Compliance News

Company Law Updates

1. Relaxation in additional fee for delay in filling annual return forms for private limited companies

The Ministry of Corporate Affairs (MCA), issued a General Circular (No. 17/2021) dated 29 October 2021 announcing relaxation on levy of additional fee for annual financial statement filings required to be done for the financial year ended on 31 March 2022 in light of current pandemic situation. Accordingly the said circular stated that no additional fee shall be levied up to 31 December 2021 for filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL, AOC-4 Non-XBRL and MGT-7/ MGT-7A for financial year 2020-2021.

Further the MCA decided to extend this relaxation by issuing a General Circular (No.22/2021) dated 29 December 2021, MCA has further stated that no additional fee shall be levied for filling AOC-4, AOC-4 (CFS), AOC-4 XBRL, AOC-4 Non-XBRL forms till 15 February 2022, and for filling MGT-7/MGT-7A till 28 February 2022, for the financial year 2020-2021.

2. Clarification on holding of AGM and Extra Ordinary General Meeting (EGM) through Video Conferencing (VC) or Other Visual Audio Means (OAVM)

As per section 96 of the Companies Act 2013, every company shall hold its annual general meeting (AGM) within 6 (six) months from the date of closing of its financial year. However, due to the current Covid-19 pandemic, with reference to MCA’s General Circular (No. 20/2020) dated 5 May 2020 and General Circular (No. 02/2021) dated 13 January 2021, the MCA vide General Circular (No. 19/2021) dated 8 December 2021, it has been decided to allow the companies whose AGMs are due in the year 2021, to conduct their AGMs on or before 30 June 2022. Such AGMs may be conducted by the companies through VC or OAVM, subject to fulfillment of the requirements stipulated under paragraph 3 and 4 of the General Circular (No. 20/2020) dated 5 May 2020.

Further the MCA also released another General Circular (No. 21/2021) dated 14 December 2021. The said circular allowed the companies who are proposing to organize AGMs in 2022 for the Financial Year ended or ending any time before or on 31 March 2022 through VC or OAVM as per the respective due dates by 30 June 2022 in accordance with requirements laid down under paragraph 3 and 4 of the General Circular (No. 20/2020) dated 5 May 2020. To clarify such companies can hold their AGMs through VC or OAVM only up to 30 June 2022 unless the said date has been further extended by MCA to allow the companies to hold their AGM through VC or OAVM.

Further, the MCA has also clarified that this General Circular shall not be construed as conferring as an extension for time for holding the AGMs under the Companies Act 2013, and the companies which have not adhered to the relevant timelines shall be liable to legal action under the appropriate provisions of the Companies Act 2013.

On the similar line, MCA, vide General Circular (No. 20/2021) dated 8 December 2021, has permitted companies to conduct their Extra Ordinary General Meetings (EGMs) for passing ordinary and special resolutions through VC or OAVM, till 30 June 2022. The EGMs shall be conducted in accordance with the modalities stipulated by the MCA vide its General Circulars issued on 13 April 2020 and 8 April 2020.

Company Secretarial (CS) compliance for Private Limited Companies

Below is the summary of the compliances which need to be adhered to in the next quarter (January-March 2022)

Particulars	Due Date
Hold at least one board meeting in quarter January- March 2022	31 March 2022
Form AOC-4 (Filing of financial statement and other documents with the Registrar)	30 days from AGM (As per General Circular dated 29 December 2021 there is no additional fee levied in filing of Form AOC-4 for the Financial Year 2020-21 up to 15 February 2022)
Form MGT-7* (Filing of Annual Return)	60 days from AGM (*The companies who have conducted their AGM in November 2021, will be required to file Form MGT-7 within 60 days of the AGM so held)
ECB-2 Returns	Commercial loans availed in the form of bank loan, buyers' credit, suppliers' credit or securitized instruments availed from non-resident lenders with minimum average maturity of 3 years is required to file ECB-2 returns within 7 working days from the close of the month.

Updates by the Reserve Bank of India (RBI)

1. RBI Guidelines on external commercial borrowings (ECB) and Trade Credit due to cessation of the London Inter-Bank Offered Rate (LIBOR)

In light of the transitioning from the LIBOR (the London Inter-Bank Offered Rate) due to LIBOR being discontinued from 31 December 2021, RBI has suggested a roadmap. In the said roadmap, for the purpose of a safe and sound LIBOR transition, companies entering into new financial contracts were suggested to cease reference of the LIBOR as a benchmark and instead use any widely accepted alternate reference rates.

Further, vide notification (number RBI/ 2021-22/135) dated 8 December 2021, RBI has made certain changes to the all-in cost benchmark and ceiling for foreign currency External Commercial Borrowings (ECBs) and Trade Credit (TC) policy. One such change is that henceforth the benchmark rate in case of foreign currency ECB/TC, shall refer to any widely accepted interbank rate or alternative reference rate (ARR) of 6 (six) month tenor, applicable to the currency of borrowing under ECB/TC.

2. Introduction of Legal Entity Identifier (LEI) for Cross-Border Transactions

The LEI is a 20 digit number used to uniquely identify parties to a financial transaction worldwide. LEI has been introduced by the RBI in a phased manner. Vide notification (no. RBI/2021-22/137) dated 10 December 2021, RBI has stated that with effect from 01 October 2022, resident entities undertaking capital or current account transactions of INR 50 crore and above, shall be required to furnish the LEI number to their AD Category I Banks. In case of non-resident counterparts where LEI information is not available, no such LEI is to be furnished by such non-resident entities. Once an entity has obtained an LEI number, such entity must furnish their LEI number in all transactions, irrespective of the transaction size.

Updates by the Ministry of Labour and Employment

1. The Delhi Government has introduced amendments to the Delhi Shops and Establishments Rules, 1954

The Labour Department, Delhi, vide notification (number 15(52)/Lab/2021/4506) dated 15 November 2021, has issued Delhi Shops and Establishments (Amendment) Rules, 2021 (Amended Rules), whereby certain provisions of the existing Shop and Establishment Rules 1954 have been amended. Under the previous rules, the occupier of an establishment was required to submit physical form to the Chief Inspector for the purpose of registration under the Delhi Shops and Establishment Act, 1954 (Delhi Shop Act). The Amended Rules have omitted the the process of registration physical submission and replaced with an online registration mechanism. Thus, the occupier of the establishment, within 90 (ninety) days of commencement of the business, is required to apply for registration on an online Shop and Establishment Portal of the Labour Department. Further, in the amended rules have made the intimation process online and has also extended the timeline for intimation. As per the Amended Rules, the occupier shall notify any change of information within 30 days of such change, on the online Shop and Establishment Portal of the Labour Department, Government of National Capital Territory of Delhi.

2. Employer has the right to demand RT-PCR test in case of unvaccinated employees

In a recent judgement of the Hon’ble Bombay High Court in the case of Deepak Kumar Radheshyam Khurana and Others v Mumbai Port Trust and Another [Writ Petition (L) Number 17132 of 2021], the Hon’ble Bombay High Court has observed that employer is reasonable to demand its unvaccinated employees to submit RT-PCR test report from time to time and bear the cost of such tests for attending office.

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