Introduction:

The COVID-19 pandemic has not only severely disrupted financial markets and the global economy but has also emerged as the biggest threat to human life. In India too, both the government and the RBI have announced several relief measures to minimize the impact of corona virus on Individuals, Companies, taxpayers, and investors etc.

Various Government authorities have given various reliefs to the companies and individuals however it is difficult to explain all that relief in detail so that we hereby discussed only the important measures taken by RBI and MCA due to this situation of Covid-19 pandemic.

NOTIFICATION & CIRCULAR ISSUED BY MCA IN ORDER TO PROVIDE RELIEF TO THE COMPANIES

Board meetings under the Companies Act, 2013:

the Government has in principle decided to relax the requirement of holding Board meetings with the physical presence of directors for approval of the annual financial statements, Board’s report, etc. Such meetings may till 30th June, 2020 be held through video conferencing or other audiovisual means

Other Special Measures taken by government under Companies Act, 2013 (CA-2013) and Limited Liability Partnership Act, 2008 in view of COVID-19 outbreak

i. No additional fees shall be charged for late filing during the period from 01sr April to 30th September 2020, to be filed in the MCA-21 Registry, irrespective of its due date, this will enable long-standing noncompliant companies/ LLPs to make a ‘fresh start’. (Separate

ii. The mandatory requirement of holding meetings of the Board of the companies within 120 days stands extended by a period of 60 days till 30th September. Accordingly, the time gap between two consecutive meetings of the Board may extend to 180 days till the next two quarters.

iii. The Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2O20-2021 instead of the financial year 2019-2020.

iv. As per the companies act 2013, 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.

v. Requirement under section 73(2)(c) of CA-13 to create the deposit repayment reserve of 20% of deposits maturing during the financial year 2020-21 before 30th April 2020 shall be allowed to be complied till 30th June 2020.

vi. Requirement under rule 18 of the Companies (Share Capital & Debentures) Rules, 2014 to invest or deposit at least 15% of the amount of debentures maturing in specified methods of investments or deposits before 30th April 2020, maybe complied with till 30th June 2020.

vii. Newly incorporated companies are required to file a declaration for Commencement of Business in INC- 20A within ‘180 days of incorporation. An additional period of 180 more days is allowed for this compliance.

viii. 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 CA-1 3 shall not be treated as a non-compliance for the financial year 2019-20.

ix. ‘Deactivated’ DIN of Directors 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 Form INC-22A(ACTIVE FORM) are encouraged to become compliant once again and file DIR-3KYC/DIR-3KYC-Web/INC-22A(ACTIVE FORM) as the case may be between 1st April, 2020 to 30th September, 2020 without any filing fee of INR 5000/INR 10000 respectively.

PM CARES Fund as eligible CSR activity under item no. (viii) of the Schedule VII of Companies Act, 2013.

MCA has clarifies that Contribution to any fund set up by the Central Government for socio-economic development and relief qualifies as CSR expenditure. The PM-CARES Fund has been set up to provide relief to those affected by any kind of emergency or distress situation like Covid-19. Accordingly, it is clarified that any contribution made to the PM CARES Fund shall qualify as CSR expenditure under the Companies Act 2013.

Further note that any contribution to any other fund set up by state government are not eligible for CSR expenditure the Companies Act 2013

Companies Fresh Start Scheme, 2020 (CFSS)

MCA, has introduced a new scheme known as the Companies Fresh Start Scheme, 2020 (CFSS).This scheme gives an opportunity to the defaulting companies to file the belated documents in MCA 21 registry. This Scheme granting immunity from imposing additional fees and imposing penalty on account of delay filings. Only a normal fees for filling of documents in the MCA21 will be payable during the scheme remain in force i.e. 01.04.2020 to 30.09.2020.

Further this scheme also gives an opportunity to inactive companies to get their companies declare as “dormant company” under section 455 of the Act by filling simple application with normal fees.

Note: List of forms covered under CFSS, 2020 & LLP modified settlement scheme 2020 are given separately by the department.

Passing of Ordinary Resolution and Special Resolution by companies under the Companies Act, 2013

the MCA has issued the Circular No.14/ 2020 dated 8th April, 2020 through such circular, the MCA has encouraged the companies to take approval of members, other than items of ordinary business or business where any person has a right to be heard, through postal ballot or e-voting in without holding a general meeting, which requires physical presence of members.

This circular has also provided the procedure for holding EGM which are given in two parts:

i. Holding of EGM by Companies which are required to provide the facility of e-voting

Unavoidable EGM may be held through Video Conferencing (VC) or Other Audio Visual Means (OAVM).

The meeting shall be scheduled by taking into consideration the convenience of different persons positioned in different zones.

The proceedings of the meeting shall be recorded and such recorded transcript shall be maintained in the safe custody by the company and the public company shall upload the recorded transcript on the website [if any] of the company.

ii. Holding of EGM by Companies which are not required to provide the facility of e-voting.

Unavoidable EGM may be held through Video Conferencing (VC) or Other Audio Visual Means (OAVM).

The meeting shall be scheduled by taking into consideration the convenience of different persons positioned in different zones.

The entire proceedings of the meeting shall be recorded and such recorded transcript shall be maintained in the safe custody by the company and public company shall upload the recorded transcript on the website [if any] of the company.

Note: To know the detailed procedure for holding the EGM please read Circular No.14/ 2020 dated 8th April, 2020

Holding of annual general meetings by companies whose financial year has ended on 31st December, 2019

Companies whose financial year (other than first financial year) has ended on 31st December, 2019, can hold their AGM for such financial year within a period of nine months from the closure of the financial year (i.e. by 30th September, 2020) instead of 6 months.

Period/days of extension for names reserved and resubmission of forms

Normally Names reserved for 20 days for new company incorporation and 60 days for change of name of company, however after this extension names expiring any day between 15th March, 2020 to 3rd May 2020 would be extended by 20 days beyond 3rd May 2020.

Further Extension of RSUB validity for companies are also given by this notification, where last date of Resubmission (RSUB) falls between 15th March 2020 to 3rd May 2020, additional 15 days beyond 3rd May 2020 would be allowed.

NOTIFICATIONS/CIRCULAR ISSUED BY RBI

Rescheduling of Payments – Term Loans and Working Capital Facilities

In respect of all term loans (all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs ”) are permitted to grant a moratorium of three months on payment of all instalments

1. falling due between March 1, 2020 and May 31, 2020.

In respect of working capital facilities sanctioned in the form of cash credit/overdraft (“CC/OD”), lending institutions are permitted to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 upto May 31, 2020.

Extension of realization period of export proceeds

Presently value of the goods or software exports made by the exporters is required to be realized fully and repatriated to the country within a period of 9 months from the date of exports. now the time period for realization and repatriation of export proceeds for exports made up to or on July 31, 2020, has been extended to 15 months from the date of export. The measure will enable the exporters to realise their receipts, especially from COVID-19 affected countries within the extended period.

The Monetary Policy Committee (MPC) constituted under section 45ZB of the Reserve Bank of India Act, 1934 at its meeting held on March 27, 2020 decided to:

  • reduce the policy repo rate under the liquidity adjustment facility (LAF) by 75 basis points to 4.40 per cent from 5.15 per cent with immediate effect;
  • accordingly, the marginal standing facility (MSF) rate and the Bank Rate stand reduced to 4.65 per cent from 5.40 per cent;
  • Further, consequent upon the widening of the LAF corridor as detailed in the accompanying Statement on Developmental and Regulatory Polices, the reverse repo rate under the LAF stands reduced by 90 basis points to 4.0 per cent.
  • The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of coronavirus (COVID-19) on the economy, while ensuring that inflation remains within the target.

Liquidity Coverage Ratio (LCR)

As part of post-Global Financial Crisis (GFC) reforms, Basel Committee on Banking Supervision (BCBS) had introduced Liquidity Coverage Ratio (LCR), which requires banks to maintain High-Quality Liquid Assets (HQLAs) to meet 30 days net outgo under stressed conditions.

Benefit was given to farmers in relation to Short Term Crop Loans

In the wake of the nationwide lockdown due to outbreak of Covid -19 pandemic and the resultant restrictions imposed on movement of people, many farmers are not able to travel to bank branches for payment of their short term crop loan dues. So as per regarding Covid 19-Regulatory Package, the moratorium has been granted for three months on payment of installments falling due between March 1, 2020 and May 31, 2020 in respect of all term loans including short term crop loans as we discussed above.

Banks are therefore advised to extend the benefit of IS of 2% and PRI of 3% for short-term crop loans upto ₹3 lakh to farmers whose accounts have become due or shall become due between March 1, 2020 and May 31, 2020.

FDI POLICY

In addition to all the above amendment, the government of India passed an order on 18 April 2020 that would protect Indian companies from FDI during the pandemic. These changes were notified via a Press Note by the Department for Promotion of Industry and Internal Trade (DPIIT). As per this policy a non resident entity can invest in India, except in those sectors which are prohibited. However an entity of a county which shares land border with India can invest only under government approval route. Further a citizen of Pakistan or an entiry incorporated in Pakistan can invest only under the government approval route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.

Basically this amendment was come into force after China’s central bank recently raised stake in HDFC to a little over 1 percent and the government has amended the Foreign Direct Investment (FDI) policy to discourage opportunistic investment in Indian companies by neighboring countries (Specifically China) in the midst of the Corona virus pandemic.

I hope this can help you for growing your business.

For more information connect :

CS Monika Bhatt( Company Secretary,LLB,B.Com)