Recent updates Related to Companies Compliance’s that you Must Know

COMPANY LAW:

Recent updates Related to Companies Compliances that you Must Know

Article explains Recent updates Related to Compliance in pursuance of General Circular No. 11 dated 24th March,2020 & General Circular No. 12 dated 30th March,2020, Companies Fresh Start Scheme, 2020 and Revised LLP Settlement Scheme,2020, Clarification on contribution to PM Cares Fund as Eligible CSR Activity, Spending of CSR Funds For COVID-19 and Notification for increasing threshold of default under Section 4 of IBC, 2016.

 

1.Compliance in pursuance of General Circular No. 11 dated 24^th March,2020 & General Circular No. 12 dated 30^th March,2020

According to this,

DIN Holders of DINs marked as ‘Deactivated’ due to non-filing of DIR-3/DIN-3 KYC-Web and

Those Companies whose compliance status has been marked as ‘ACTIVE NON-COMPLIANT’ due to non- filing of Active Company Tagging Identities and Verification (ACTIVE) Eform

are encouraged to become compliant once again in pursuance of above said circulars and file the

DIR-3/DIN-3 KYC-Web/ACTIVE Eform as the case may be b/w 1^st April,2020 to 30^th    

 September,2020 without any filing fees of Rs.5,000/ Rs.10,000 respectively.

 

2.Companies Fresh Start Scheme, 2020 and Revised LLP Settlement Scheme, 2020

In pursuance of the Government of India’s efforts to provide relief to law abiding Companies and Limited Liability Partnerships (LLPs) in the wake of COVID 19,

The Ministry of Corporate Affairs, has introduced the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020”

 

Objective of the Scheme’s

1. To provide an opportunity to both Companies and LLPs to make good any filing related defaults, irrespective of duration of default, and make a fresh start as a fully compliant entity.
2. To reduce compliance burden during the unprecedented public health situation caused by COVID-19.
3. To provide a one-time waiver of additional filing fees for delayed filings by the companies or LLPs with the Registrar of Companies during the currency of the Schemes, i.e. during the period starting from 1st April, 2020 and ending on 30th September, 2020.
4. To reduce the related financial burden of both Companies and LLPs, especially for those with long standing defaults, thereby giving them an opportunity to make a “fresh start”.
5. Both the Schemes also contain provision for giving immunity from penal proceedings, including against imposition of penalties for late submissions and also provide additional 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 21 and not against any substantive violation of law.

Note: Detailed Schemes Will be discussed separately.

3. Clarification on contribution to PM Cares Fund as Eligible CSR Activity

The Government of India has set up the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund) with the primary objective of dealing with any kind of emergency or distress situation such as that posed by COVID 19 pandemic.

Item no. (viii) of the Schedule VII of the Companies Act, 2013, which enumerates activities that may be undertaken by companies in discharge of their CSR obligations, inter alia provides that contribution to any fund set up by the Central Government for socio-economic development and relief qualifies as CSR expenditure.

The PM-CARES Fund has been set up to provide relief to those affected by any kind of emergency or distress situation.

Accordingly, it is clarified that any contribution made to the PM CARES Fund shall qualify as CSR expenditure under the Companies Act 2013.

4. Clarification on Spending of CSR Funds For COVID-19

Keeping in view of the Spread of Noval Corona Virus (COVID-19) in India, Government of India has treated it as a Notified disaster and clarified that Spending of CSR Funds for COVID-19 is eligible CSR activity.

Funds may be spent for various activities related to COVID-19 under items nos. (i) and (xii) of Schedule VII  relating to

1. Promotion of Health Care including preventive health care and sanitation &
2. Disaster Management

Further, as per General Circular No. 21/2014 dated 18/06/2014, Items in Schedule VII are broad based and may be interpreted liberally for this purpose.

5. Notification for increasing threshold of default under Section 4 of IBC, 2016

Central Government, in exercise of its power conferred by the Proviso to Section 4 of the Insolvency and Bankruptcy Code, 2016 hereby specified the minimum amount of default Rs. 1 Crore (One Crore) for the purpose of said section.