Relief in COVID-19 Pandemic to Corporate Sector

With an objective to boost the enthusiasm for corporates amidst this COVID-19 outbreak, Finance Minister Nirmala Sitharaman has come up with some relief from the standpoint of delay in compliances for Corporate Sector, in order to control the situation from getting worsened and revive corporates from emerging financial distress. A gist of amendments brought in Companies Act, 2013, Insolvency and Bankruptcy Code (IBC), 2016 and Payment and Settlement Systems Act, 2017 via Press Conference held on 24.03.2020 are elucidated below;

Corporate Laws

• No additional fees for late filing of MCA Forms for the period 01.04.2020 to 30.09.2020.
• Mandatory requirement of conducting Board Meetings by the companies within prescribed interval of 120 days shall be extended by a period of 60 days till next two quarters i.e., till 30.09.2020, thereby enhancing the minimum prescribed interval to 180 days.
• Applicability of Companies Auditors’ Report Order 2020 (CARO,2020) deferred from Financial Year 2019-20 to 2020-21.
• No violation, if independent directors are not able to hold one meeting during Financial Year 2019-20.
• Conditions for compulsory residential status of directors are relaxed, now there is no need of mandatory presence in India for 182 days.
• Time-limit for declaration of commencement of business under Form INC-20A is further extended by 6 months, thereby extending the time limit to 1 year.
• Debenture Redemption Reserve creation requirements extended till 30.06.2020.
• To prevent triggering of insolvency proceedings against MSMEs by large participants, threshold for default under section 4 of the IBC, 2016 has been increased to Rs 1 crore from the existing threshold of Rs 1 lakh.
• Further, if the current situation continues beyond 30.04.2020, Ministry shall consider suspending section 7, 9 and 10 of the IBC, 2016 for a period of 6 months in order to protect companies at large from being forced into insolvency proceedings in such force majeure causes of default.

Other Changes

• Bank charges to be reduced for digital payment up to 30.06.2020.
• No charges for non-maintenance of minimum bank balance up to 30.06.2020.
• No charges to debit card holder for withdrawal of amount from any bank ATM up to 30.06.2020.