The weekly messenger | Edition 03.21

ACCOUNTING NEWS

New Publication – Compendium of Opinions – Volume XXXVII – 12 January 2021
The Expert Advisory Committee (EAC) of the ICAI has issued the 37^th volume of ‘Compendium of EAC Opinions’, comprising of opinions finalised by it during the period 12 February 2017 to 11 February 2018. Some of the important matters on which the opinions have been provided includes:

• Treatment of financial liability under Ind AS 32 and Ind AS 109.
• Amortisation of goodwill in respect of subsidiaries and jointly controlled entities recognised as an asset in consolidated financial statements.
• Classification of investments in units of debt mutual funds and equity mutual funds under Ind AS 109.
• Treatment of disputed amount (Principal and Interest) in respect of cases pending before various regulatory authorities.
• Classification of grant related to assets in the statement of cash flows.
• Charging of pro rata depreciation.

For more information, click here. 
 
IFRS Foundation publishes educational material to support companies in applying going concern requirements – 13 January 2021
 
The IFRS Foundation has issued an educational material on 'Going concern — a focus on disclosure', in order to support the companies to assess their ability to continue as Going Concern during the current stressed economic environment arising from COVID-19, while preparing their financial statements using IFRS requirement. The purpose of issuing this educational material is to support consistent application of IFRS Standards and it does not change, or add to, existing requirements.    
 
For more information, click here.

REGULATORY NEWS

Clarification on spending of CSR funds for Awareness and public outreach on COVID-19 Vaccination programme – 13 January 2021
 
The Ministry of Corporate Affairs (MCA) through its Circular dated 13 January 2021, has clarified that CSR funds incurred for carrying out awareness campaigns / programmes or public outreach campaigns on COVID-19 Vaccination programme would be treated as eligible CSR activity under item no. (i), (ii) and (xii) of Schedule VII of Companies Act, 2013 respectively.
 
For more information, click here.  
 
Clarification on holding of AGM through Video Conferencing or Other Audio Visual Means – 13 January 2021
 
The MCA has also allowed the companies to conduct their Annual General Meetings (AGMs), which are due in the year 2021 through Video Conferencing or Other Audio Visual Means, provided the requirements of paragraphs 3 and 4 of the erstwhile Circular issued on 5 May 2020 are fulfilled.
 
Further, MCA has specifically mentioned that this Circular shall not be construed as conferring any extension of time for holding of AGMs by companies under Companies Act, 2013.
 
For more information, click here.
 
Scheme for condonation of delay for companies restored on the Register of Companies between 1 December 2020 and 3 December 2020, under Section 252 of the Companies Act, 2013 – 15 January 2021
 
Certain companies who had preferred appeals under Section 252 ‘Appeal to Tribunal’ of the Companies Act 2013 against the orders of striking off the names of the companies before respective benches of National Company Law Tribunals (NCLTs) could not take the benefit of the Companies Fresh Start Scheme, 2020 (CFSS-2020) issued by MCA in March 2020.
 
Now, pursuant to the final orders issued by the NCLTs w.r.t. restoration of names of such companies in the month of December 2020, such companies had requested the MCA for a similar sort of relaxation as provided under CFSS-2020. Therefore, the MCA has issued the ‘Scheme for condonation of delay for companies restored on the Register of Companies between 1 December 2020 and 3 December 2020, under section 252 of the Companies Act, 2013’, the key features of which are as follows:
 
Applicability: For Companies in respect of whom the appeal filed under Section 252 of the Companies Act, 2013 with the respective NCLT Bench for the restoration of the name of the company was disposed of between 1 December 2020 to 31 December 2020, with an order for restoration of the company.
 
Duration: Overdue forms can be filed upto 31 March 2021.
 
Forms for which the Scheme is applicable: All forms required to be filed with Registrar (except for e form SH-7, CHG-1, CHG-4, CHG-8 and CHG-9) .
 
Applicable Fees: Normal filing fees under Companies (Registration Offices and Fees) Rules, 2014 on the date of filing and no additional fees would be applicable.
 
The Scheme shall come into force w.e.f. 1 February 2021.
 
For more information, click here.
 
Companies (CSR Policy) Amendment Rules, 2021 – 22 January 2021

Pursuant to the enactment of the amendments being made to Section 135 ‘Corporate Social Responsibility’ of the Companies Act 2013 vide Companies (Amendment) Act, 2019 and Companies (Amendment) Act, 2020, the MCA has issued the Companies (CSR Policy) Amendment Rules, 2021. Some of the major changes which has been made in the aforesaid Rules are as follows:

• In Rule 2 ‘Definitions’, the definitions of ‘Corporate Social Responsibility (CSR)’ and ‘CSR Policy’ have been amended. Further, certain new definitions for the following terms have been inserted:

1. Administrative Overheads;
2. International Organisation;
3. Ongoing Project;
4. Public Authority.

• As per Rule 4 ‘CSR Implementation’,

1. Companies would now be able to undertake CSR activities either through itself or through eligible entities as provided in the said rule. In case, a company would undertake CSR activities through intermediaries, then such intermediaries would be required to register themselves by filing e-form CSR-1 w.e.f. 1 April 2021.
2. Board has now been made responsible to ensure that funds so disbursed have been utilized for approved purposes and the Chief Financial Officer or the person responsible for financial management shall certify the same.
3. Board has also been made responsible to monitor the implementation of ongoing projects.

• As per Rule 5 ‘CSR Committees’, CSR Committee will now be required to formulate an annual action plan for CSR activities. However, board may alter such plan, as per the recommendation of CSR Committee, based on reasonable justification to that effect.
• As per Rule 7 ‘CSR Expenditure’:

1. Any surplus arising out of the CSR activities will not form part of the business profit of a company;
2. Any excess amount spent could now be set off within 3 succeeding financial years, subject to certain conditions;
3. CSR can also be spent for creation/acquisition of capital asset to be held in a specified manner.

• In Rule 9 ‘Display of CSR Activities on its websites’, company will now be required to disclose the composition of CSR Committee, CSR Policy and Projects approved by the Board.
• New Format for ‘Annual Report on CSR Activities’ to be included in the Board Report has also been added.

These Rules shall come into force w.e.f. 22 January 2021, unless otherwise stated in the notification.
 
For more information, click here.
 
MCA notifies commencement date of various sections of Companies (Amendment) Act, 2020 – 22 January 2021
 
The MCA has notified 22 January 2021 as the commencement date of various sections of the Companies (Amendment) Act, 2020, the listing of which is as follows:
 

 
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MCA notifies commencement date of Section 21 of Companies (Amendment) Act, 2019 – 22 January 2021
 
The MCA has notified that the provisions of Section 21 of the Companies (Amendment) Act, 2019 i.e. Amendment to Section 135 ‘Corporate Social Responsibility’ of the Companies Act, 2013 shall come into force w.e.f. 22 January 2021.
 
For more information, click here.
 
Relaxation from compliance with certain provisions of the Listing Regulations due to the COVID -19 pandemic – 15 January 2021
 
Pursuant to relaxations provided by MCA w.r.t. holding of Extraordinary General Meeting (EGM) and AGMS due in the year 2021 through Video Conferencing or other audio-visual means upto 30 June 2021 and 31 December 2021 respectively, the Securities and Exchange Board of India (SEBI) has also extended the following relaxations, which it had provided to the listed companies through its erstwhile Circular dated 12 May 2020 till 31 December 2021:

• Requirement of sending physical copies of annual reports and statement containing salient features of all the documents, as prescribed in Section 136 of the Companies Act, 2013 to the shareholders has been dispensed with.
• The requirement of sending of proxy forms to the holder of the securities has also been dispensed with for a temporary period, in case the meetings are held through electronic mode.

For more information, click here.
 
Relaxations relating to procedural matters – Issues and Listing – 19 January 2021
 
The SEBI vide its Circular dated 6 May 2020, had granted certain onetime relaxations from the strict enforcement of certain regulations of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, pertaining to right issue opening upto 31 December 2020.
 
Now, the relaxation provided in point (iv) of the aforesaid Circular, (as per which an issuer along with other specified persons were allowed to go for an optional mechanism to accept the applications of the shareholders instead of Application Supported by Blocked Amount (ASBA) facility, subject to certain conditions) has been further extended till 31 March 2021.
 
For more information, click here.