Year-long IBC suspension to be lifted ‘after March 24’, hints MCA

The Ministry for Corporate Affairs Ministry has hinted that the suspension of the Insolvency and Bankruptcy Code (IBC) is likely to be revoked after March 24.

he Ministry for Corporate Affairs Ministry has hinted that the suspension of the Insolvency and Bankruptcy Code (IBC) is likely to be revoked after March 24.

This has been conveyed in a written submission by the Ministry to the Standing Committee on Finance headed by Jayant Sinha. This submission came along with the note on allocation and utilisation of funds for the Insolvency and Bankruptcy Board of India (IBBI), which is the insolvency regulator.

“It is expected that the suspension of the Insolvency and Bankruptcy Code will likely be revoked after March 24 and activities of IBBI will be increased manifold in the next financial year,” the MCA submission said.

Given that the economy is now in recovery mode, it is widely expected that the Centre will revoke the suspension after March 24. Also, any extension of the suspension this date would require Parliament approval, legal experts said.

6-month suspension

A six-month suspension was first introduced in June 5 for debt defaults arising post March 25, 2020, when the Covid-induced lockdown was announced. The suspension was to end on September 25, but was extended up to December 25. In mid-December, the suspension was further extended by three months, up to March 25.

In effect, the government had ensured that any corporate debt default during Covid, between March 25, 2020 and March 25, 2021, will remain outside the IBC purview. However, for defaults before March 25, 2020, there will be no protection, said experts.

While the law protects the corporate debtor from insolvency proceedings for the one-year period till March 25, it does not disallow such action against the personal guarantors of a corporate debtor.

‘Go digital’

In a separate development, the Standing Committee on Finance has, in its latest report tabled in the Lok Sabha on Tuesday, directed the MCA to move towards full digitisation of its functions, particularly of its statutory bodies. It sees the quasi judicial bodies facing a deluge of cases post withdrawal of the moratorium and underscored stressed the need to enhance their digital and infrastructural capacities to handle the increase in caseload.

Source: Business Line

Companies get relaxation for Annual Filings of 2019-20 upto 15/02/2021 without additional fees.

MCA relaxes levy of additional fees in filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL and AOC-4 Non-XBRL for the financial year ended on 31.03.2020 under the Companies Act, 2013

Keeping in view of various requests received from stakeholders regarding relaxation on levy of additional fees for annual financial statement filings required to be done for the financial year ended on 31.03.2020, it has been decided that no additional fees shall be levied upto 15.02.2021 for the filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL and AQC-4 Non-XBRL in respect of the financial year ended on 31.03.2020.

During the said period, only normal fees shall be payable for the filing of the aforementioned e-forms.

Earlier, the Annual General Meeting for adoption of the Audited Financial Statements, Directors Report and Auditors’ Report was extended by 3 months from September 30 to December 30, 2020.

Accordingly, the companies were required file Audited Financial Statements before January 31st, 2021.

This has now been further relaxed for another 15 days up to February 15, 2021, for filing of the eForms with Ministry of Corporate affairs (MCA).

Read the MCA Circular for waiver of Additional Fees

AGM due date extended till 31.12.2020 for all companies

Companies will be given three months’ extension to hold their AGMs.

A major relief has been granted to around 1.2 million companies, by MCA granting extension of 3 months for holding annual general meeting.

The MCA had earlier allowed companies to hold virtual AGMs due to Covid-19. However, companies were finding it difficult to complete the audit functions and finalize the annual reports.

The Companies with AGM due date as 30.09.2020 can now conduct their AGM by 31.12.2020, as per MCA.

There is no need of separate application in form GNL-1 for extension.

Companies are required to hold the AGM within six months of the end of a financial year which means by September 30, 2020 for FY2019-20. Now, they can hold it by December 31 this year.

Below are the excerpt of the extension notification by the various ROCs.

Section 96 of the Companies Act 2013 provide that every company other than a One Person Company , shall in each year hold an a general meeting as its Annual General Meeting (AGM) and shall specify the meeting as such in the notices calling it and not more than fifteen months shall elapse between the date of one AGM of a company and that of the next

And WHEREAS the first proviso of section 96 of the Act provides that in case of the first AGM, it shall be held within a period of nine months from the date of closing of the first financial year of the company and in other case, within a six months, from the date of closing of the financial year

And WHEREAS, the third proviso to Sub-section (I) of section 96 of the Act provides that the Registrar may, for any special reason, extend the time within which any annual general meeting, other than the first annual general meeting, shall As held, by a period not exceeding three months

And WHEREAS, various representations have been received from the companies, bodies and Professional Institutes pointing out that several companies are finding it difficult to hold their AGM for the financial year ended on 31.03.2020 due to the difficulties faced in view of the COVID 19 pandemic

And WHEREAS, the representations have been considered and the undersign is of the considered opinion that due to such unprecedented special reasons, the time within which the AGM for the financial year ended on 31.03.2020 is required to be held as per provisions to be extended

The undersigned hereby extend the time to hold the AGM, other than the first AGM, for the Financial year ended 31.03.2020 for companies that are unable to hold their AGM within due date of holding or period of three months from the due date are extended without companies requiring to file GNL 1 Form.

The approval for extension of AGM upto 3 months from the due date of AGM shall be deemed to have been granted by the undersigned without any further action on the part of Company.

The MCA issued directions to the registrar of companies (ROCs) to issue orders to even those who have not filed formal applications to this effect. Even those applications, which have already already filed, but not approved, or rejected, are also covered under this relief, MCA said in a release.

Extension of AGM order of Respective ROC’s – Source: Ministry of Corporate Affairs

 

Extension of Annual General Meeting for the FY 2019-20 – MCA

Due to the widespread of COVID-19 and social distancing norms and consequential restrictions linked thereto, MCA has received several representations to allow companies to hold their Annual General Meeting for the financial year ended on 31st March, 2020 beyond the statutory period provided in section 96 of the Companies Act, 2013.

The matter was examined and MCA clarified vide General Circular No. 20/2020, dated 05.05.2020 regarding holding of AGM through video conferencing (VC) or other audiovisual means (OAVM), the companies which were unable to hold their AGM were advised to prefer applications for extension of AGM at a suitable point of time before the concerned Registrar of Companies under Section 96 of the Act.

MCA, in this regard, vide General Circular no. 28/2020 dated 17th August,2020 has issued clarification on extension of Annual General Meeting for the financial year ended as at 31.03.2020.

Provisions of holding Annual General Meeting (AGM) as per Companies Act, 2013.

According to section 96 of the Companies Act, 2013, companies are to hold their Annual General Meeting (AGM) within a period of 6 months from the date of closing of the financial year and companies which are to hold their first AGM shall be held within a period of 9 months from the date of closing of the financial year of that company.

The Ministry once again reiterated that the companies which are unable to hold their AGM for the financial year ended on March 31, 2020, despite availing the relaxations provided in MCA General Circular No. 20/2020 ought to file their applications in E-Form GNL-1 for seeking an extension of time in holding of AGM for the financial year ended on March 31, 2020, with the concerned Registrar of Companies on or before 29th September, 2020.

Also the Ministry has directed Registrars of Companies to consider all such applications (Filed in E-Form GNL-1) liberally in view of the hardships faced by the stakeholders and to grant an extension for the period as applied for (up to three months i.e. 31st December) in such applications.

Procedure to file Application seeking extension of time for holding Annual General Meeting:

1.Chairman /Director of the company shall call for a meeting of Board of Director for which a notice must be send at least 7 days before holding of Meeting of Board.
2.Convene a Board Meeting on the specified date.
3.Pass a resolution for extension of time limit for holding annual general meeting specifying the due reason for extension of AGM.
4.File an application to Registrar of Companies in E-Form No. GNL-1. (Reason for not holding AGM, along with other necessary information to be provided)
5.Attach the Certified true copy of the Board Resolution in E-Form-GNL-1.
6.The registrar will examine the application on the specific grounds and grant an extension.

 Obtain the Certificate of Grant of extension in holding Annual General Meeting of the Company.

 Convening of Annual General Meeting in extended period:

Once the extension is granted, the company may convene the Annual General Meeting of the Company within the period as allowed by the Registrar of Companies. 

MCA Circular on Extension of AGM

SEBI extends deadline for filing April-June corporate financial results to September 15

In a major relief to companies, the Securities and Exchange Board of India (SEBI) today extended the deadline for submission of financial results for the quarter, half-year, and financial year ended 30 June 2020 to September 15. The SEBI circular said that it has received representations requesting an extension of time for submission of financial results for the quarter or half year-ended 30 June 2020, due to the shortened time gap between the extended deadline for submission of financial results for the period-ended 31 March 2020 and the quarter or half year-ended June 30, 2020.

Under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR Regulations’), a listed entity is required to submit its quarterly, half-yearly, or annual financial results within 45 days or 60 days, as applicable, from the end of each quarter, half year, or financial year.

Accordingly, listed entities were required to submit the financial results for the quarter, half-year-ended 30 June 2020 on or before 14 August 2020.

Earlier, the regulatory body had also extended the timeline for submission of financial results by listed entities for the quarter, half-year, or financial year-ended 31 March 2020 to 31 July 2020, due to the impact of the coronavirus pandemic.

SEBI further said that today’s announcement shall come into force with immediate effect and advised all stock exchanges to bring the provisions of this circular to the notice of all listed entities.

It has asked the stock exchanges to bring the provisions of the circular to the notice of all listed entities and also disseminate on their websites.

Meanwhile, SEBI’s move to relax the deadlines is expected to give more time to companies already struggling with operations part amid the pandemic.

In-line with the efforts to provide relief to the sagging businesses, Finance Minister Nirmala Sitharaman earlier announced to decriminalise some offences under the Companies Act.

The SEBI has also introduced new norms to give more fund-raising flexibility to stressed firms.

The amendments can help promoters get financial investors on board without losing control of the company.

SEBI signs MoU with CBDT for Data Exchange

There is a need to create a regulator or authority for data business, which provides centralized regulation for all non-personal data exchanges,” the government-appointed panel said in the report. Such a regulator would be armed with legal powers to request data, supervise data sharing requests and settle disputes“.
A formal Memorandum of Understanding (MoU) was signed today between the Central Board of Direct Taxes (CBDT) and the Securities and Exchange Board of India (SEBI) for data exchange between the two organizations.
 
The MoU was signed by Smt. Anu J. Singh, Pr. DGIT (Systems), CBDT, and Smt. MadhabiPuri Buch, Whole Time Member, SEBI in the presence of senior officers from both the organizations via video conference.

The MoU will facilitate the sharing of data and information between SEBI and CBDT on an automatic and regular basis.

In addition to regular exchange of data, CBDT and SEBI will also exchange with each other, on request and suo moto basis, any information available in their respective databases, for the purpose of carrying out scrutiny, inspection, investigation and prosecution,” SEBI said in a statement.

In addition to regular exchange of data, SEBI and CBDT will also exchange with each other, on request and Suo moto basis, any information available in their respective databases, for the purpose of carrying out their functions under various laws.

The MoU comes into force from the date it was signed and is an ongoing initiative of CBDT and SEBI, who are already collaborating through various existing mechanisms.

A Data Exchange Steering Group has also been constituted for the initiative, which will meet periodically to review the data exchange status and take steps to further improve the effectiveness of the data-sharing mechanism.

The MoU marks the beginning of a new era of cooperation and synergy between SEBI and CBDT.

In the past, SEBI has cracked on several entities who had manipulated the stock prices of listed companies. The regulator had observed in the penny stock scam that promoters and market operators were using the stock exchange platform to evade taxes and launder black money.

Read the Press Release: SEBI signs MOU with CBDT for Data Exchange

IBBI proposes to limit cases with insolvency professionals

The IBBI’s discussion paper said that the processes under the Insolvency and Bankruptcy Code (IBC) require a unique combination of skill sets in terms of subject matter knowledge and management skills for an IP and at different stages of transactions, different sets of skills are called for.

In what may bring about major reform and efficiency in the insolvency regime in India, the Insolvency and Bankruptcy Board of India (IBBI) has proposed to limit the number of cases an insolvency professional can handle to five as it noted that few insolvency professionals (IP) are handling too many cases

In a recent discussion paper, the board noted the “skewed” work allocation and has come up with a matrix for allocation of cases.

Citing observations by courts and  tribunals, the paper said: “Keeping in mind the provisions of the Companies Act, 2013, the skewed work allocation amongst the IPs and the observations of the Supreme Court or Adjudicating Authority, and given the expansive and intense responsibilities of an IP in corporate processes, it is proposed to issue necessary guidelines to IPs advising them to limit the maximum number of assignments handled by them, to five, at a given point of time.”

As per the proposed matrix an insolvency resolution professional (IRP) can handle a total of five cases of resolution or liquidation, including voluntary liquidation, wherein the turnover of the corporate debtors is less than or equal to Rs 1,000 crore. As the matrix progresses, an IRP handling the case of a corporate debtor with the turnover of Rs 50,000 crore would be able handle only that very case, and no more.

“On the basis of information available, it is observed that a few IPs are handling too many assignments under the Code, which is detrimental to the institution of IP in the long run,” it noted.

The IBBI’s discussion paper said that the processes under the Insolvency and Bankruptcy Code (IBC) require a unique combination of skill sets in terms of subject matter knowledge and management skills for an IP and at different stages of transactions, different sets of skills are called for.

A spike in one area of expertise will not be sufficient to create a uniform experience for stakeholders. Further, it cannot be ignored that no two IPs possess identical sets of qualification, experience, skills and expertise, it said.

“Similarly, no two CIRPs are same as it involves diverse businesses, complex corporate structures, varied stakeholders. The said restriction on an IP will put a check on undesirable instances of delay and disturbance to the processes led by IPs while simultaneously handling too many assignments under the Code.”

The Board was of the view that with limits in place, quality of output is expected to improve and it will facilitate the realisation of the objective of value maximisation as enshrined in the Code.

The major inputs for violation will be through complaints and therefore, the cost of surveillance for the Board may not be significant. Further, this will be conducive for development of the market for professionals as more talent will be drawn towards IP profession, it added.

The IBBI has sought public comments on the proposal till July 25, 2020.

Source: Economic Times