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A Gestalt On The Relaxation Norms Under Various Regulations In India During The Covid-19

The World Health Organization (WHO) on March 11, 2020, has declared the novel coronavirus (COVID-19) outbreak a global pandemic. The global outbreak of coronavirus (COVID-19) is an unusual event that has led to lockdowns and unexpected restrictions on the public as well as the corporate sector across the world. Owing to the legal, regulatory and compliance challenges faced by the people due to COVID-19 pandemic, various regulators have granted certain relaxation norms which are briefed in this write-up.

Tabled below are the relaxation norms by various regulators under different Acts in the time of COVID- 19 to address the regulatory, legal and compliance challenges:

SR.NO ACT RELAXATION NORMS
1 Companies Act, 2013
  • The time limit for filing form NFRA-2 for the reporting period Financial Year 2018-2019 has been extended to 210 days from the date of deployment of this form on website of National Financial Reporting Authority (NFRA).
  • The last date for registration of Independent Directors in the Data Bank of Independent Directors has been extended from five months to seven months, i.e. within 7 months from 1st December 2019. Thus the extended date for the registration would be on or before 30th June, 2020.
  • MCA has extended the time period of additional 20 days for the following transactions with respect to the names expiring on any day between 15th March 2020 to 3rd May 2020:
    a. Filing of Spice + Part B by the companies whose name has been reserved,
    b. Filing of INC-24 in case the name has been reserved for change of name of Company,
    Further, an additional 15 days period will be allowed for resubmission of the forms where the last date of resubmission of forms for companies falls between 15th March 2020 to 3rd May 2020. However, for SRNs already marked under NTBR (Not to be taken on Record), extension would be provided on case to case basis.
  • The time frame to hold Annual General Meeting (AGM) for the companies whose Financial Year (other than first Financial Year) has ended on December 31, 2019 has been extended, such Companies can now hold AGM within the period of 9 months from closure of current Financial year (i.e.September 30, 2020) and the same shall not be considered as the violation of law.
  • Extraordinary General Meeting (EGM), may be held through Video-Conferencing or Other Audio Visual Means and notice can be sent through e-mail only. Companies which are mandatorily required to provide e-voting, shall provide the same for voting during and other companies can obtain approval by show of hands or poll through email, as may be applicable.
  • Notice of EGM shall contain disclosures of framework provided in the Circular, clear instructions on how to access and participate in the meeting. It should also provide a helpline number to provide assistance to Shareholders.
  • Postal Ballot can also be undertaken only through e-voting by companies where e-voting is mandatory. No need to send physical ballots to members.
  • DIN holders of DINs marked as ‘Deactivated’ due to non-filing of DIR-3KYC/DIR-3 KYC-Web and those Companies whose compliance status has been marked as “ACTIVE non-compliant” due to non-filing of Active Company Tagging Identities and Verification (ACTIVE) e-form can file DIR-3KYC/DIR-3KYC-Web/ACTIVE as the case may be between 1st April, 2020 to 30th September, 2020 without any filing fee of INR 5,000/INR 10,000 respectively.
  • To grant relief from levy of additional fees on filing of Forms with ROC, MCA has introduced Companies Fresh Start Scheme, 2020. Under the Scheme, Eligible Companies are allowed completion of belated filing without payment of any additional fees. Tenure of Scheme is from April 01, 2020 till September 30, 2020. The CFSS form shall be available on the MCA portal with effect from October 01, 2020 till March 31, 2021 for filing purposes.
  • The Companies (Auditor's Report) Order,2020 shall be made applicable from the financial year 2O2O-2O21 instead of being applicable from the financial year 2019-2020.
  • For the period April 01, 2020 till September 30, 2020, board meetings can be held with a gap of 180 days.
  • 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 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.
  • Last date of creating deposit repayment reserves (20%) and debenture redemption reserves (15%) has been extended from April 30, 2020 to June 30, 2020.
  • An additional period of 180 more days is allowed to newly incorporated companies which are required to file a declaration for Commencement of Business within '180 days of incorporation under section 10A of the Companies Act, 2013.
  • 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 Companies Act, 2013 shall not be treated as a non-compliance for the financial Year 2019-20.
  • For the period beginning from the commencement of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 and ending on the 30th June, 2020, the meetings on matters referred to in sub-rule (1) i.e. Matters Not to be Dealt With in a Meeting Through Video Conferencing or Other Audio Visual Means may be held through video conferencing or other audio visual means.
2 Limited Liability Partnership Act, 2008
  • MCA has extended the time period of additional 20 days for the following transactions with respect to the names expiring on any day between 15th March 2020 to 3rd May 2020 for Filing of FiLLiP/Form 5 in case of name reserved for incorporation or change of name of name of LLP. Further, an additional 15 days period will be allowed for resubmission of the forms where the last date of resubmission of forms for LLPs falls between 15th March 2020 to 3rd May 2020. However, for SRNs already marked under NTBR (Not to be taken on Record), extension would be provided on case to case basis.
  • To grant relief from levy of additional fees on filing of Forms with ROC, MCA has introduced LLP Settlement Scheme, 2020. Under the Scheme, Eligible LLPs are allowed completion of belated filing without payment of any additional fees. Tenure of Scheme is from April 01, 2020 till September 30, 2020.
3 Insolvency And Bankruptcy Code, 2016
  • The Central Government specifies One Crore as the minimum amount of default for initiating insolvency proceedings.
4 Foreign Exchange Management Act, 1999
  • Timelines for realization and repatriation of export proceeds has been increased from 9 months to 15 months from the date of export. The said relaxation has been provided for the exports made up to or on 31st July, 2020.
  • Foreign Direct investment in India from a foreign entity incorporated in or where the beneficial owner of such an investment into India is situated in/ is a citizen of any such country which shares the border with India can now be made only through the Government approval route.
5 SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015
  • Regulation 44(5) of the LODR requires top 100 listed entities by market capitalization to hold their Annual General Meeting (AGM) within a period of five months from the date of closing of the financial year. SEBI had relaxed this requirement by one month for listed entities whose financial year ends on March 31, 2020. Thus, the Companies can now hold AGM on or before September 30, 2020. The top 100 listed entities by market capitalization whose financial year ended on December 31, 2019 may hold their AGM within a period of nine months from the closure of the financial year (i.e., by September 30, 2020).
  • Regulation 29 (2) of LODR specifies that stock exchanges need to be provided prior intimation about meetings of the board (excluding the date of the intimation and date of the meeting) as follows:
    a. at least 5 days before the meeting if financial results are to be considered;
    b. 2 working days in other cases.
    For the board meetings to be held till July 31, 2020 the above requirement under Regulation 29(2) of LODR of prior intimation of 5 days / 2 working days has been reduced to 2 days.
  • Regulation 39 (3) of LODR requires listed entities to submit information regarding loss of share certificates and issue of the duplicate certificates, to the stock exchange within two days of its getting information. SEBI has relaxed this information to be given for the period between March 01, 2020 to May 31, 2020.
  • SEBI has clarified that authentication / certification of any filing / submission made to stock exchanges under LODR may be done using digital signature certifications until June 30, 2020.
  • SEBI has relaxed the requirements relating to publication of advertisements in newspapers as required under Regulation 47 and similar requirement that applies to entities which have listed their NCDs and NCRPS as required under Regulation 52(8)of LODR Regulations till May 15, 2020.
  • Regulation 40(9) requires the listed entity to ensure that the share transfer agent and/or the in-house share transfer facility, as the case may be, produces a Certificate from Practicing Company Secretary on timely issue of share certificates within one month of the end of each half of the financial year. SEBI has provided a relaxation w.r.t quarter/financial year ending on March 31, 2020 and thus the extended due date for the quarter/financial year ending March 31, 2020 shall be May 31, 2020.
  • SEBI has provided a period of relaxation of 3 months for the yearly meeting of Nomination and Remuneration Committee, Stakeholders Relationship Committee and Risk Management Committee. The Committees can now hold meeting on or before June 30, 2020.
  • SEBI has extended the effective date of the circular dated January 22, 2020 relating to the Standard Operating Procedure (SoP) on imposition of fines and other enforcement actions for non-compliances with provisions of the LODR, the effective date of operation of which was for compliance periods ending on or after March 31, 2020. The said circular shall now come into force with effect from compliance periods ending on or after June 30, 2020.
  • A relaxation of 60 days has been provided for issuance and filings for issuers who have listed /propose to list their Non-Convertible Debentures (NCDs) / Non-Convertible Redeemable Preference Shares (NCRPS)/ Commercial Paper(s). The extended date for the issuance where the Audited Financials are available as on September 30, 2019 shall be on or before May 31, 2020.
  • For Large Corporate-Initial Disclosure which is due within 30 days from the beginning of the Financial Year and Annual Disclosure which is due within 45 days from the end of the Financial Year, a period of relaxation of 60 days and 45 days has been granted respectively. The extended due date for the Initial Disclosure and Annual Disclosure shall be June 30, 2020.
  • With respect to Regulation 52 (1) and (2) relating to preparation and submission of Financial results on a half yearly basis within forty five days from the end of the half year and its annual audited results within sixty days from the end of the financial year to the recognised stock exchange(s), a period of relaxation of 45 days and 30 days has been granted. The extended due date shall be June 30, 2020.
  • A period of relaxation of 45 days has been granted for the filing of Investor Grievance Report as per Municipal Bond which has to be filed within 30 working days from end of Half Year, the extended due date shall be June 30, 2020.
  • For the quarterly submission of Accounts maintained by Issuers under ILDM Regulations within 45 days from the end of the quarter a period of relaxation of 45 days has been granted. The same is now to be submitted on or before June 30, 2020.
  • A relaxation of 1 month has been granted for Regulation 7(3) relating to compliance certificate on share transfer facility. The extended date for the same shall be May 31, 2020.
  • The extended due date with regards to Regulation 13(3) relating to Statement of Investor complaints shall be May 15, 2020.
  • With respect to Regulation 24A relating to Secretarial Compliance report, the extended due date shall be June 30, 2020.
  • For Regulation 27(2) relating to Corporate Governance report a relaxation of 1 month has been granted by SEBI. The extended due date shall be May 15, 2020.
  • With respect to Regulation 31 relating to Shareholding Pattern, the extended due date shall be May 15, 2020.
  • The board of directors and Audit Committee of the listed entity are exempted from observing the maximum stipulated time gap between two meetings for the meetings held or proposed to be held between the period December 1, 2019 and June 30, 2020. However, the board of directors / Audit Committee shall ensure that they meet at least four times a year.


Disclaimer:
Absolute Care is taken to prepare this article however inadvertently if any errors occurs then the Author shall not be held responsible for any such cause. The Content published is only for educational purpose and shall not be construed as rendering of any Professional Advice in any manner whatsoever. The Readers must exercise their own Judgement and refer the original source before any implementation. Further the content is an original work of the author and may be used only after written permission.

Written By:

  1. Jaya Sharma, Founder- Jaya Sharma & Associates
    Email: [email protected]
  2. Sunita Choudhary, (Intern) Jaya Sharma & Associates
    Email: [email protected]

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