The weekly messenger | Edition 11.20

Auditing News

Extension of validity of Peer Review Certificate in the wake of COVID -19 spurt across the country – 30 March 2020
In the wake of COVID -19 spurt and nation-wide lock down, the Institute of Chartered Accountants of India (ICAI) has extended the effective date of validity of Peer Review Certificate as under:

• In case of Practice Units already holding a valid Peer Review Certificate and the Peer Review Process thereof has been completed - The effective date of validity of the Peer Review Certificate has expired or is set to expire between 1 April 2019 till the period of lockdown, the effective date of validity stands extended by one year from the date of validity of the last issued certificate, subject to the submission of the final clean report for the peer review period 2014-17 and later, within 30 days after the cease of lockdown by such units wherefrom the final clean report for the relevant peer review period was not received by the Board till 24 March 2020.
• In case of Practice Units holding a valid Peer Review Certificate and peer review process thereof was initiated and ongoing, however, has stuck due to nation-wide lockdown – If the validity of the last issued certificate expires before the completion of Peer Review process, the validity of such Certificate is extended by one year from the date of validity of the last issued certificate.

For more information, click here.
 
Revised effective date for applicability of (a) ICSI Auditing Standards and (b) Guidelines on Issuance of Diligence Report for Banks by Peer Reviewed Units – 31 March 2020
 
In view of the developments arising due to the spread of COVID-19 pandemic, the Institute of Company Secretaries of India (ICSI) has deferred:

• the mandatory applicability of ICSI Auditing Standards CSAS-1 to CSAS-4 from 1 April 2020 to 1 October 2020; and
• the requirement to issue Diligence Report for Banks in case of Consortium Lending / Multiple Banking Arrangements by Peer Reviewed Units from 1 April 2020 to 1 July 2020.

For more information, click here.

Regulatory News

Clarification/Guidance on applicability of Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) – 3 April 2020
 
The ICSI has clarified that any relaxation granted by the Central Government (CG) from the compliance of provisions of Board and General Meetings under the Companies Act, 2013 will automatically and consequentially apply to Secretarial Standards (SSs) as the case may be and the relaxed provisions of the Companies Act, 2013 will prevail to the extent applicable in terms of enforceability.
 
For more information, click here.
MCA issues Companies Fresh Start Scheme, 2020 and LLP Settlement Scheme, 2020 – 30 March 2020
 
To incentivize compliance and reduce compliance burden in the wake of COVID-19, the Ministry of Corporate Affairs (MCA) has introduced the ‘Companies Fresh Start Scheme, 2020’ and revised the ‘LLP Settlement Scheme, 2020’.  The USP of both the schemes is to provide a one-time waiver of additional filing fees for delayed filings by the companies or Limited Liability Partnerships (LLPs) with the Registrar of Companies during the currency of the Schemes i.e. during the period 1 April 2020 to 30 September 2020.
 
Apart from giving longer timelines for corporates to comply with various filing requirements under the Companies Act, 2013 and LLP, Act 2008, both schemes also reduce the related financial burden, especially for those with long standing defaults and thereby provides an opportunity to make a ‘fresh start’.
 
Further, the ICAI has also issued certain frequently asked questions (FAQs) on the aforesaid Schemes.
 
For Modification to LLP Scheme, 2020, click here;

For Companies Fresh Start Scheme, 2020, click here;
 
For FAQs on LLP Settlement Scheme, 2020 and its modification, click here.
 
For FAQs on Company Fresh Settlement Scheme, 2020, click here.
 
Contribution towards PM CARES Fund would qualify for exemption u/s 80G of Income Tax Act, 1961 – 31 March 2020
 
The MCA has clarified that any contribution made before 31 March 2020 to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM CARES Fund), which has been set up with the primary objective of dealing with any kind of emergency or distress situation such as that posed by COVID 19 pandemic, would qualify for 80G exemption under the Income Tax Act, 1961.
 
However, w.e.f. 1 April 2020, only those companies that have chosen to remain in the old tax structure will get the said benefit.
 
For more information, click here.
 
One-time relaxation for DIN holders whose DINs marked as ‘Deactivated’ and for companies whose compliance status marked as ‘ACTIVE non-compliant’ – 31 March 2020
 
In pursuance of the general circulars issued by the MCA with respect to the ‘Special Measures under Companies Act, 2013 and LLP Act, 2008 in view of COVID-19 outbreak’ and ‘Companies Fresh Start Scheme, 2020’, it has been further notified that:

• the Director’s Identification Number (DIN) holders of DINs marked as ‘Deactivated’ due to non-filing of DIR-3KYC/DIR-3 KYC-Web; and
• the companies with compliance status marked as ‘ACTIVE non-compliant’ due to non-filing of e-form Active Company Tagging Identities and Verification (ACTIVE)

are encouraged to become compliant once again and file DIR-3KYC/DIR-3KYC-Web/ACTIVE as the case may be, without any filing fee of INR 5000/INR 10000 respectively.
 
For more information, click here.
 
Functioning of NCLT during the lock down period – 28 March 2020
 
In view of the lock down announced by the Government of India until 14 April 2020, in order to curtail the spread of COVID19, the National Company Law Tribunal (NCLT) has decided to extend its directions given in the notice dated 22 March 2020 (i.e. with respect to the  closure of NCLT benches from 23 March 2020 to 31 March 2020) up to 14 April 2020.
 
For more information, click here.
 
IBBI amends CIRP Regulations to provide relief in corporate insolvency resolution process due to COVID-19 outbreak – 30 March 2020
 
Pursuant to the difficulty being faced by the lockdown due to COVD-19, the Insolvency and Bankruptcy Board of India (IBBI) has decided to amend the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations). In the amended Regulations, the IBBI has clarified that that the period of lockdown imposed by the CG in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to the lockdown, in relation to a corporate insolvency resolution process. This would, however, be subject to the overall time-limit provided in the Code.
 
These regulations shall come into force w.e.f. 29 March 2020.
 
For more information, click here.

Temporary relaxation in processing of documents pertaining to FPIs due to COVID-19 – 30 March 2020
 
The Securities and Exchange Board of India (SEBI) has granted certain temporary relaxations with respect to compliance requirements for Foreign Portfolio Investors (FPIs) in a situation where FPIs are not in a position to send original and/or certified documents, as specified in Operational guidelines for FPIs and Designated Depository Participants (DDPs) issued under the SEBI (FPI) Regulations, 2019.
 
The relaxations shall be applicable till 30 June 2020.
 
For more information, click here.
Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2020 – 31 March 2020
 
The Reserve Bank of India has amended the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 with the Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2020, wherein in Regulation 9 ‘Period within which export value of goods/software/services to be realised’, the time period with respect to the realization and repatriation of the amount representing the full export value of goods or software or services exported in India has been increase from nine months to fifteen months from the date of export, for the exports made up to or on 31 July 2020.
 
However, the provisions with respect to period of realisation and repatriation to India of the full export value of goods exported to warehouse established outside India remain unchanged.
 
For more information, click here.
 
Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2020 – 31 March 2020
 
The CG has further amended the ‘Prevention of Money-laundering (Maintenance of Records) Rules, 2005’ with ‘Prevention of Money-laundering (Maintenance of Records) Amendment Rules, 2020’, wherein in a new clause i.e. clause (iiia) in clause (iii) to the proviso to sub-rule (5) of Rule 9 ‘Client Due Diligence’ has been inserted, namely:-
 
‘(iiia) Notwithstanding anything contained in clause (iii), the small account shall remain operational between 1 April 2020 and 30 June 2020 and such other periods as may be notified by the CG.’
 
These rules shall come into force w.e.f. 31 March 2020.
 
For more information, click here.

IRDAI issues COVID-19 related instructions – 30 March 2020
 
In order to meet the challenges on account of the developing situation owing to COVID-19, the Insurance Regulatory and Development Authority of India (IRDAI), has issued certain instructions with respect to the following:

• Safety measures;
• Communication to key stakeholders;
• Monitoring of the situation;
• Products;
• Policy Servicing and Claims;
• Relaxations.

For more information, click here.
 
IRDAI provides additional time for filing Regulatory Returns – 4 April 2020
 
The IRDAI has also allowed an additional time to all the insurers for the purpose of filing of regulatory returns as at 31 March 2020, which is as follows:

• Monthly Returns: 15 days over and above the normal time;
• Quarterly, Half-Yearly and Yearly Returns: 30 days over and above the normal time;
• Cyber Security Audit: 30 days over and above the normal time.

For more information, click here.
 
No Extension of the Financial Year – 30 March 2020
 
Pursuant to the circulation of some fake news circulating in certain section of media with respect to the extension of the Financial Year, the Ministry of Finance has clarified that there is no extension of the Financial Year.
 
For more information, click here.