EASE AND CHAOS


Ministry of Corporate Affairs has issued many amendment rules and circulars during the month of September 2020 for the ease of doing business. Though one thing always remains – chaos. In this brief post, we will discuss these ease and remaining chaos briefly.  

Convertible Note – not a Deposit

An amount of twenty-five lakh rupees or more received by a start-up company, by way of a convertible note convertible into equity shares or repayable within a period not exceeding ten years from the date of issue in a single tranche is now an exempted deposit. Earlier the maximum tenure was five years. {The Companies (Acceptance of Deposits) Amendment Rules, 2020 dated 7th September 2020 hosted here}

Board Meeting with video conferencing or other audiovisual means

Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 restricts Board of Directors to consider specific matters except through meeting where directors are physically present. 

The Companies (Meetings of Board and its Powers) Rules, 2014 eased this requirement till 30th June 2020. This relaxation is now available till 31st December 2020. {The Companies (Meetings of Board and its Powers) Third Amendment Rules, 2020 dated 28th September 2020 hosted here}

Independent Director Database

A person who is an independent director in a company on the date of commencement of the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, shall within a period of thirteen months from such commencement. This period will now complete on 31st December 2020. {The Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2020 dated 28th September 2020 hosted here}

IEPF Forms

General Circular 35/2020 dated 29th September 2020 clarify that Form IEPF-1, IEPF-2, IEPF-3, IEPF-4, IEPF-7 and e-verification of Form IEPF-5 may be filed without Additional Fee till 31st December 2020 under authority General Circular 30/2020 dated 28th September 2020.

It means these forms shall now be filed under CFSS-2020 which amount to acceptance of default and companies shall seek immunity under the said scheme by filing Form CFSS-2020 discussed earlier here.

Deposit Payment Reserve and Deposit Related Investment

General Circular 34/2020 dated 29th September 2020 further extend compliance requirement per Paragraph V and Paragraph VI of General Circular 11/2020 dated 24th March 2020 till 31st December 2020. Under this circular, no other benefit of General Circular 11/2020 extended to stakeholders.

EGM through VC or OAVM

General Circular 33/2020 dated 28th September 2020 extends relaxation provided under General Circular 14/2020 dated 8th April 2020, General Circular 17/2020 dated 13th April 2020 till 31st December 2020.

Creation and Modification of Charge

General Circular 32/2020 dated 28th September 2020 Extend the scheme for relaxation of time for filing forms related to creation or modification of Charges under the Companies Act, 2013 issued under General Circular 23/2020 dated 17th June 2020 till 31st December 2020.

LLP Settlement Scheme 2020

General Circular 31/2020 dated 28th September 2020 extend the LLP Settlement Scheme 2020 issued under General Circular 13/2020 read with General Circular 6/2020 dated 4th March 2020 till 31st December 2020

As all other requirements remain unchanged, all provisions of General Circular 6/2020 shall be applicable.

At the time of writing this post, said General Circular 6/2020 is not on MCA website.

Company Fresh Start Scheme 2020

General Circular 30/2020 dated 28th September 2020 extend Companies Fresh Start Scheme 2020 issued under General Circular 12/2020 dated 30th March 2020 till 31st December 2020.

Remaining Hardship 2020

General Circular 11/2020 born on 24th March 2020 died a natural death. The Circular was suffering from COVID-19 since birth. 

It is now reduced to a single time Public Relationship exercise of the Government. 

FEE MORATORIUM

Earlier Promise was – No additional fee shall be charged for late filing during the period of 1st April 2020 to 30th September 2020 on MCA 21 system. {Para I of that Circular}

All forms are now onwards covered under CFSS-2020 or LLPSS-2020 without the moratorium. MCA will still not charge any additional Fee. It means these forms shall be filed under CFSS-2020 filing under which amount to acceptance of default and companies shall seek immunity under the said scheme by filing Form CFSS-2020.

BOARD MEETING GAP

The gap between two consecutive meetings, maybe 180 days till 30th September 2020 but not after that. {Para I of that Circular} All Companies now need to hold meeting within 120 days of last Board meeting.

If, the previous Board Meeting was held on or before 2nd June 2020 the due date for the next meeting was 30th September 2020, not after that. 

In case of default has already committed in anticipation of ease, please check penal or compounding provisions.

DECLARATION OF COMMENCEMENT OF BUSINESS

This particular provision was without expiry date under Paragraph VII of General Circular 11/2020 dated 24th March 2020 hence perpetually applicable unless withdrawn by another circular. No further legal comments on this. Companies should enjoy 180 days extension for filing without compliance under CSFF-2020.

  • Aishwarya Mohan Gahrana

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