||Pre Relaxation Compliance
||Post Relaxation Compliance
|Filing of forms with the MCA
||Companies are required to file the respective returns
and documents within the time specified in this regard under the
respective provisions of the Companies act, 2013 (the Act). However,
filing returns beyond specific time period would attract late filing
||# The ministry has imposed a moratorium period on its
registry from 1st day of April 2020 to 30th day of September 2020.
# Moratorium as per Merriam-Webster’s dictionary is defined
as a legally authorized period of delay in the performance of a legal
# During this said period, the companies are authorized to file
their pending returns and documents with the ministry without the levy
of any additional filing fee notwithstanding the due date which has
already went past or the due date which may occur during the said
# This means that the company is provided with a fresh opportunity
to clear off all pending filings from their end during the said period
without the MCA taking cognizance of the same.
A company has to file Annual returns in form MGT-7 with the Registrar
of Companies (ROC) pertaining to the Financial year ended 31st March
2019. The same has not been filed till date. As already been known, late
filing fees are effective from 1st day of January 2020. Now a company
can make use of this moratorium period to file the said annual return
with ROC without incurring any additional filing fee and without
reciprocating any comments from the ROC.
||Section 173(1) of the Act state that Every company shall
hold the first meeting of the Board of Directors within thirty days of
the date of its incorporation and thereafter hold a minimum number of
four meetings of its Board of Directors every year in such a manner
that not more than one hundred and twenty days shall intervene between
two consecutive meetings of the Board.
||# Considering the pre-relaxation compliance to hold
board meetings within 120 days of previous meeting, there would be
certain companies who would have scheduled their board meetings closer
to the end of the financial year or would be planning to hold meetings
of board during the month of April or May 2020.
# On being considerate about the nationwide pandemic situation and
lock downs in several places, the ministry has extended the time to hold
the meeting of the board of directors by 60 days over and above the
period of 120 days. However this relaxation is only available till
30th day of September 2020.
ABC Limited held its board meeting on 20th December 2020 and its next
meeting is scheduled to be held on 10th April 2020. Now considering the
situation and by the virtue of given relaxation, the company can hold
board meeting anytime but not later than 17th June 2020.
# Earlier the MCA on 19th day of March 2020 issued the Companies
(Meetings of Board and its Powers) Amendment Rules, 2020 to allow the
directors of the companies to participate in the meeting of board of
directors by the mode of video conferencing for the restricted items
enlisted under Rule 4 of Companies (Meetings of Board and its powers)
Rules, 2014 such as Approval of Financial statements, Approval of Board
report, approval of prospectus, audit committee meetings etc. without
requirement of physical quorum being present. This notification is
effective till 30th day of June 2020.
|The Companies (Auditor's Report) Order,2020
||The MCA had issued notification S.O. 849(E) dated
25th day of February 2020 which is captioned Companies (Auditor's
Report) Order, 2020. The said notification states as under:
Every report made by the auditor under section 143 of the Companies Act
on the accounts of every company audited by him, to which this Order
applies, for the financial years commencing on or after the 1st April,
2019, shall in addition, contain the matters specified in paragraphs 3
and 4 of the said notification
|# Due to non-availability of various services, lock
down situations in various areas, the uncertainty ahead and to reduce
the compliance work on the part of companies and the auditors, the MCA
has decided to change the applicability/commencement of Companies
(Auditor’s Report) Order, 2020 from the current financial year
(2019-20) to financial year 2020-21.
# Hence the auditors have to comply with the requirement of stating
such matters in their audit report as required under the said rules for
the accounts of the company that would be presented to the shareholders
in the year 2021.
|Meeting of Independent Directors
||Independent Director by the virtue of law has been
bestowed with more responsibility in discharging his duties in the best
interest of the companies. Section 149(8) of the Companies Act, 2013
mandates that Independent directors shall adhere to the code of conduct
for such directors as listed out under Schedule IV to the Act.
Schedule IV mandates that The independent directors of the company shall
hold at least one meeting in a financial year without the attendance of
non-independent directors and members of management.
|# There would be certain companies in the geography
of India, whose Independent directors would have scheduled a meeting
which is mandatory under pre relaxation regulations before the closure
of the current financial year (FY 2019-20). However due to the
restrictions on movement laid down by the GOI, companies would not be in
a position to hold such meetings.
# To provide solution to this requirement, the MCA has rolled out a
relaxation stating that non-holding of meeting of Independent directors
during FY 2019-20 would not be treated as a violation and no action
would be taken against the same. In simple sense, the requirement of
holding meeting of Independent directors for the FY 2019-20 has been
|Deposit Repayment Reserve Account
||Section 73(2)(c) of the Act signifies that a company
shall open an account with a scheduled bank and deposit more than 20
percent of the amount of deposit maturing during the following financial
year in such account within 30th day of April of each year. Such account
be known as Deposit Repayment Reserve account.
||# The MCA has made it clear that under interim
relief provided, companies shall open bank account with scheduled banks
as listed under Schedule II of RBI Act and deposit/deposit more than 20
percent of the amount of deposit maturing during the following financial
year into the Deposit Repayment Reserve account within 30th day of June
# It is pertinent to note that the purpose of opening and
maintaining such account is to pave way for repayment for deposits in
case of uncertainty and non-payment on case to case basis. Hence the
time period for compliance for such deposit into account is extended to
30th June 2020 instead of 30th April 2020.
|Debenture Redemption Reserve Account
||# Rule 18 (Sub provision 7(b)) of Companies (Share
Capital and Debentures) Rules, 2014 enlists those companies that are not
required under the purview of the act to constitute a debenture
redemption reserve account on the basis of classification on public and
privately placed debentures.
# Further provision 7(b) (v) provides that every other company covered
under the rules other than those exempted from such requirement shall
deposit or invest a sum which shall not be less than fifteen per cent.,
of the amount of its debentures maturing during the year, ending on the
31st day of March of the next year in any one or more methods of
investments or deposits as provided. Such investment or deposit shall be
made before 30th day of April every year.
|# There is no relaxation with respect to the
percentage of amount that has to be deposited or invested as required
under the Rules.
# The relaxation rolled out with respect of the said rules are that, a
sum of not less than 15 percent of the amount of debentures matured
during the year as on 31st March 2021 shall be deposited or invested
in the specified methods of investments or mode of deposit under the Act
within 30th day of June 2020instead of 30th day of April 2020.
# The said relief is a time based measure and no procedural measures
have been relaxed by the MCA.
|Commencement of Business
||Section 10A of the Act confers a mandatory obligation on
then newly incorporated companies to not commence any business
operations or borrow monies unless a declaration to the effect in e-form
INC-20A is filed by a director within a period of one hundred and eighty
days of the date of incorporation of the company.
||# Not only the GOI has rapidly taken steps for
reducing the compliance on established companies but has made certain
relaxations in case of newly incorporated companies or companies that
are going to be incorporated.
# Companies are given an additional time period of 180 days to file
the declaration for commencement of business with the ROC over the
period of 180 days already given by the Act.
ABC Limited acquired the status the legal status of company vide
obtaining certificate of incorporation dated 31stOctober 2019. In the
case, the company is required to file the certificate of incorporation
within 28th day of April 2020. By the virtue of relaxation bestowed by
MCA, the company can file the declaration to the MCA by 25th day of
October 2020 (Additional 180 days).
||The provisions of Section 149(3) of the Act, makes it
mandatory and sensible that every company shall have a necessarily have
one director who is physically present in the territory of India for a
total period of not less than one hundred and eighty-two days during the
||# Non presence of at least one director in India is
essentially treated as a non-compliance and taken cognizance of by the
# In this regard, owing to various restrictions on travel and
movement, the MCA has rolled out a relief to the companies stating that
if at least one director of any company is not physically present in the
territory of India as required under the Act, that would not amount to
non-compliance for the ‘financial year 2019-20’ only.