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The COVID pandemic appeared in India in 2020, and the government imposed the first lockdown in March 2020. The companies faced many difficulties due to the lockdown. Even after the upliftment of the lockdown, normalcy was not restored.
The companies faced hardships to fulfil their compliances under the Companies Act, 2013 (“Act”) because of the spread of the COVID-19 pandemic across India.
The companies requested the Ministry of Corporate Affairs (MCA) to provide ease in compliances due to the COVID-19 pandemic. Thus, the MCA provided many relaxations to ease the company and LLP compliances for the year 2020.
Currently, the second wave of COVID-19 is prevailing in the country, and lockdowns are being imposed in various parts of the country. Thus, the MCA provided certain relaxations in 2021 also. The relaxations provided by the MCA are stated below.
On 22 January 2021, the MCA issued a clarification in the spending allowed as CSR (Corporate Social Responsibility) by the companies. It stated that spending company funds for public outreach programmes and awareness campaigns to promote vaccination against COVID-19 would be considered as eligible CSR activity.
On 22 April 2021, the MCA also issued another clarification on spending CSR funds for setting up makeshift hospitals and temporary COVID care facilities. It stated that providing temporary COVID facilities, and makeshift hospitals are eligible CSR activities under Schedule VII (i) and (xii) of the Act relating to health care promotion, including preventive health care and disaster management.
The MCA also stated that the spending of the CSR funds for the below activities would be considered as eligible CSR activities:
On 3 May 2021, the MCA provided that no additional fees will be charged to companies for filing the forms reporting the creation or modification of charges on the assets.
A company could file Form CHG-1 and Form CHG-9 by 31 May 2021, when the due date of these forms fall after 1 April 2021 and expire. Thus, when a company creates a charge before 1 April 2021, and it is not yet reported to the Registrar, it could be filed by 31 May 2021 without any additional fee.
The MCA also waived the additional fee for filing many forms under the Act and the Limited Liability Partnership (LLP) Act, 2008. The MCA issued a circular stating that the company and LLP statutory forms required to be filed between 1 April 2021 and 31 May 2021 can be filed by 31 July 2021 without any additional fees.
Initially, the MCA issued a list of eight forms due between 1 April 2021 and 31 May 2021 under the Act and the LLP Act, 2008. The eight forms and Form CHG-1 and Form CHG-9 can be filed by 31 July 2021 by paying the regular fees.
However, the MCA has currently issued a list of 53 forms that can be filed by the company and LLP by 31 July 2021 without any additional fees. The complete list of 53 forms can be downloaded here.
On 30 December 2020, the MCA amended the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 and provided that the companies could hold board meetings through video conferencing or audio-visual means with the physical presence of directors for certain matters till 30 June 2021.
The MCA issued a circular on 31 December 2020, allowing companies to conduct Extraordinary General meetings (EGMs) through video conferencing or audio-visual means or transact items through e-Voting facility or simplified voting through registered emails, without requiring the physical presence of the shareholders till 30 June 2021.
On 3 May 2021, the MCA issued a circular extending the period of interval between board meetings provided under Section 173 of the Act. Section 173 of the Act provides that the gap between two board meetings of a company must not exceed 120 days, and it should conduct a minimum of four board meetings in a year.
The MCA extended the period of interval between two board meetings by an additional 60 days. The company can hold two board meetings with a gap of not exceeding 180 days, in place of 120 days for the first two-quarters of FY 2021-22. Thus, a company can now hold two board meetings in a gap of 180 days during the quarters of April to June 2021 and July to September 2021.
On 15 June 2021, the MCA issued a notification omitting Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014. Rule 4 states that the companies cannot conduct board meeting through video conferencing or other audio-visual means to deal with the following matters:
With the omission of Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014, the companies can conduct the board meetings through video conferencing or other audio-visual means to discuss all matters, including the approval of annual financial statements and the Board’s report.
On 30 March 2020, the MCA appealed to the MD/CEOs of the top 1000 companies based on market capitalisation for contributing generously to the ‘PM CARES Fund’. The MCA also stated that the excess contributions made to the PM CARES Fund could be set off against the CSR obligations in the subsequent financial years.
On 20 May 2021, the MCA issued a clarification on the 30 March 2020 appeal. It clarified that any excess CSR amount contributed by the companies on 31 March 2020 to the PM CARES FUND could be set off against the CSR obligation for FY 2020-21 subject to the following conditions:
The MCA provided many relaxations in compliances by a company and LLP in 2020 due to COVID-19 pandemic lockdowns. The many relaxations provided by the MCA are as follows:
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