Compliance Requirements For Companies and LLPs Eased
The Ministry of Corporate Affairs (“MCA”) has introduced the following changes and relaxations on account of difficulties posed by COVID-19:
- Companies and LLPs will not be charged any additional fees for late filing during a moratorium period from April 01, 2020 to September 30, 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date.
- To ease the burden on Companies and their auditors, the Companies (Auditor’s Report) Order, 2020 has been made applicable from Financial Year 2020-21, instead of the Financial Year 2019-20, as notified earlier.
- The requirement under Section 73(2)(c) of Companies Act, 2013, which requires Companies to create a deposit repayment reserve of twenty (20) % of deposits maturing during any Financial year, within one (1) month of the expiry of such Financial Year, has been extended from April 30, 2020 till June 30, 2020 (for Financial Year 2019-2020 only).
- Likewise, the requirement to invest or deposit at least fifteen (15) % of amount of the deposits or debentures maturing in specified methods of investments in any Financial year, within the expiry of one month of such Financial Year, in terms of Rule 18 of the Companies (Share Capital & Debentures) Rules, 2014 has now been extended from April 30, 2020 till June 30, 2020 (for Financial Year 2019-2020 only).
- An additional period of one hundred and eighty (180) days have been granted to newly incorporated companies for filing a declaration for ‘Commencement of Business’ in terms of Section 10A of the Companies Act.
- Under Section 149(3) of the Companies Act, every company is required to have at least one (1) resident director who has stayed in India for a period of minimum one hundred and eighty two (182) days in the previous calendar year. Non-fulfilment of the minimum residency norms in India by directors shall not be treated as a non-compliance for the Financial Year 2019-20.
- A new Companies Fresh Start Scheme, 2020 and revised LLP Settlement Scheme, 2020 have been introduced, in terms of which:
However, the immunity is only against delayed filings in MCA-21 and not against any substantive violations of law.
- It provides Companies / LLP’s an opportunity to make good any filing related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity;
- It is a one-time waiver of additional filing fees for delayed filing by Companies/ LLP’s with the Registrar of Companies, during the period starting from April 01, 2020 and ending on September 30, 2020; and
- It gives Companies/ LLP’s immunity from penal proceedings, including imposition of penalties for late submissions. Further, it gives them additional time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed.