Corporate Laws are continuing in a lackluster mode, though it is a blessing to all of us, when comes to timelines. The Companies Act, 2013 , the Limited Liability Partnership Act, 2008 and Insolvency and Bankruptcy Code, 2016 had brought in several relaxations and concessions when comes to timelines and many statutory and legal authorities also had kept aside the wand held in their hand for the time being, to help us. I would like to share with you about some recent developments in the Corporate Law regime, to keep you floated, flawlessly, in with the flow of changes.
Relaxation in residency requirement of 182 days for directors.
As per Subsection (3) of Section 149 of the Act, Every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial year. The said section is applicable for all the companies from 01-04-2014. However, many are facing difficulties in complying with the said requirement due to the travel restrictions imposed at various part of the World. Hence as a special measure under the Companies Act, 2013 , in view of Covid 19 outbreak, the Ministry of Corporate Affairs vide General Circular No 36/2020 dated 20th October, 2020, had relaxed the requirement of 182 days minimum residency requirement for at least One Director of a Company , to be in India for the Financial year 2020-21. So , in short, the violation of Section 149(3) shall not be considered as a Non- Compliance for the Financial year 2020-21.
Extension of Companies Fresh Start Scheme.
I had updated you earlier about the CFSS 2020 scheme of MCA to give relaxation in additional fees of eforms, to give some relief to the defaulters, for their intentional as well as inadvertent omissions, and thereby update and maintain the records of their companies in proper manner. The said scheme initiated vide General Circular No 12/2020 was only upto 30th September, 2020. The details of the said schemes are available in the link https://www.bijoypulipra.com/single-post/a-talk-on-companies-fresh-start-scheme-2020 . As the pandemic persist, the MCA had taken a liberal and practical step by extending the period of scheme upto 31st December, 2020 vide the General Circular No 30/2020 dated 28th September, 2020. If you are unable to make use of this Opportunity, then I fear that, you are missing a Golder Opportunity to save your hard earned money. So , please look into the same and do the needful. Pandemic will not be there for ever for sure!
Extension of LLP Settlement Scheme 2020
In continuation of the General Circular no 13/2020 dated 30-03-2020, in view of large disruption caused by the Covid 19 Pandemic , Ministry had decided to extend the LLP Settlement scheme till 31st December, 2020. This will enable the defaulting LLPs to catch the boat before it sail off the shore. So, don’t miss the boat this time as the life jackets may not be adequate to save you from sinking in penalty.
Extension of time for creation or modification of charge under the Companies Act, 2013
Creation of charge means, filing of certain documents with MCA/ROC , when a company avail of a loan facility by providing its assets as collateral/security for the said loan facility. As per the provisions of the Act, the said filing is to be filed within certain time limit , failing of which charge cannot be created. Ministry of Corporate Affairs vide General Circular No 23/2020 dated 17th June, 2020 had extended the time lines for filing the pending charges upto 30th September, 2020. Considering the impact of Covid 19 Pandemic, the MCA had further extended the time lines upto 31st December, 2020. Please note that in view of the advent of Insolvency and Bankruptcy Code, 2016, it is mandatory for the banks to ensure that the borrowers are creating the charges on the loans availed by them. If the borrower fails to do that in timely manner, it may affect their credit worthiness and the bank/ financial institutions may deter from offering further funds for such violators. So, please check your records and ensure that, charge is duly created with ROC on all the secured loans availed by the company
Extension of time limit to conduct the Extraordinary General Meetings(EGM) through VC/OAVM
In continuation of the General Circular No 14/2020 dated 08th April, 2020, No 17/2020 dated 13th April, 2020 and No 22/2020 dated 15th June, 2020, the Ministry (Vide Cir No 33/2020 dated 28th September, 2020) had decided to allow the companies to conduct and convene the EGM through VC/OAVM or transact items through postal ballot in accordance with the framework provided in the aforesaid circulars upto 31st December, 2020. You are requested to ensure that the company is following the terms and conditions of the aforementioned Circulars and convene the meetings accordingly.
Hope you have got an idea about the recent developments under the Companies Act. I think, this is enough for now. I will write to you soon on similar topics.
Registered Valuer (S&FA)