Amendments Made in the Companies Act 2013 between Dec 2020 to Jan 2021
Shivani Jain | Updated: Jan 21, 2021 | Category: News
These days the Ministry of Corporate Affairs (MCA) is continuously making amendments in the provisions of the Companies Act 2013. In this blog, we will discuss about the Amendments Made in the Companies Act 2013 during the period of December 2020 to January 2021.
Table of Contents
Amendments Made By Way of Circulars
The various amendments made by way of issuing circulars are as follows:
Relaxation in Fees and Extension of Filling Form CRA 4
The Ministry of Corporate Affairs by way of Circular No 38/ 2020, issued on 01.12.2020, had extended the date of filing form CRA 4, together with the fees charged.
Earlier, the date for filing cost audit report for the Financial Year 2019-2020 in form CRA 4 was 30.11.2020, but the same was extended till 31.12.2020.
The reason behind the extension was to provide relief against the disruption caused in COVID – 19 pandemic.
Link to the Official Notification passed by Ministry of Corporate Affairs[1]:
Relaxation in Holding EGM Meeting through Video Conference
The Ministry of Corporate Affairs by way of the Circular No 39/ 2020, issued on 31.12.2020, had extended the relaxation of conducting the Extra Ordinary General Meeting through Video Conferencing till 30.06.2021. Earlier, the companies were allowed to conduct EGM through video conference till 31.12.2021.
However, it shall be considerate to note that the said relaxation is given only in respect of EGM or Extra-Ordinary General Meeting. That means companies are not allowed to conduct their AGM through video conferencing.
Link to the Official Notification passed by Ministry of Corporate Affairs:
Relaxation in Holding Board Meeting through Video Conference
In view to provide relief in this pandemic situation, the Ministry of Corporate Affairs (MCA) had extended the relaxation of conducting the Board Meeting through Video Conferencing till 30.06.2021. Earlier, the companies were allowed to conduct Board Meeting through video conference till 31.12.2021.
Further, the said relaxation was provided by of Order No G.S.R. 806(E), passed on 30.12.2020. However, it shall be considerate to take into consideration that the said relaxation is provided only with regard to the matters listed Rule 4 of the Companies (Meetings of Board and its Powers) 2014, which are as follows:
- Approval of the Board Report;
- Approval of the Annual Financial Statements;
- Approval of the Prospectus issued;
- Approval of Audit Committee Meetings;
- Approval of the matters concerning Merger, Demerger, Amalgamation, Acquisition, and Takeover;
Link to the Official Notification passed by Ministry of Corporate Affairs :
Relaxation in Holding Annual General Meeting through Video Conference
The Ministry of Corporate Affairs by way of Circular No 02/ 2021, issued on 13.01.2021, had provided clarifications regarding holding of Annual General Meetings through Video Conference. Further, the said circular was in continuation the General Circular No 20/ 2020, issued on 05.05.2021/
As per the circular passed, the companies whose AGMs (Annual General Meetings) were due to be conducted in the year 2020, or has become due in the year 2021, to conduct the same on or before 31.12.2021. Also, it has clarified that the meetings must be conducted based on the requirements mentioned under para 3 and 4 of the General Circular No 20/ 2020.
Link to the Official Notification passed by Ministry of Corporate Affairs:
Extension in the Applicability of CARO 2020
The Ministry of Corporate Affairs by way of an Order dated 17.12.2020, had made amendment in the applicability of CARO 2020.
As per the said order, the date for the implementation of CARO 2020 has been extended till 01.04.2021, which was earlier to be 01.04.2020.
Link to the Official Notification passed by Ministry of Corporate Affairs:
Clarifications concerning spending on CSR Funds for COVID – 19
The Ministry of Corporate Affairs by way of a Circular No 01/ 2021, dated 17.12.2020, has clarified that the CSR (Corporate Social Responsibility) Funds spent for carrying out awareness programs or campaigns or public outreach campaigns concerning COVID – 19 vaccine is eligible to be considered as CSR Activity item under (i), (ii), and (xii) of schedule VII of the Companies Act 2013.
The said activity relates to the promotion of health care, and includes preventive health care, sanitization, promotion of education, and disaster management as well.
Also, the said notification was in continuation to the earlier issued Circular No 10/ 2020, dated 23.03.2020.
Link to the Official Notification passed by Ministry of Corporate Affairs:
Introduction of Scheme for Condonation of Delay
The Ministry of Corporate Affairs by way of a Circular No 03/2021, dated 15.01.2021, has declared the implementation of Scheme for Condonation of Delay. In this circular, MCA has clarified that the provisions of the Companies Fresh Start Scheme 2020 or CFSS 2020 are no longer prevalent for various filings done under the provisions of the Companies Act 2013.
Further, as per the Scheme for Condonation of Delay, the companies that are restored under the provisions of section 252 of the Companies Act 2013, on the register kept by ROC (Registrar of Companies)between 01.12.2020 to 31.12.2020, are covered under this scheme.
The details of the Scheme for Condonation of Delay are as follows:
Date of Enforcement
The said scheme will come into effect from 01.02.2021.
Applicability of Scheme
All the companies against whom an appeal has been filed concerning the restoration of name of the company, who were disposed of between 01.12.2020 to 31.12.2020, under section 252 of the Companies Act 2013, with the respective NCLT (National Company Law Tribunal). And the NCLT has passed an order of restoration for the said company.
Duration of the Scheme
The last date for filing any overdue e-forms by the companies restored under the said scheme is 31.03.2021.
Forms regarding which the Scheme is applicable
The said scheme is applicable in respect of each forms, which the company needs to file with the ROC (Registrar of Companies), except the ones as follows:
- Form SH 7 (Increase in the Authorized Capital);
- CH 1, CH 4, CH 8, and CH 9 (Charge related Documents);
Fees Applicable
Every company which has been restored by NCLT needs to file the form with ROC, together with the fees prescribed on the date of filing under the provisions of Companies (Registration Offices and Fees) Rules 2014. However, it shall be significant to state that there is no need to pay any additional fees by the companies on which the said scheme is applicable.
Link to the Official Notification passed by Ministry of Corporate Affairs:
Amendments Made By Way of Notifications in Rules
The various amendments made in rules by way of issuing notifications are as follows:
Amendment in MCA Form SH 7
The Ministry of Corporate Affairs by way of a Notification No G.S.R. 794(E), dated 17.12.2020, had amended MCA Form SH 7. Further, the said amendment was made under the provisions of Companies (Share Capital and Debenture) Rules 2014.
The said amendment related to the insertion of clause (e) in subsection (1) of section 64, which states as follows:
“(e) Cancel Shares which, at the date of the passing of the resolution on that behalf, have not been taken or agreed to be taken by any other person, and diminish the amount of its share capital by the amount of the shares so cancelled.”
That means after the passing of this notification there are in total 7 ways to Alter the Share Capital of the Company.
Link to the Official Notification passed by Ministry of Corporate Affairs :
Amendment in Name Approval Rules
The Ministry of Corporate Affairs by way of a Notification, dated 17.12.2020, has amended the provisions of Companies (Incorporation) Rules 2014. The said rules will now be known as Companies (Incorporation) Third Amendment Rules 2020.
Further, the amendment made relates to the introduction of Section 9A, i.e., Extension of Reservation of Names in Some Cases.
Prevailing Provision concerning Name Reservation
According to the provision of the Companies Act 2013, the maximum tenure for which the name selected remains reserved is 20 days. That means if in case the promoter fails to incorporate or register a company within a period of 20 days, then, in that case, the reserved name will be expired.
Amended Provision concerning Name Reservation
Based on the newly inserted section, the promoter can now avail of an extension in the expiry of name selected by filing Spice+ form after the payment of prescribed fees as follow:
|
S. No. |
Number of Days |
Fees to be Paid |
Condition Applicable |
|
|
1. |
40 days, starting from the Date of Approval of the Name Selected; |
Rs 1000 |
Promoters need to make the payment prior to the expiry of 20 days, starting from the date of approval of the name. |
|
|
2. |
60 Days, starting from the Date of Approval of the Name Selected; |
Rs 2000 |
Promoters need to make the payment prior to the expiry of 40 days, starting from the date of approval of the name. |
|
|
3. |
60 Days starting from the Date of Approval of the Name Selected; |
Rs 3000 |
Promoters need to make the payment prior to the expiry of 20 days, starting from the approval of the name. |
|
Link to the Official Notification passed by Ministry of Corporate Affairs:
Amendment Made in the Provisions Concerning the Independent Directors
The Ministry of Corporate Affairs by way of a Notification, dated 18.12.2020, have amended the provisions of Companies (Appointment and Qualification of Directors) Rules 2014. The said rules will now be known as Companies (Appointment and Qualification of Directors) Fifth Amendment Rules 2020.
In the said notification the MCA has decided to provide relief to the Independent Directors by making amendments as follows:
- MCA has extended the time period to clear the Online Proficiency Exams to two years, starting from the date of inclusion of name in the database;
- Any individual or director who has obtained a score of 50 or above shall be considered to have cleared the exam;
- Any individual who has been a Director, KMP (Key Managerial Personal) in any Listed Company or Public Limited Company for not less a period of 3 years are exempt from clearing the Online Proficiency Test. Also, it shall be significant to mention that the term “Public Limited Company” means the entity having the paid up share capital of Rs 10 crores or more;
Link to the Official Notification passed by Ministry of Corporate Affairs :
Amendment Made in the Provisions Concerning Compromises, Arrangements, and Amalgamations
The Ministry of Corporate Affairs by way of a Notification, dated 17.12.2020, have amended the provisions of Companies (Compromises, Arrangements & Amalgamations) Rules 2016. The said rules will now be known as Companies (Compromises, Arrangements & Amalgamations) Second Amendment Rules 2020
In the said notification the MCA has made changes as follows:
- Addition of the Definition of the term “Corporate Action”, which is as follows:
“Corporate Action” denotes an action taken by the company pertaining to the transfer of shares, together with the benefits accruing on such shares, such as bonus shares, split, fraction, consolidation of shares, and right issue to the acquirer.
- Addition of a New Rule namely Rule 26A
Under the said rule, the MCA has introduced a new process concerning the Minority Shareholding held in the Demat Form;
Link to the Official Notification passed by Ministry of Corporate Affairs:
Amendment in Companies Amendment Act 2020
The Ministry of Corporate Affairs by way of a Notification, dated 21.12.2020, has declared that out of 65 sections of the Companies Amendment Act 2020, 44 sections have come into force from 21.12.2020.
Link to the Official Notification passed by Ministry of Corporate Affairs:
Second Amendment in Companies Amendment Act 2020
The Ministry of Corporate Affairs by way of a Notification, dated 22.01.2021, has declared that 15 sections of the Companies (Amendment) Act 2020 will come into effect from the date of publication in the official gazette, i.e., 22.01.2021.
Link to the Official Notification passed by Ministry of Corporate Affairs:
Companies (Corporate Social Responsibility Policy) Amendment Rules 2021
By exercising the powers provided under section 135 and 469 (1) and (2) of the Companies Act 2013, the Central Government has decided to amend certain provisions of the Companies (Corporate Social Responsibility Policy) Rules 2014. The said amendment will be known as Companies (Corporate Social Responsibility Policy) Amendment Rules 2021.
Also, these will come into force from the date of publication in the official gazette, 22.01.2021.
Link to the Official Notification passed by Ministry of Corporate Affairs:
Companies (Incorporation) Amendment Rules 2021
Recently, the Ministry of Corporate Affairs (MCA), by way of a notification, issued on 25.01.2021, has notified the process to dispose of the application for the conversion of a Public Limited Company into Private Limited Company if in case an objection is raised by the RD (Regional Director). The said amended rules will be known as the Companies (Incorporation) Amendment Rules 2021 and it aims to amend the Companies (Incorporation) Rules 2014.
As per these rules if in case the Regional Director receives an objection while examining the application for conversion, then, in that case, the same will be first recorded in writing by the RD. After that, he will hold a hearing or series of hearings as required within a period of thirty days. Thereafter, he will ask the company to file an affidavit concerning the consensus reached and based on that the regional director will pass an order for either approving or rejecting the application, together with the reasons, starting from the date of hearing.
However, if case no consensus has been reached between the parties involved, then, in that case, the said RD or Regional Director may approve the process of conversion, if he is satisfied, that the same is not in against with the interest of justice or has not been made in contravention the provisions of the Act.
Also, it shall be taken into consideration that the said conversion will not be permitted if there is any pending inspection, inquiry, or investigation against the company.
Link to the Official Notification passed by Ministry of Corporate Affairs:
Conclusion
In a nutshell, we can rightly state that the main reason behind the continuous amendments in regulations by MCA was to provide relief amid COVID-19 pandemic crisis to the stakeholder of every level.
Further, this blog deals in details about the key amendments made by the Ministry of Corporate Affairs during the month of December 2020 to January 2021.
Lastly, in case of any other doubt or query, reach out to Swarit Advisors, our proficient experts are there to cater to all your doubts and queries.
