The weekly messenger | Edition 37.20

REGULATORY NEWS

Revised effective date for applicability of ICSI Auditing Standards – 28 September 2020
 
Due to COVID-19 pandemic, the Institute of Company Secretaries of India (ICSI) had earlier deferred the mandatory applicability of its Auditing Standards CSAS-1 to CSAS-4 from 1 April 2020 to 1 October 2020. Now, this applicability date has been further extended i.e. the Auditing Standards would now be mandatorily applicable to Audit Engagements accepted by the Auditor on or after 1 April 2021.
 
For more information, click here.
 
Companies (Amendment) Act, 2020 – 28 September 2020
 
The Ministry of Law and Justice has notified “The Company (Amendment) Act 2020”, which seeks to amend the Companies Act, 2013.The key changes which have been made through the Companies (Amendment) Act, 2020, inter-alia includes:

• Central Government (CG) has been empowered to exclude certain class of companies, in consultation with the Securities and Exchange Board of India (SEBI) from the definition of listed company; 
• Introduction of a separate Chapter on ‘Producer Companies;
• Companies with Corporate Social Responsibility (CSR) obligation of up to ₹ 50 lakh would not be required to constitute CSR Committee;
• Companies will now be able to set off the excess amount spent on CSR activities in the succeeding years;
• Specified class of unlisted companies may now be required to prepare and file their periodical financial results;
• Allowance of direct listing of securities by Indian companies in permissible foreign jurisdictions;
• Companies can now pay adequate remuneration to their non-executive directors as well, in case of inadequacy of profits, thereby aligning the same with the provisions for remuneration to executive directors in such cases;
• Reduction in the timelines for applying for right issues under Section 62;
• Extending the exemptions w.r.t. to filing of certain resolutions (i.e. resolution to grant loans, or give guarantee or provide security in respect of loans) with the Registrar of Companies (ROC) to certain classes of NBFCs and housing finance companies;
• Providing of a window within which penalties shall not be levied for delay in filing annual returns and financial statements in certain cases;
• Reduction in penalties under various sections;
• Decriminalisation of offences, thereby omitting punishment with imprisonment in various sections;
• Removal of penal provisions from various sections.

The Companies (Amendment) Act, 2020 shall come into force on such date as the CG may, by notification in the official gazette appoint and different dates may be appointed for different provisions of this Act.
 
For more information, click here.
 
Companies (Meetings of Boards and its Powers) Third Amendment Rules, 2020 – 28 September 2020
 
In the month of March 2020, the Ministry of Corporate Affairs (MCA) had issued a notification, wherein it had allowed the companies to hold board meeting even through video conferencing (VC) or other audio visual means (OAVM) from the period 19 March 2020 till 30 June 2020, which later got extended to 30 September 2020 for the following matters, which are otherwise required to be dealt with in a board meeting, requiring the physical presence of the directors:

• Approval of the annual financial statements;
• Approval of the Board’s report;
• Approval of the prospectus;
• Audit Committee Meetings for consideration of financial statements including consolidated financial statement if any, to be approved by the board under Section 134(1) of the Companies Act, 2013.

Now, as per the amended Rules, the MCA has extended the aforesaid relaxation till 31 December 2020.
These Rules shall come into force w.e.f. 28 September 2020.
 
For more information, click here.
 
Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2020 – 28 September 2020
 
The MCA has issued the Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2020, wherein it has made certain changes in clause (a) of sub-rule (1) of Rule 6 ‘Compliances required by a person eligible and willing to be appointed as an independent director’ of the aforesaid Rules.
 
As per the Amendment Rules, the time lines within which the independent director in a company has to apply online to the institute for inclusion of his name in the data bank, has been revised from ‘ten months’ to ‘thirteen months’ from the commencement of Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 i.e. 1 December 2019.
 
These Rules shall come into force w.e.f. 28 September 2020.
 
For more information, click here.
 
Extension of timelines for various compliances under the Companies Act, 2013
 
Extension of Companies Fresh Start Scheme, 2020 – 28 September 2020
The Companies Fresh Start Scheme was introduced on 1 April 2020 and was open till the 30 September 2020. Under this scheme, a one-time opportunity was provided to the defaulting companies to file all their pending documents including the annual filing of the company without charging higher additional fees on any delay. The due date of this scheme has been extended from 30 September 2020 to 31 December 2020.
 
For more information, click here.
 
Extension of time – LLP Settlement Scheme, 2020 – 28 September 2020
 
The Limited Liability Partnership (LLP) Settlement Scheme, 2020 was a one-time waiver of additional filing fees for delayed filings by the LLPs with the ROC during the period 1 April 2020 to 30 September 2020. The due date of this Scheme has also been extended from 30 September 2020 to 31 December 2020.
 
For more information, click here.
 
Extension of time – Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013 – 28 September 2020
 
Under this Scheme, filing of forms w.r.t. creation or modification of charges under the Companies Act 2013 was earlier provided till 30 September 2020. Now, the same has been extended till 31 December 2020.
 
For more information, click here.
 
Extension of time for EGM through VC or OAVM or passing of certain items only through postal ballot without convening general meeting – 28 September 2020
 
Earlier the companies were allowed to hold Extraordinary General Meeting (EGMs) or transact business through postal ballots through VC or OAVM till 30 September 2020. Now, the same has been extended till 31 December 2020.
 
For more information, click here.
 
Clarification with regard to creation of deposit repayment reserve of 20% u/s. 73(2) (c) of the Companies Act, 2013 and to invest or deposit 15% of amount of debentures u/r. 18 of Companies (Share Capital and Debentures) Rules, 2014 – COVID-19 – Extension of time – regarding – 29 September 2020
 
The MCA had issued ‘Special Measures under Companies Act, 2013 and LLP Act, 2008 in view of COVID-19 outbreak’, wherein the

• requirement under section 73(2)(c) of the Companies Act, 2013 to create the deposit repayment reserve of 20% of deposits maturing during the financial year 2020-21 before 30 April 2020 was extended till 30 June 2020, which later got extended till 30 September 2020 ; and
• requirement under Rule 18 of the Companies (Share Capital & Debentures) Rules, 2014 to invest or deposit at least 15% of amount of debentures maturing in specified methods of investments or deposits before 30 April 2020 was extended till 30 June 2020, which later got extended till 30 September 2020.

Now, the MCA has further extended the aforesaid timelines till 31 December 2020. However, other requirements as provided in the Special Measures remains unchanged.
 
For more information, click here.
SEBI (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2020 – 28 September 2020
 
The SEBI has issued the SEBI (Issue of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2020, which majorly focuses on matters related to rights issue by listed entities. Other changes include removing the requirement for appointing a compliance officer, expanding the threshold for applicability, condensed disclosures in the letter of offer, etc.
 
These Rules shall come into force w.e.f. 1 October 2020.
 
For more information, click here.
 
Relaxation with respect to Validity of SEBI Observations and Revision in issue size – 29 September 2020
 
The SEBI vide its Circular dated 21 April 2020 had granted certain relaxations with respect to filing of fresh offer document in case of increase or decrease of issue size beyond a specific threshold and validity of SEBI’s observations.  
 
Pursuant to various representations being received by SEBI on account of current conditions due to COVID - 19, the SEBI has decided to extend and grant the following relaxations: 

• As per the erstwhile Circular, an issuer was permitted to increase or decrease the fresh issue size by up to 50% of the estimated issue size without requiring to file fresh draft offer document with SEBI, for IPO/ Rights Issues/ FPO opening before 31 December 2020. This timeline has now been extended for issues opening before 31 March 2021. 
• Moreover, the validity of SEBI’s observations expiring between 1 October 2020 and 31 March  2021 have now been extended up to 31 March 2021, subject to an undertaking coming from the lead manager to the issue, confirming compliance with Schedule XVI of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 while submitting the updated offer document to the Board.

For more information, click here. 

Amendments to Form 3CD – 1 October 2020
 
The Central Board of Direct Taxes vide the Income-tax (22^nd Amendment) Rules, 2020 has made certain changes in Form 3CD, which are as follows:

• In Part A, after serial number 8, serial number 8a. i.e. “8a. Whether the assessee has opted for taxation under section 115BA/115BAA/115BAB?” has been inserted;
• In Part B, in serial number 18, after clause (c), the following clauses have been added:

1. “(ca) Adjustment made to the written down value under section 115BAA (for assessment year 2020-21 only) ………….
2. (cb) Adjusted written down value …………………………….”;

• In Part B, in serial number 32, clause (a) has been substituted with the following clause:

“(a) Details of brought forward loss or depreciation allowance, in the following manner, to the extent available:
 

*If the assessed depreciation is less and no appeal pending than take assessed.
 
^ To be filled in for assessment year 2020-21 only.”
 
These changes will come into force w.e.f. 1 October 2020.
 
For more information, click here.