Summary of New MCA official updates under the Company Act 2013
Corporate & Allied Laws Update:
MCA has issued the much-awaited clarification for passing general and special resolutions and convening an EGM in unavoidable circumstances and extended the validity of the existing circulars up to December 31, 2021, in light of the current social distancing norms.
The MCA has earlier issued General Circular no 14/2020 (first circular) and 17/2020 (second circular) dated 13th April 2020 for providing relaxation and clarifying various difficulties in following the first circular.
Circular details guidelines for conducting an EGM for companies that need to provide e-voting facilities or have opted for e-voting as per section 108 of the Companies Act, 2013.
every listed company and company not having less than 1000 shareholders must mandatorily provide e-voting facility and for companies that do not need to provide e-voting facilities.
All other requirements and conditions provided in the said circulars shall remain unchanged.# MCA has released a notification that “ACTIVE non-compliant” corporations and “Deactivated DIN” holders can take full advantage of the moratorium term from 01.04.2020 to 30.09.2020 without any LATE FEES.
31.03.2020 is the latest due date of AOC-4, MGT-7 for F.Y. 2018-19 for companies with authority in UT J&K and Ladakh and NBFC (IND AS) Firms XBRL AOC-4 and MGT-7.
In order to ensure Corona Preparations of Companies / LLPs, on 23.03.2020, MCA must deploy a web-form called CAR (Company Affirmation of Readiness for COVID-19) to be filed by all INSTANT Companies / LLPs.
MCA also updated the rules of the Board of Directors to ensure that the Board of Directors may keep the “Video-Conferencing” facility for the acceptance of the financial reports, the Board report, etc. to be held until 30.06.2020.
MCA has explained that corporations are allowed to conduct AGM by video conferencing (VC) or other audio and visual means. (Refer to MCA General Circular No. 20/2020 for specific details).
MCA extended the date of registration of current directors at the Independent Director Databank from 30.04.2020 to 30.06.2020.
Consequently, timely identification of the same is of primary importance. Note that MCA also charges a nominal fee of 5,900 per director for such registration.
MCA also extended the deadline for the “Registration at the Independent Directors’ Portal” of the new Independent Directors.
The Government has developed an online PF withdrawal system for “COVID-19 Outbreak” reasons through the EPF Member Portal or “Umang Mobile App.” You should withdraw the lower PF of:
- 75% of the total standing PF amount.
- Three months of Standard + DA.
MCA has explained w.r.t. dates and duration of the name allocation, name change, and resubmissions as follows:
- No Licensed Business Names (New / Update) expiring from 15.03.2020 to 03.05.2020 must be retained until 23.05.2020.
- Resubmission timelines of any MCA form for which the last resubmission date is from 15.03.2020 to 03.05.2020 have been extended to 18.05.2020.
RELIEF TO LISTED COMPLIANCE REPORTING COMPANIES ATTRIBUTABLE TO CORONAVIRUS:
LATEST DUE DATE-15.05.2020—QUARTERLY COMPLIANCE)
- Furnishing Specifics of the shareholding structure (Q4 19-20) in compliance with Regulation 31 (Earlier Date-21.04.2020).
- In Furnishing Corporate Governance Statement (Q4 19-20) according to Regulation 27 (Earlier Date-15.04.2020).
- Furnishing information of customer grievances (Q4 19-20) under Regulation 13(3) (Earlier Date-21.04.2020)
LATEST DUE DATE-31.05.2020 (Half-Year Compliance)
- Furnishing Certificate of Compliance with Stock Exchange (HY2 19-20) according to Regulation 7 (Earlier Date-30.04.2020).
LATEST DUE DATE-30.06.2020-(Yearly Compliance)
- Publication of financial results pursuant to Regulation 33 of the LODR Guidelines for Financial Publishing (Earlier Dates-15.05.2020 (Q4 Results) and 30.05.2020 (Annual Results)).
- Secretarial compliance study under Regulation 24A for the year 2019-20 (earlier date-30.05.2020).
The Essential Points to be remembered with reference to the company incorporation in India with reference to current situation + “SPICE
- Both forms (Incorporation, AOA, MOA, AGILE-PRO) have to be filled out in a web-based facility and then copied, digitally signed and posted as before.
- “Check Form,” “Pre-Scrutiny” to be performed on a web-based database, so no modifications can be made to the downloaded files.
- “INC-9” (declaration by first subscriber) must always be submitted by a web-based facility only.
- “AGILE-PRO” is to be digitally signed only by a person who has signed the “Spice+” form and no other director will sign the same form.
- If you continue to apply for “Name Reservation” first, you should opt for 2 Proposed Names otherwise you might also proceed to the “Name with Incorporation” facility and then you can only propose One Name
The GSTIN status applied through AGILE-PRO can be checked at the GST Portal from the MCA Forms SRN.
Companies that enroll ESI and PF inside the SPICE+ package do not require compliance with the ESI and PF laws until the deadline for application is set.
Changes made in CARO, 2020 Applicable from the Financial year 2019-20
Fixed Assets/ Property, Plant, and Equipment
Reporting over maintenance of records of Intangible assets has been specifically added.
Leased Immovable property is specifically excluded from the reporting over the holding of title deeds in the Company’s name.
If owned Immovable property is not held in the Company’s name, Dispute status and details of the registered owner need to be reported.
In the case of EPP revaluation, the auditor must determine that the same has been achieved on the basis of the Reported Interest survey. Changes ought to be recorded if 10% or more of the adjustments are made in the WDV.
Inconsistencies recognized by management with an effect of 10% or more of the inventory value need to be reported.
In the case that the Corporation has a working capital limit of more than INR 5 Crores depending on the security of the current assets (e.g. Stock, Debtors), the auditor must report that the regular filings (e.g. Financial Accounts, Debtors Listing) made with the lender are in compliance with the books.
The auditor must disclose whether or not any income has been returned under the Income Tax Act, 1961 and the same has been duly accounted for in the books of accounts.
Default in repayment of loans
The auditor must determine that the company is considered to be a “Willful defaulter.”# Information on the removal of term loans from allowable use needs to be published.
Data has been given on how short-term loans have been used for long-term purposes.
The auditor must comment on all money taken to meet the commitments of the community business.
Reporting on loans received by the Firm was made on the basis of the commitment of shares issued by the Firm to shareholders, Joint ventures, and associates.
Fraud reporting has been extended to fraud against the Company by any person rather than by officers or employees in the past.
The fraud report issued by the auditors in the form of ADT-4 to CG should be reported.
The auditor has to record his evaluation of “Whistle Blower” allegations.
The auditor must report whether the internal audit system exists within the company and whether or not the internal audit reports have been considered.
The particulars of the proceedings (pending/initiated) under the Benami Law need to be published.
Consolidated Financial Statements
Details of consolidated companies with qualifications or adverse reactions in the CARO report must be reported along with the Paragraph Number of the auditor with the audit report on Consolidated Financial Activities.
Non-Banking Financial Activities
The auditor must report on the conduct of financial activities of an NBFC nature by the company without a valid Certificate and reporting.
The auditor will document whether the Company has suffered CASH LOSS during the current AND preceding financial year and the volume of such cash loss.
The resignation of the statutory auditor and the causes, problems with him duly considered by the incoming auditor or not; must be published.
The goals of the Organization to meet its Existing Obligations on the basis of percentages, maturity, and plans for execution must be stated.
Corporate Social Responsibility:
The Auditor will disclose that the unexpended amount has been allocated to the designated fund within 6 months of the end of the fiscal year and whether or not the pending project balance has been moved to a special account. (Amendment itself under the Corporations Act, not yet told in 2013).
APPLICABILITY OF ANNEXES TO THE AUDITOR’S REPORT:
- Annexure of the CARO Report is not needed in the case of Small Business, Banking Firm, Insurance Company, Section 8 Company, One Person Company, and any private company
- Having paid-up capital and free assets to INR 1 crores as at the balance sheet date and borrowing up to INR 1 crores at any time during the year and revenue up to INR 10 crores as per the financial reporting of the year mentioned.
- Annexure of the Internal Financial Control Report is not required in the case of Small Company, One Person Company, AND any Private Company with Turnover up to INR 50 Crores
- as per the financial statements of the year concerned and borrowing up to INR 25 Crores at any time during the year.