Every year, companies are required to file their various annual forms and returns like annual returns and financial statements, etc. Sometimes, there are various events occurring in businesses which also result in compliances to be made by a company on Ministry of Corporate Affairs (MCA) portal like allotment of securities by a company requires the filing of return of allotment in PAS-3, increase in authorized capital requires the filing of Form SH-7, etc. To comply with all such filings, various due dates are prescribed in the Act.
COVID-19 has changed the scenario of everything from daily lifestyle to operating business due to various disruptions viz lockdowns, serious illness, inadequate medical facilities, etc. Considering all these factors, the Government has always come ahead to support people and corporates and to smoothen the business environment, various relaxations have been given from time to time.
In this article, you will get informative insights on various recent relaxations provided by the Government.
1. Relaxation in levy of additional fees in filing of various forms
Vide General Circular No. 17/2021, dated 29-10-2021, MCA has decided not to levy any additional filing fees for a period up to 31.12.2021 in respect of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL, AOC-4 Non-XBRL, MGT-7, and MGT-7A being filed for the financial year 2020-21.
Therefore, companies can file these forms with normal fees only till 31st December 2021.
In the table mentioned below, you can find the original and extended due dates for the aforementioned ROC forms for the financial year 2020-21.
|E-form||Purpose of the form||Original due date||Extended due date|
|AOC-4||For filing annual financial statements||Within 30 days of AGM. Assuming 30th September 21 is AGM date, then 29th Oct, 21||31st December, 2021|
|AOC-4 (Consolidated Financial Statements)||For filing consolidated financial statements in case of group companies||Within 30 days of AGM. Assuming 30th September 21 is AGM date, then 29th Oct, 21||31st December, 2021|
|AOC-4 XBRL||For filing financial statements in extensible business reporting language in case of prescribed companies||Within 30 days of AGM. Assuming 30th September 21 is AGM date, then 29th Oct, 21||31st December, 2021|
|AOC-4 Non-XBRL||For filing financial statements for exempted XBRL filing categories||Within 30 days of AGM. Assuming 30th September 21 is AGM date, then 29th Oct, 21||31st December, 2021|
|MGT-7||For filing annual return||Within 60 days of AGM. Assuming 30th September 21 is AGM date, then 29th, Nov. 21||31st December, 2021|
|MGT-7A||For filing annual returns in case of one person company (OPC) and small company||Within 60 days of AGM. Assuming 30th September 21 is AGM date, then 29th, Nov. 21||31st December, 2021|
2. Extension of due date for filing cost audit report
Rule 6(5) of the Companies (Cost Records and Audit) Rules, 2014 requires companies specified in rules 3 and 4 of such rules to furnish cost audit reports in Form CRA-4 (XBRL) received from cost auditor to the Central Government.
The report should be furnished within 30 days from the date of receipt of the cost audit report by the Board of Directors. It is pertinent to mention here that the cost auditor is liable to provide a cost audit report to the Board within 180 days from the closure of the financial year. Accordingly, the due date for submission of the cost audit report for the financial year was 30th September 2021 and should be furnished to the Registrar by 31st October 2021.
By circular no. 18/2021, MCA has extended the last date for submission of cost audit report to the Board of Directors till 30th November 2021, thereby, CRA-4 submission automatically got extended till 30th December 2021.
3. Extension of time limit for holding annual general meeting
In order to provide relief for compliance withholding of annual general meeting (AGM), the time limit is extended by 2 months beyond the original due date by which companies are required to conduct their AGMs for the financial year 2020-21 ended on 31st March 2021.[Office Memorandum CL-II-03/252/2021-O/o-DGCoA/MCA].
Requirement of holding AGM as per section 96 of the Act.
- Every company is required to hold an AGM once in a calendar year. The only exception is OPC.
- First AGM of a company should be held within a period of 9 months from the end of the first financial year after its incorporation.
- Subsequent all AGMs after the first AGM should be held within a period of 6 months from the end of the financial year.
- There should not be more than a fifteen months gap between the date of one AGM and that of the next AGM.
4. Allowing conduct of Extraordinary General Meeting (EGM) through video conferencing
The Act does not contain any specific provision for shareholders’ meetings through video conferencing or any other audio-visual means. Section 108 of the Act allows for e-voting whereas, section 110 of the Act allows passing of resolution through postal ballot.
Vide circular no. 14/2020, dated 8-4-2021, companies were asked to transact matters through postal ballot/e-voting except for ordinary business and in cases where holding EGM was unavoidable then, the same could be held through video conferencing or any other audiovisual mode.
Amid the scenario of COVID-19, the Government has extended this facility till 31st December, 21 by virtue of circular no.10/2021 dated 23 June 2021.
5. Removal of restrictions on matters to be transacted through board meeting via Video Conferencing
With the omission of rule 4 of Companies (Meetings of Board and its Powers) Rules, 2014 vide Notification No. G.S.R. 409(E), dated 15.06.2021, now all matters including approving financial statements and board reports can be done through a board meeting via video conferencing.
Requirement of Board meeting held through video conferencing
According to the provisions of section 173(2) of the Act, directors are allowed to participate in board meetings through video conferencing or other audio-visual means. However, rule 4 of the of Companies (Meetings of Board and its Powers) Rules, 2014 kept restrictions on the following matters which could not be dealt with or approved through video conferencing or other audio-visual means:
(a) Approval of annual financial statements;
(b) Approval of board’s report;
(c) Approval of prospectus;
(d) Audit committee meeting for approval of financial statements; and
(e) Amalgamation, merger, demerger, acquisition, and takeover.
6. Relaxation in condition of residency of one director in India
Section 149 of the Act requires that there should be a minimum of one director who resided in India for at least 182 days in a year. This condition is relaxed and there will not be any non-compliance in case all the directors were not resided in India for the financial year 2020-21.-Vide https://www.pib.gov.in/PressReleasePage.aspx?PRID=1737223.
7. Widening net of CSR activities with amount spent for COVID-19
Corporates have been a helping hand in the tough times of COVID-19. Be it providing masks and sanitizers or medical aid, companies have come forwarded with ample funds to help the Government and citizens of India.
In return, the Government has expanded the net of CSR activities via circular no. 9/2021, dated 5th May 2021. Spending of CSR funds for creating health infrastructure for COVID care, the establishment of medical oxygen generation and storage plants, manufacturing and supply of oxygen concentrators, ventilators, cylinders, and other medical equipment for countering COVID-19 or similar such activities were made eligible CSR activities.
8. Extension of date of implementation of mandatory audit trail of accounts
Proviso to rule 3 of Companies (Accounts) Rules, 2014 states that every company using accounting software for preparation of books of accounts is mandatorily required to use only such software which has a feature of recording audit trail. This requirement was earlier made applicable from 1st April 2021 which is now extended to 1st April 2022.
9. Appointment of Independent director even in case of delayed application for inclusion of name in data bank
In case an individual has not applied for the entrance of his name in a data bank of independent directors, such person can still be appointed as an independent director and he/she can apply for inclusion of his name to IICA with additional fees of INR 1000.
Upon expiry of the registration, if an individual fails to renew his/her registration in a data bank within 30 days, such person can continue being an independent director. He/she just needs to apply for renewal of registration with additional fees of INR 1000 in order to retain his/her name.
10. Relaxation for One Person companies
With effect from 1st April 2021,
- Non-resident Indians (NRIs) can also incorporate OPC.
- Residency rule test has been relaxed as the number of days are now reduced to 120 days from 180 days.
- Now at any time, OPC may be converted into a private or public company except section 8 company. The condition is that it has to increase the minimum number of members and directors.
- The limitation of paid-up capital (INR 50 lakh) & average annual turnover (average annual turnover during the relevant period of two crore rupees) applicable for OPC is removed. Now, there are no restrictions on the growth of OPCs in terms of their paid-up capital and turnover.