 2021 and stated that funds for creating health infrastructure for Covid care, establishment of medical oxygen generation and storage plants, manufacturing and supply of oxygen concentrators, ventilators, cylinders and other medical equipment for countering Covid-19, is eligible to be booked as CSR activity expenditure.
  2. MCA vide notification 409 (E) dated 15 June 2021 has released Companies (Meetings of Board and its Powers) Amendment Rules, 2021 to amend the original Companies (Meetings of Board and its Powers) Rules, 2014 (“Original Rules”). Vide this amendment, Rule 4 of the Original Rule has been omitted. With this MCA now permanently allows certain matters to be  dealt with in meetings held through video conferencing or other audio visual means which were earlier restricted under the erstwhile rule. Such matters include: approval of annual financial statement or Board’s Report or prospectus or matter relating to amalgamation, merger, demerger, acquisition and takeover of a company.  Further, Ministry of Corporate Affairs (MCA) vide General Circulars 14/2020 and 39/2020 dated 8 April 2020 and 31 December 2020 had earlier allowed companies to conduct extra-ordinary general meetings (EGMs) through video conferencing (VC) or other audio video means (OAVM), which was applicable till 30 June 2021. MCA has now extended the applicability and allowed the companies to hold EGMs through VC or OAVM till 31 December 2021. The modalities of conducting such EGM shall remain the same as provided in General Circular 14/2020.
  3. MCA has issued a clarification on offsetting of excess CSR fund spent in financial year 2019-2020. Vide Circular CSR-01/4/2021-CSR-MCA dated 20 May 2021 MCA has clarified that where a company has contributed any amount to Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (“PM CARES Fund”) on 31 March 2020 which is over and above the minimum amount prescribed under section 135 of Companies Act 2013, such excess amount is offset against the requirement to spend as CSR expenditure for financial year 2020-21, subject to certain conditions.
  4. MCA vide General Circular 08/2021 dated 3 May 2021 has relaxed  requirement to holding board meetings by companies  within interval provided under section 173 of the Companies Act, 2013 within 120 days for the first two quarters of Financial Year 2021-22. With this, the maximum gap between two consecutive meetings of the board may extend to 180 days during the quarter-April to June 2021 and quarter-July to September 2021.
  5. MCA vide General Circular 06/2021 dated 3 May 2021 has granted additional time up to 31 July 2021 for companies to file and submit statutory forms under the Companies Act, 2013, which were  originally due to be filed between 1 April 2021 to 31 May 2021 other than Form CHG-1, Form CHG-4 and Form CHG-9, without any additional fee. Further, vide General Circular 11/2021 dated 30 June 2021, the relaxation has been extended till 31 August 2021. Accordingly, no additional fee shall be levied up to 31 August 2021 for forms (other than the above mentioned Form CHG-1, Form CHG-4 and Form CHG-9) to be filed between 1 April 2021 to 31 July 2021.
  6. Relaxation for filing forms related to creation or modification of charge i.e. Form CHG-1 and Form CHG-9
    As per section 77 of the Companies Act 2013, Form CHG-1 and CHG-9 are to be filled within 120 days from creation or modification of charge respectively. However, due to the pandemic, vide General Circular 07/2021 dated 3 May 2021, MCA allows relaxation of time and condone the delay by a company or a charge holder in filing forms related to creation/modification of charge  i.e. Form CHG-1 and CHG-9. The said relaxation was further extended vide General Circular 12/2021 dated 30 June 2021. Following are the relaxed time-lines for filling the charge related forms:
  • Where the date of creation/modification of charge is before 1 April 2021 and the time line 120 day has not expired as on 1 April 2021, in such a case, the period from 1 April 2021 to 31 July 2021 shall not be considered while counting the 120 days.
  • Where the date of creation/modification of charge is between 1 April 2021 to 31 July 2021, the period beginning from the date of creation/modification of charge to 31 July, 2021 shall not be considered while counting the 120 days.

 

Company Secretarial (CS) compliances for Private Limited Company

Below is the summary of the compliances which need to be adhered to in the next period July 2021 – September 2021.

 

ParticularsDue Date 
Filing of Annual Return on Foreign Liabilities and Assets (FLA) 15 July 2021

Hold at least one Board Meeting in quarter July 2021 – September 2021

 

(As per the relaxation provided by MCA in view of Covid outbreak, gap between previous Board meeting and this meeting can go up to 180 days for the first two quarters of Financial Year 2021-22)

30 September 2021

 

Hold subsequent Annual General Meeting (AGM)

 

(For companies whose financial year has ended 31 March 2021)

30 September 2021

Form DIR-3 KYC

30 September 2021

 

Insolvency and Bankruptcy Code, 2016 (IBC)

  1. Pursuant to the Ordinance issued by the President of India under, pre-packaged insolvency resolution process for corporate persons classified as micro, small and medium enterprises (MSMEs) has been included. Vide Notification S.O. 1543(E) dated 9 April 2021, the government has specified INR 1 million as the minimum amount of a default for the matters relating to pre-packed insolvency resolution process of corporate debtors.
  2. Regulations 18, 19 and 21 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation 2016 (“CIRP Regulation”) deal with the resolution professional (RP) convening meeting of committee of creditors (CoC) of the corporate debtor against which the insolvency resolution process is been conducted.

 

The Insolvency and Bankruptcy Board of India, vide Clarification No. IBBI/CIRP/2021 dated 16 April 2021 has released a clarification in the said matter and stated that the RP shall convene a meeting of the CoC, in case a request has been made by the CoC members comprising of at least 33 per cent of the voting right. However, in case the request has been made by the members of CoC comprising of less than 33 per cent of the voting rights, the RP may convene such meeting of CoC, if considered necessary after considering the request expeditiously on merits.

 

Micro, Small and Medium Enterprises (MSME)  Relaxation in timeline for Udyam Registration Portal

Earlier, vide notification S.O. 2119(E) dated 26 July 2020, the Ministry of MSME had amended the definition and revised the eligibility of micro , small and medium enterprises. Due to the re-classification of enterprises as micro, small or medium, registration of all the existing MSMEs made before 30 June 2020 were only be valid till 31 March 2021. Therefore, all the existing MSMEs were required to re-register themselves at the Udyam Registration Portal on or after 1 July 2020 till 31 March 2021 failing to which the existing registration would have ceased to exist .


However, keeping in mind the pandemic situation, the Ministry of MSMEs vide Notification S.O. 2347(E) dated 16 June 2021, has now extended the validity of already registered existing MSMEs from 31 March 2021 to 31 December 2021.

 

 

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