Companies get more time to meet deposit repayment and debenture reserve norms amid COVID-19

Company Law
• The extension is applicable to both deposits as well as debentures maturing this fiscal
• The extension is given in view of the requests received from various stakeholders seeking more time on account of covid-19
• The move comes at a time when businesses are struggling with a weak balance sheet after the national lockdown

The government has given a three-month extension to companies to set aside a part of the deposits and debentures maturing in FY21 in a dedicated account, a statutory requirement under the Companies Act.

The Ministry of  Corporate Affairs (MCA) said in a circular that the due date of April end, which was extended till end of June in a circular in March, has been further extended till end of September, 2020.

The circular, signed on Friday, said the extension was given in view of the requests received from various stakeholders seeking more time on account of covid-19.

The extension is applicable to both deposits as well as debentures maturing this fiscal. The Companies (Share Capital and Debentures) Rules of 2014 said every company needs to set up a Debenture Redemption Reserve before end of April every year and deposit in that not less than 15% of the debentures maturing in that year. This investment could be in the form of bank deposits or central and state government securities or specified corporate bonds.

Similarly, companies accepting deposits from its members have to deposit not less than 20% of such deposits maturing in a financial year and in the subsequent financial year in a scheduled bank in a separate account called deposit repayment reserve account. For this requirement under the Companies Act too, the government had in March given three months extra time till end of June. Due dates for both the requirements now stand extended till end of September, 2020.

The move comes at a time when businesses are struggling with a weak balance sheet after the national lockdown to check the spread of coronavirus infections wiped out two months of business. The government’s over 20 trillion stimulus package relied mostly on bank credit to businesses rather than on more upfront measures.

The Ministry of  Corporate Affairs (MCA) has in the last few months taken a series of steps that will reduce the compliance burden and lower the cost of capital for businesses.

Source: MCA Circular dated 19 June 2020

ICAI enables generation of Bulk UDINs for Certificates

Institute of Chartered Accountants of India enable generation of UDIN (Unique Document Identification Number) for certification by its members

A provision for generating UDIN in bulk for Certificates has been incorporated in UDIN Portal.

Using this facility now the members will be able to generate UDIN in bulk (uptil 300 UDINs) for various types of Certificates in one go. It can be done through uploading of excel file.

Process for bulk UDIN

Step-wise complete process for generating bulk UDINs is as under:

i) After login, from the Menu bar, click on Bulk UDIN for Certificates. Minimum 3 certificates and Maximum 300 certificates can be generated using this procedure.

ii) Download template file from Download Template button and open in Excel. Please note that the .xlsx file can be opened in Excel 2007 and later versions.

iii) Select Certificate type from drop down.

iv) Input dates in the format as per your system/computer (generally it is in mm/dd/yyyy or as 10 June 2020). Excel will format dates automatically in required format i.e dd-mm-yyyy. Do not use copy paste in this cell.

v) Fill in all the parameters and values.

vi) Save the file.

vii) Click on the upload file on the Certificate Form on UDIN Portal.

viii) Select the file just saved now.

ix) Portal will populate the data in the Form. Verify the data so populated.

x) If correct, Send and Verify OTP and Submit.

xi) Alternatively, the option of filling the details of Type of Certificates, Dates and key fields etc. is available on the form itself.

Read More: ICAI Notification

MCA relaxes time to file forms for creation/modification of charges

In a view of the pandemic situation due to COVID-19 outbreak and several representations made, by the stake holders, Ministry of Corporate Affairs (MCA) has came out with a new scheme called “Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013” for the purpose of condoning the delay in filing certain forms related to creation/ modification of charges.

This important relaxation by MCA in relation to creation and modification of Charges under the Companies Act, 2013 is very significant, especially during the pandemic situation due to COVID-19, is detailed as below:

=========================================================

F.No. 02/05/2020 CL-V
Government of India
Ministry of Corporate Affairs
5th Floor, ‘A’ Wing, Shastri Bhawan,
Dr. Rajendra Prasad Road, New Delhi-1.

General Circular No. 23/2020
Dated: 17th June, 2020

To

All Regional Directors,
All Registrar of Companies,
All Stakeholders.

Subject: Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013.

Sir/Madam,

The companies are required to file forms related to creation or modification of charges within the timelines provided in section 77 of the Companies Act, 2013 (Act), i.e. a total of 120 days of the creation or modification of charge. In case, the company fails to register the charge within the period of thirty days referred to in sub-section (1) of section 77, the charge holder may file the form related to creation or modification of charges under section 78 of the Act, within the overall timelines for filing of such form under section 77.

  1. On account of the pandemic caused by the COVID-19, representations have been received in this Ministry, requesting that the timelines related to filing of certain charge related forms may be suitably relaxed so as to provide a window of compliance for the registration of charges. Under the Companies Fresh Start Scheme, 2020 as laid out in the General Circular No. 12/2020, dated 30.03.2020, the benefit of waiver of additional fees was not extended to the charge related documents. Therefore, it has been suggested that some dispensation may be provided for filing of charge related documents as well.
  2. In view of the above, the Central Government in exercise of its powers under section 460 read with section 403 of the Act and the Companies (Registration Offices and Fees) Rules, 2014 (Fees Rules) has decided to introduce a Scheme, namely “Scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013” for the purpose of condoning the delay in filing certain forms related to creation/modification of charges.
  3. The details of the scheme are as under: –

(i) The scheme shall come into effect from the date of issue of this Circular.

(ii) Applicability: The scheme shall be applicable in respect of filing of Form No. CHG-1 and Form No. CHG-9 (both referred as ‘form’ or ‘forms’) by a company or a charge holder, where the date of creation/modification of charge:

(a) is before 01.03.2020, but the timeline for filing such form had not expired under section 77 of the Act as on 01.03.2020, or

(b) falls on any date between 01.03.2020 to 30.09.2020 (both dates inclusive).

(iii) Relaxation of time:

(a) In case a form is filed in respect of a situation covered under sub-para (ii)(a) above, the period beginning from 01.03.2020 and ending on 30.09.2020 shall not be reckoned for the purpose of counting the number of days under section 77 or section 78 of the Act. In case, the form is not filed within such period, the first day after 29.02.2020 shall be reckoned as 01.10.2020 for the purpose of counting the number of days within which the form is required to be filed under section 77 or section 78 of the Act.

(b) In case a form is filed in respect of a situation covered under sub-para (ii)(b) above, the period beginning from the date of creation/modification of charge to 30.09.2020 shall not be reckoned for the purpose of counting of days under section 77 or section 78 of the Act. In case, the form is not filed within such period, the first day after the date of creation/modification of charge shall be reckoned as 01.10.2020 for the purpose of counting the number of days within which the form is required to be filed under section 77 or section 78 of the Act.

(iv) Applicable Fees:

(a) In regard to sub-para (iii)(a) above, if the form is filed on or before 30.09.2020, the fees payable as on 29.02.2020 under the Fees Rules for the said form shall be charged. If the form is filed thereafter, the applicable fees shall be charged under the Fees Rules after adding the number of days beginning from 01.10.2020 and ending on the date of filing plus the time period lapsed from the date of the creation of charge till 29.02.2020.

(b) In regard to sub-para (iii)(b) above, if the form is filed before 30.09.2020, normal fees shall be payable under the Fees Rules. If the form is filed thereafter, the first day after the date of creation/modification of charge shall be reckoned as 01.10.2020 and the number of days till the date of filing of the form shall be counted accordingly for the purposes of payment of fees under the Fees Rules.

(v) The Scheme shall not apply, in case:

(a) The forms i.e.CHG-1 and CHG-9 had already been filed before the date of issue of this Circular.

(b) The timeline for filing the form has already expired under section 77 or section 78 of the Act prior to 01.03.2020.

(c) The timeline for filing the form expires at a future date, despite exclusion of the time provided in sub-para (iii) above.

(d) Filing of Form CHG-4 for satisfaction of charges.

  1. This issues with the approval of the Competent Authority.

Yours faithfully,

(K S Narayanan)

Assistant Director (policy)

EGMs deadline extended upto 30 Sept 2020 by MCA

MCA extends the deadline for conducting extra ordinary general meetings (EGMs) through VC/ OAVM/ Postal Ballot and passing of ordinary/ special resolutions, from 30 June to 30 Sept. 2020, provided the other guidelines of the framework, prescribed earlier, are adhered to.

Subject: Clarification on passing of ordinary and special resolutions by companies under the Companies Act, 2013 read with rules made thereunder on account of Covid-19 – Extension of time- reg.

  1. This Ministry has issued General Circular No. 14/2020 on 8 April, 2020 and General Circular No. 17/2020 on 13th April, 2020 for providing clarifications on passing of ordinary and special resolutions by companies by holding extraordinary general meetings (EGMs) through video conferencing (VC) or other audio visual means (OAVM) or passing of certain items only through postal ballot without convening general meeting. The framework provided in the said Circulars allows companies to hold relevant EGMs or transact relevant business through postal ballots, as per procedure specified therein, upto 30th June, 2020 or till further orders, whichever is earlier. Requests have been received from the stakeholders for extending the period upto which the framework provided in the aforesaid Circulars may be utilized by the companies.
  2. The matter has been examined and it has been decided to allow companies to conduct their EGMs through VC or OAVM or transact items through postal ballot in accordance with the framework provided in the aforesaid Circulars upto 30th September, 2020. All other requirements provided in the said Circulars remain unchanged.

Read MCA Circular dated 15.06.2020

Despite pandemic, Tamil Nadu attracts 17 investors worth Rs.15,128

The companies which signed the MoUs are from Germany, Finland, Taiwan, France, South Korea, Japan, China, USA, Australia, UK

As many as 17 MoUs’ to bring in fresh industrial investments worth Rs 15,128 crore into Tamil Nadu were signed between a host of foreign companies and the Tamil Nadu government in the presence of chief minister Edappadi K Palaniswami on Wednesday.

These projects in areas such as commercial vehicle manufacture, electronics, footwear, information technology, medical equipment and energy are expected to generate 47,150 jobs in Tamil Nadu, an official release here said.

The companies which signed the MoUs are from Germany, Finland, Taiwan, France, South Korea, Japan, China, USA, Australia, UK and the Netherlands, indicating that Tamil Nadu continues to be a destination for foreign direct investment (FDI).

Palaniswami’s government has been taking a number of initiatives for economic revival.  They include appointment of a high-power committee of economic experts led by former RBI governor C Rangarajan to chalk out strategies in the medium-term, the Industrial Guidance Bureau facilitating single-window clearance of investment proposals, the recent policy announced to boost production of medical equipment and drugs in the wake of Covid-19 and TIDCO offering a Rs.102 crore package to meet working capital requirement of 799 MSMEs’, an official release said.

The MoUs signed today include the following projects: Daimler India is to expand its commercial vehicle manufacturing at its Oragdam factory in Kancheepuram district involving an investment of Rs.2,277 crore, creating 400 more jobs.

Finnish firm Salcomp will invest Rs.1,300 crore in the Nokia special economic zone in Sriperumbudur to manufacture mobile phone components, to generate 10,000 additional jobs in Kancheepuram district and this project would help to rejuvenate the Nokia SEZ in that district.

The MoUs further include Rs. 900 crore investment by Japan’s Polymatech Electronics to make semiconductor chips at the Oragadam SIPCOT industrial park, a Rs.350 crore joint venture footwear manufacture project by Taiwan’s Chung Jye Company Ltd and Aston Shoes, a Rs.400 crore industrial park to be developed at Mappedu in Kancheepuram district by Australian firm, Lai Investment Manager Pvt Ltd., South Korea’s ‘Mando Automotive India  Pvt Ltd.  to invest Rs.150 crore in Pillaipakkam SIPCOT industrial park in Kancheepuram district, Netherlands’ Dinex to invest Rs.100 crore in the Mahindra City Industrial Park in Chengalpattu district for auto-components manufacture, a 750-mw gas-based power project at Ponneri in Thiruvallur district by Indo-UK joing venture, Chennai Power Generation Limited’ involving an investment of Rs.3,000 crore, and France’s IGL India Transplantations Solutions Ltd to invest Rs. 18 crore in medical equipment in SIPCOT park at Cheyyar in Tiruvannamalai district.

Down south in Thoothukudi and Tirunelveli districts, a huge investment of Rs. 2,000 crore is envisaged by Vivid Solaire Energy Private Limited of France, to manufacture wind mills equipment, the release said. The USA’s HDCI Data Centre Holdings Chennai LLP will invest in an IT project in Ambattur in Chennai involving an investment of Rs. 2,800 crore, it said.

While Singapore’s ST Tele Media will invest Rs. 1,500 crore in a new IT project in Chennai, wind mill components will be made by Germany’s Baetter in Chennai involving an investment of Rs.210 crore. Besides there, there are four more industrial investments in the pipeline in Kancheepuram, Thiruvallur and Chengalpattu districts including China’s ‘BYD India Private Ltd’, to invest Rs.50 crore in an electric vehicle manufacture project.

Mahindra Origins in a JV with a Taiwanese company, TJR Precision Technology Company, will invest Rs.46 crore in making precision components at Ponneri. Further, USA’s Lincoln Electric will invest Rs.12 crore in an R & D Centre at Mahindra Industrial Park in Chengalpattu district, the release added.

Top officials including Chief Secretary, Mr. K Shanmugam, Industries Secretary, N Muruganandam, State Guidance Bureau managing director, Ms. Karkala Usha, its executive director Mr. Aneesh Shekhar, and representatives of the various companies were among those who were present on the occasion.

Source: Deccan Chronicle

NCLAT quashes NCLT order to make MCA party in all insolvency cases

NCLAT quashes NCLT order to make MCA party in all insolvency cases as this will be not only excessive but perhaps counterproductive

The National Company Law Appellate Tribunal (NCLAT) quashed an order of the National Company Law Appellate Tribunal (NCLT) directing that the Ministry of Corporate Affairs (MCA) be made a party to every case under the Insolvency and Bankruptcy Code (IBC) on Monday.

According to the appellate tribunal, the NCLT’s order, was beyond the power of the tribunal as it was tantamount to the imposition of a new rule in a compelling fashion

The impugned order making it applicable throughout the country to all the benches of NCLT is untenable and it suffers from material irregularity and patent illegality in the eye of law, said the judgment of the three-judge bench headed by Justice Venugopal M.

“The NCLAT ruled that the MCA need not be a party to all Section 7,9 and 10 applications, although they may be impleaded in certain cases based on exercise of judicial principles and following principles of natural justice. Although the MCA has been central in the implementation of the IBC, their being a party to every single IBC fillings is not only excessive but perhaps counterproductive,” said Richa Roy, partner at Cyril Amarchand Mangaldas.

In November 2019, the NCLT had directed the MCA, through its secretary, be party to all cases under IBC on the grounds that authentic records would be made available by officers of the MCA.

The Centre challenged the order arguing that such rule making was the exclusive domain of the government. It further said that authentic records could be furnished by the Registrar of Companies and certified copies could be made available for a fee.

The NCLAT order added that such “wholesale, blanket and omnibus directions” cannot be issued in a single stroke” and impleadment of the MCA can only be determined on a case-to-case basis.

MCA has extended the period for names reserved and re-submission of forms

Ministry of Corporate Affairs ( MCA ) has extended the period for names reserved and re-submission of forms.

Issue description and Period/Days of Extension are as below: –

Names reserved for 20 days for new company incorporation.

SPICe+ Part B needs to be filed within 20 days of name reservation

  1. Names expiring any day between 15th March 2020 to 31st May would be extended by 20 days beyond 31st May 2020.
  2. Names reserved for 60 days for change of name of company. INC-24 needs to be filed within 60 days of name reservation.
    Names expiring any day between 15th March 2020 to 31st May would be extended by 60 days beyond 31st May 2020.
  3. Extension of RSUB validity for companies.
    SRNs where last date of Resubmission (RSUB) falls between 15th March 2020 to 31st May 2020, additional 15 days beyond 31st May 2020 would be allowed. However, for SRNs already marked under NTBR, extension would be provided on case to case basis.
    Note: Forms will not get marked to (Not to be taken on Record)’NTBR’ due to non-resubmission during this extended period as detailed above. It also includes IEPF Non-STP eForms ( IEPF3, IEPF-5 and IEPF-7)
  4. Names reserved for 90 days for new LLP incorporation/change of name. FiLLiP/Form 5 needs to be filed within 90 days of name reservation.
    Names expiring any day between 15th March 2020 to 31st May would be extended by 20 days beyond 31st May 2020.
  5. RSUB validity extension for LLPs.
    SRNs where last date of resubmission (RSUB) falls between 15th March 2020 to 31st May 2020, additional 15 days would be allowed from 31st May 2020 for resubmission. However, for SRNs already marked under NTBR, extension would be provided on case to case basis.
    Note: Forms will not get marked to (Not to be taken on Record)’NTBR’ due to non-resubmission during this extended period as detailed above.
  6. Extension for marking IEPF-5 SRNs to ‘Pending for Rejection u/r 7(3)’ and ‘Pending for Rejection u/r 7(7)’
    SRNs where last date of filing eVerification Report (for both Normal as well as Resubmission filing) falls between 15th March 2020 to 31st May 2020, would be allowed to file the form till 30th Sep 2020. However, for SRNs already marked under ‘Pending for Rejection u/r 7(3)’ and ‘Pending for Rejection u/r 7(7)’, the extension would be provided on case to case basis.

Note: Status of IEPF-5 SRN will not change to ‘Pending for Rejection u/r 7(3)’ and ‘Pending for rejection u/r 7(7)’ till 30th Sep’20.

Notification by MCA of Extension of time_22042020