Scope of the scheme: All pending documents in relation to annual statutory compliances, may be filed by eligible Indian companies [1] on MCA Portal beyond the prescribed time periods, without being subject to higher additional fees on account of delay. An enabling scheme has been introduced, namely the Companies Fresh Start Scheme, 2020 (CFSS-2020).

CFSS-2020 would come into force on April 01, 2020, and would remain in force till September 30, 2020.

It would grant immunity from launching of prosecution or proceedings from imposing a penalty on account of delay associated with certain filings, in addition to exemption from imposition of additional fees. However, no immunity is granted with respect to any substantive violation of the law, such as any proceedings involving the interests of any shareholder or any person qua the company or its directors or key managerial personnel.

For the purpose of obtaining immunity under this scheme, an application under Form CFSS-20 is to be filed.

Fee payable: The MCA clarified that only normal fees would be applicable on filings made by the Companies on the MCA Portal, during the subsistence of CFSS-2020.
Applicability:

The scheme is applicable on any company which makes default in filing of any documents, statement, returns, etc. including annual filings on MCA Portal (Defaulting Company) has permitted to file belated documents in accordance with CFSS-2020.

Defaulting companies: CFSS-2020 also gives an opportunity to default inactive companies to get themselves declare as ‘dormant company’ under the provisions of the Companies Act, 2013 (Act).

2. Corporate Social Responsibility:

Changes to The Companies Act, 2013 in Light of Covid-19 Outbreak – On 28^th March 2020, the Ministry of Corporate Affairs (MCA) vide its Office Memorandum dated March 28, 2020, has clarified that any contribution made by a company, to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund) constituted to deal with the emergency or distress situations such as created by COVID 19 pandemic, would deem to be an eligible CSR activity under Item No. (viii) of Schedule VII of the Companies Act, 2013 i.e. the prime minister’s national relief fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the scheduled caste, tribes, other backward classes, minorities, and women.

3. Relaxation of the norms relating to the meeting of the board of directors (the “Board”):

On March 19, 2020, by way of a notification[2] the MCA has relaxed the requirement of holding Board meetings with the physical presence of directors, in relation to matters specified under Rule 4 of Companies (Meetings of Board and its Powers) Rules, 2014. The said relaxation is available till June 30, 2020. MCA has dispensed with the earlier requirements under the Companies Act, 2013, i.e. the need to conduct physical board meetings in relation to inter alia approval of financial results, board reports, and restructuring until 30 June 2020. [3]

4. Interval between two board meetings increased [4]:

A company requires to hold a minimum of 4 board meetings every year with a maximum time gap of 120 days between two consecutive board meetings. The MCA has extended this time gap of 120 days by 60 days thereby increasing the interval limit between

two consecutive board meetings to a maximum of 180 days. This one-time relaxation is available for the next two quarters i.e. up to 30 September 2020.

5. Policy of work from home implemented for companies and limited liability partnerships:

On March 20, 2020, the MCA issued an advisory to all companies and limited liability partnerships to a policy of “work from home” till March 31, 2020. MCA is also in the process of deploying a web-based form named CAR (Company Affirmation of Readiness towards COVID-19) which the companies and

the LLPs will be require to be submit.

6. Auditor’s Report:

The MCA had earlier on 25 February 2020 announced a new format of the report of the statutory audits of companies, namely Companies (Auditor’s Report) Order, 2020 (CARO 2020) replacing the earlier order under Companies (Auditor’s Report) Order, 2016. CARO 2020 is applicable for all statutory audits commencing on or

after 1 April 2019 corresponding to the financial year 2019-20. The MCA has now postponed the applicability of CARO 2020 to the financial year 2020-21. This will significantly reduce the burden on the companies and

their auditors to deal with the additional checks introduced under CARO 2020.

7. Meetings of Independent Directors[5]:

Schedule IV of the CA 2013 mandates the independent directors (ID) of a company to hold at least one meeting in a financial year without non-independent directors and members of management. The MCA has clarified that if the independent directors are not able to hold at least one independent director’s meeting during

the financial year 2019-20, the MCA will not view it as a non-compliance with the statutory provisions. However, the MCA has encouraged the independent directors to share their views amongst themselves through telephone, email, or

any other mode of communication, as they may deem fit.

8. Deposit Provisions:

Companies, having outstanding deposits, require to deposit at least 20% of the number of their deposits maturing during the following financial year, into a separate deposit repayment reserve on or before 30 April of each year.[6] For the deposits maturing in the financial year 2020-21, the MCA

has extended the due date for deposit into the deposit repayment reserve to 30 June 2020. In the current market scenario, this extension will facilitate

the liquidity crunch situation faced by many companies, who have accepted deposits.

9. Declaration of Commencement of Business:

A newly established company require to file a declaration for the commencement of new business (Form 20-A)

within 6 months of its incorporation. However, the timeline for filing this declaration has extended from 6 months to 1 year from the date of incorporation.

10. Compliances in connection with debentures eased out:

The requirement to invest or deposit at least 15% of the number of debentures maturing before 30th April 2020 may be complied

with by 30th June 2020.

11. Resident Status of Director eased out:

Changes to The Companies Act, 2013 in Light of Covid-19 Outbreak – The qualification for a director who has stayed in India is was that

he should be resident in India for a period of a minimum of 182 days during a financial year. However, these qualification criteria have removed for the financial year 2019-2020. Hence, non-compliance with the criteria laid down for qualification of a director is not a non-compliance for

the financial year 2019-20.

All newly incorporate companies are require to file a declaration in form INC-20A within 180 days from the date of its incorporation stating that every subscriber

to the memorandum has pay the value of the shares agree to be takes by him. MCA has now provided an additional time limit of 180 days for filing the aforesaid declaration. It means all the newly incorporated companies can file

from INC-20A within a period of 360 days from the date of its incorporation.