Compliance news

​Company Law Updates

1. Certain initiatives and continued actions taken by the Ministry of Corporate Affairs (MCA) towards the continuous efforts to provide ease of doing business in wake of the pandemic situation of covid-19:

• In continuation to General Circular no. 11/2020 dated 24 March 2020, considering the requests received from the various stakeholders, MCA has extended relaxation pertaining to the minimum residence in India  requirement of 182 days for directors for financial year 2020-21. Accordingly, via General Circular No 36/2020 dated 20 October  2020 the MCA has clarified that non-compliance of minimum residency in India for a period of at least 182 days in a year, by at least one director in every company, under section 149 of the Companies Act,2013, shall not be treated as non-compliance for the financial year 2020-2021 as well.
• The relaxation of time line for filing Form DIR-3 KYC/DIR-3 KYC WEB for the financial year 2019-20 was limited to 31 December 2020  forming a part of the  ‘Companies Fresh Start Scheme, 2020’ (CFSS-2020). Any director whose Form DIR-3 KYC/DIR-3 KYC WEB hasn’t been filed would be deactivated shortly. The directors can reactivate their DIN by filing of the said Form DIR-3 KYC/DIR-3 KYC WEB and after payment of the applicable fees of INR 5000/-.
• MCA has issued a clarification on passing of ordinary and special resolutions by companies under the Companies Act, 2013 on account of covid-19. The MCA has further extended the timeline to up to 30 June 2021 to allow the companies to conduct their extra ordinary general meeting (EGM) through video conferencing or other audio visual means or transact items through postal ballot in accordance with the framework provided  in the MCA General Circulars No.14/2020 dated 8 April  2020, No.17/2020 dated 13 April 2020, No.22/2020 dated 15 June 2020 and No.33/2020 dated 28 September 2020.
• MCA has notified that that there is no change in the additional fee for eForms AOC-4/AOC-4 XBRL/AOC-4 CFS/AOC-4 NBFC and Form MGT-7 with respect to financial year 2019-20 with effect from 1 January 2021 as the extension was provided to companies for conducting annual general meeting (AGM) and not with respect to filing of the above mentioned eForms .  Accordingly, the due date of form filing shall be computed based on the actual date of AGM or the due date/extended due date of AGM as the case may be. After 31 December 2020, additional fees shall be applicable from the actual date of AGM or due date/extended due date of AGM plus 30/60 days as the case maybe and INR 100 per day shall be charges starting from such day even if such date falls prior to 31 December 2020.

2. MCA has notified 17 sections of the Companies (Amendment) Act,2020 which shall come into effect from 21 December 2020.

• Amongst other sections notified under the Companies(Amendment) Act, 2020, one of the main highlights is that sections pertaining to decriminalisation of the Companies Act, 2013 have been notified. The notified sections of 6 to 10 of the Companies (Amendment Act), 2020 does away imprisonment for various offences and substitutes the imposing of fine by penalty.  The amendments introduced also aim to reduce the financial penalty in respect of certain non-compliances. For example, the penalty amount for failure or delay in filing of annual return has been reduced to INR 10,000 from INR 50,000. Wherein the default continues, the maximum penalty to be imposed is restricted to INR 200,000 in case of a Company and at INR 50,000 in case of a officer in default. 
• The Companies( Amendment) Act, 2020  also provides in respect of companies that have spent an amount in excess of the requirements prescribed under the Companies Act,2013 towards corporate social responsibilities (CSR) activities  (i.e., at least 2 per cent of the average net profits of the company made during the 3 immediately preceding financial years) are now permitted to set off such excess amount in succeeding financial years as may be prescribed by the Central Government. Further, companies that are not required to spend more than INR 50,00,000 towards CSR under the provisions of the Companies Act,2013  are now exempted from constituting a CSR committee and the Board of Directors may discharge the functions of such CSR committee.
     

Company Secretarial (CS) compliances for Private Limited Company

Below is the summary of the compliances which need to be adhered to in the next quarter (January 2021-March 2021)
   
 

Reserve Bank of India (RBI) amends its Master Directions on Know Your Customer (KYC)

• The Aatmanirbhar Bharat 3.0 package introduces a scheme to incentivize employers, registered with EPFO, for giving employment to new employees and re-employing persons from low wage bracket who lost their jobs during Covid-19 pandemic. The scheme stands commenced from 1 October 2020 and shall remain open for registration of eligible employees up to 30 June 2021. The benefit shall be available for a period of 24 months from date of registration of new employee, not later than 30 June 2023 in any cases.
• The Central Government will provide the following benefits under the scheme for the next 2 years in respect of eligible new employees: 
   

a) For establishments employing up to 1000 employees (contributing EPF members with UAN) in wage month September, 2020, the employer’s and employee’s share of contribution as per statutory rate applicable to establishment subject to maximum of 24 per cent of wages.
 

b) For establishments employing more than 1000 employees (contributing EPF members with UAN) in wage month September 2020, employees’ share of contribution as per statutory rate applicable to establishment subject to maximum of 12 per cent of wage.
 

• The benefits provided under this scheme can be availed by the employers in respect of only “eligible new employees” falling under the wage bracket of earning less than INR 15,000/- per month. The eligible new employees are as given below :
   

a) Employes employed between 1 October 2020 and 30 June 2021 drawing monthly wage of less than INR 15000/-. These employees were not working in any establishment registered with the Employees’ Provident Fund Organisation (EPFO) before 1 October 2020 and did not have a Universal Account Number or EPF Member account number prior to 1 October 2020. They joined employment in any establishment on or after 1 October 2020 up to 30 June 2021 and are allotted Aadhaar validated UAN.
 
b) Employees already member of EPF possessing Universal Account Number (UAN) drawing monthly wage of less than INR 15000/- who made exit from employment during Covid pandemic from 1 March 2020 to 30 September 2020 and did not join employment in any EPF covered establishment up to 30 September 2020.  
 

2. The state of Karnataka amends the Karnataka Shops and Commercial Establishments Act, 1961