That apart, the mandated norm for independent directors (ID) to hold at least one meeting without the attendance of non-independent directors and members of the management has been relaxed.
The government on Tuesday announced a slew of exemptions for the companies in a bid to help them face the unprecedented situation arising out of the coronavirus (Covid-19) outbreak. Companies will not be penalised for late filing of documents, including annual returns, and other statements.
Also, the mandatory requirement of holding board meetings within the prescribed time as per the Companies Act (120 days) has also been extended by 60 days till the next two quarters — September 30, 2020.
Another relief is that the applicability of the Companies (Auditor’s Report) Order, 2020, (CARO) will be deferred to FY21 instead of FY20.
“No additional fees shall be charged for late filing during a moratorium period from April 1 to September 30, in respect of any document, returns, statements, etc, required to be filed in the MCA-21 Registry, irrespective of its due date,” finance minister Nirmala Sitharaman said.
That apart, the mandated norm for independent directors (ID) to hold at least one meeting without the attendance of non-independent directors and members of the management has been relaxed. For FY20, if the IDs of a company have not been able to hold even one meeting, the same shall not be viewed as a violation.
Welcoming the announcement, Anderson Nangia director Sandeep Jhunjhunwala said in the midst of the Corona pandemic, “India Inc got much awaited relief from regulatory and compliance deadlines by the finance minister today”.
These measures are stress relieving announcements sought by thousands of entrepreneurs, directors, management executives, company secretaries and many other stakeholders. To achieve the goal of avoiding mass gathering and breaking the chain infection of Covid-19, these respites from short ending deadlines will be highly welcomed, he added.
On the increase in the IBC threshold from `1 lakh to `1 crore, Shardul S Shroff, from Shardul Amarchand Mangaldas, said it is very thoughtful of the government, especially when the risk of large number of insolvencies is significant in these times.
“These are small changes in comparison to the national crisis but have been directed to the right constituents deserving such relief. The MSME segment and SMEs are the most vulnerable in times of crisis like the one we are experiencing. When the threshold of default is enhanced, these MSMEs and SMEs will not be subjected to CIR proceedings or lose their management rights under the Code,” he added.
However, AMRG & Associates chief executive Gaurav Mohan said, “Some breaks have also been given in the Insolvency and Bankruptcy Code provisions by raising the threshold together with a hint that key bankruptcy provisions may be suspended for 6 months in case the current situation continues beyond April 2020. This relief may be mis-used by evil businesses by holding/delaying payments to the MSME sector.”
On the deferral of CARO, Khazat Kotwal, a partner at Deloitte India, said, “From a financial reporting perspective, the deferral of CARO 2020 by a year will definitely bring some relief and I am sure the finance ministry will also consider extending the financial year end considering the current developments.”