Relaxation of the requirement of holding Board meetings with physical presence of directors for approval of the restricted matters:

MCA vide its notification dated 19th March 2020 has introduced the Companies (Meetings of Board and its Powers) Amendment Rules, 2020, and taken a preventive step to overcome the outbreak of COVID-19, the MCA has decided to relax the requirement of holding board meetings with physical presence of directors for approval of the restricted matters such as approval of the annual financial statements, approval of the board’s report, approval of the prospectus, the audit Committee Meetings for consideration of financial statement including consolidated financial statement if any, to be approved by the board and approval of matters relating to amalgamation, merger, demerger, acquisition and takeover. 

Therefore, the companies may now hold such meetings through video conferencing or other audio-visual means by duly ensuring compliance of the Companies (Meetings of Board and its Powers) Rules, 2014. These rules will be applicable from the date of introduction of these amendment rules i.e. 19th March 2020 till 30th June 2020.

MCA vide General Circular no. 11/2020 dated 24th March 2020 provided the following compliance relaxations:

1. Additional Fee: No additional fees will be charged for late filing of any documents, returns, statements, etc. required under the Act from 1st April 2020 to 30th September 2020;
   
2. Days extend for Board Meeting: Temporary relaxation in the time gap between two consecutive meetings of the Board may extend to 180 days till the next two quarters i.e. till 30th September 2020, instead of 120 days as required under section 173 of the Act;
   
3. Audit Report: Companies (Auditor’s Report) Order, 2020 shall be applicable from financial year 2020-2021 instead of 2019-20. This will significantly ease the burden on companies & their auditors for the financial year 2019-20.;
   
4. Independent Directors: are required to hold at least one meeting without the attendance of Non-independent directors and members of management. However, for the year 2019-20, if the Independent Directors of a company have not been able to hold even one meeting, the same shall not be viewed as a violation.
   
5. Deposit reserve: Requirement under section 73(2)(c) of the Act to create a Deposit reserve of 20% of deposits maturing during the financial year 2020-21 before 30th April 2020 shall be allowed to be complied with till 30th June 2020;
   
6. Share Capital & Debentures: Requirement under Rule 18 of the Companies (Share Capital & Debentures) Rules, 2014 to invest 15% of debentures maturing during a particular year in specified instruments before 30th April 2020, may be done so before 30th June 2020;
   
7. Commencement of Business: Newly incorporated companies are required to file a declaration for Commencement of Business within 180 days of incorporation under section 10A of the Act. However, an additional period of 180 more days has been allowed for this compliance;
   
8. Non-compliance: of minimum residency in India for a period of at least 182 days by at least one director of every company as required under section 149 of the Act, shall not be treated as a non-compliance for the financial year 2019-20.
   

MCA “Companies Fresh Start Scheme, 2020” vide General Circular no. 12 /2020 dated 30th March 2020:

MCA in its efforts to provide relief to law abiding companies in the wake of COVID 19, has introduced the Companies Fresh Start Scheme 2020 (herein after referred as the “Scheme”) to provide a first of its kind opportunity to companies to make good any filing related defaults, irrespective of duration of default as stipulated under section 403 of the Act, and make a fresh start as a fully compliant entity. The Scheme has been introduced to encourage compliance and reduce compliance burden during the unexpected public health situation caused by COVID-19. The main intention of the Scheme is to provide a one-time waiver of additional filing fees for delayed filings by the companies with the MCA during the prevalence of the Scheme, i.e. during the period starting from 1st April 2020 and ending on 30th September 2020.

In addition, the Scheme is giving longer timelines for corporate to comply with various filing requirements under the Act, eventually decreasing the financial burden on them, especially for those companies with long standing defaults, thereby giving them an opportunity to make a “fresh start”. The Scheme also contain provision for giving protection from any penal proceedings, including against imposition of penalties for late submissions and even provide for extra time for filing appeals before the concerned Regional Directors against imposition of penalties, if already imposed.

However, the immunity is only against delayed filings in MCA and not against any other substantive violation of law.

Clarification on passing of ordinary and special resolutions by companies under the Act

MCA has allowed companies to pass ordinary and special resolutions of urgent nature, in view of the difficulties faced by the stakeholders on account of the threat posed by Covid-19. As per the General Circular No. 14/2020 dated 8th April 2020, it has been clarified that the Act does not contain any specific provision for allowing conduct of members’ meetings through video conferencing (VC) or other audio-visual means (OAVC).

Hence, companies are requested to take all decisions of urgent nature requiring the approval of members, other than items of ordinary business or business where any person has a right to be heard, through the mechanism of postal ballot/e-voting in accordance with the provisions of the Act and rules made thereunder, without holding a general meeting, which requires physical presence of members at a common venue.

However, in case holding of an Extraordinary General Meeting (EGM) by any company is considered unavoidable, a set procedure as detailed in the aforesaid Circular needs to be adopted for convening the EGM through VC or OAVC on or before 30th June 2020. 

The MCA in the General Circular No. 17/2020 dated 13th April 2020, has issued further clarification regarding:

1. Manner and mode of issue of notices to members before convening the general meeting;
   
2. Requirement for voting by show of hands;
   
3. Passing of certain items only through postal ballot without convening a general meeting; and
   
4. Sending of e-mails by members, where a poll on any item is required for companies.