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

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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  

Relief for MSMEs! Insolvency proceedings threshold increased to Rs 1 crore from Rs 1 lakh

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IBC
Also coronavirus related debt would be excluded from the definition of “default” under the insolvency and bankruptcy code (IBC)

Finance Minister Nirmala Sitharaman on Sunday raised the minimum threshold to initiate insolvency proceedings to Rs 1 crore from the earlier Rs 1 lakh.

In addition, with an eye on further enhancement of ease of doing business, the government announced suspension of fresh initiation of insolvency proceedings up to one year.

Also corona virus related debt would be excluded from the definition of “default” under the insolvency and bankruptcy code (IBC). “No fresh insolvency proceeding will be initiated up to 1 year.

At the moment MCA has extended this by 6 months, we intend to extend this by another 6 months. For MSMEs a special insolvency framework will be notified under section 240-A of IBC.

The minimum threshold to initiate insolvency proceedings raised to Rs 1 crore from the earlier Rs 1 lakh, which largely insulates MSMEs,” she added.

The Finance Minister, in her fourth presser on Saturday, had announced structural reforms in sectors such as coal, minerals, civil aviation, power distribution, defence production, space, and atomic energy sector.

The reforms were unveiled as a part of the government’s efforts to make India ‘Aatmanirbhar‘ (self-dependent).

Sitharaman has already announced four phases of relief measures to support agriculture, MSMEs, migrant workers, individuals, coal mining, defence, aviation sector, among others amid the ongoing corona virus-induced lock down.

Source: Business Today

NCLT makes ‘default record’ mandatory

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Financial creditors moving the National Company Law Tribunal (NCLT) for initiation of insolvency process will have to mandatorily file ‘default record’ from the information utility (IU). No new petition will be entertained without record of default under Section 7 of the Insolvency and Bankruptcy Code (IBC), said the NCLT in a new directive.

The NCLT has also directed authorised representatives/ parties, in the cases pending for admission under Section 7 of the IBC, to file default record from an IU before the next date of hearing.

What is an IU?

An information utility is a repository of electronic evidence. It is an information network that stores financial data such as borrowings, default, and security interests, among others, of firms.

In India, the National e-Governance Services Limited ( NeSL), in mid-2017, became the first IU for bankruptcy cases under the insolvency and bankruptcy code (IBC).

A record of default is a statement of default on a particular loan and facility. With the latest NCLT move, the entirety of an IU as an integral part of the process to establish default and allow immediate admission before such a Tribunal is now complete, say experts.

The Corporate Affairs Ministry (MCA) had, about four months back, internally taken a decision that there is a need to make IU evidence mandatory in insolvency admission matters.

Today, the NeSL, which started its journey in September 2017, has information of loan details of 100 per cent of the corporates in India. It is sitting on data of ₹76-lakh crore of corporate borrowing outstanding.

As of end April this year, 220 financial institutions, including 75 banks, 147 NBFCs, and two debenture trustees, have uploaded data on the NeSL. Reacting to the latest NCLT move making record of default from an IU mandatory, S Ramann, Managing Director and CEO, NeSL, said: “We are satisfied that the Information Utility is playing its part as per the design of the IBC.”

Vidisha Krishan, Partner, MV Kini & Co, a law firm, said that till date the default record from IU was not mandatory, and even other records or evidence were sufficient to demonstrate a default.

However, now it has been made compulsory vide the latest direction, she added.

 

Read The NCLT Order dated 12.05.2020

 

Companies Fresh Start Scheme, 2020 (CFSS-2020)

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The Ministry of Corporate Affairs has introduced the “Companies Fresh Start Scheme, 2020” and revised the “LLP Settlement Scheme, 2020” which is already in vogue to provide a first of its kind opportunity to both companies and LLPs to make good any filing related defaults, irrespective of the duration of default, and make a fresh start as a fully compliant entity.

The Fresh Start scheme and modified LLP Settlement Scheme provide relief to law abiding companies and the Limited Liability Partnerships (LLPs) amid COVID-19 pandemic.

One Time Opportunity

The USP of both the schemes is a one-time waiver of additional filing fees for delayed filings by the companies or LLPs with the Registrar of Companies during the currency of the Schemes, i.e. during the period starting from 1st April 2020 and ending on 30th September 2020.

Fee Payable for CFSS

Only normal fees for filing of documents in the MCA-21 registry will be payable in such case during the currency or CFSS-2020. There will not be any additional fee for any documents.

Every defaulting company  shall be required to pay normal fees as prescribed under the Companies (Registration Offices and FCC) Rules, 2014 on the date of filing of each belated document and no additional fee shall be payable.

Dormant Company

The scheme gives an opportunity to inactive companies to get their companies declared as ‘dormant company’ under Section 455 of the Act by filing a simple application at a normal fee.

Details of CFSS 2020

The scheme shall come into force on the 01.04.2020 and shall remain in force till 30.09.2020

  1. “Defaulting company” means company defined under the  Companies Act, 2013, and which has made default in filing of any or the documents, statement, returns, etc including annual statutory documents on the MCA-21 registry
  2.  “Immunity certificate”‘ means the certificate referred to in subparagraph (viii) of paragraph 6 of the Scheme;
  3. “Inactive Company” means a company as defined in Explanation (i) to sub-section (l) of section 455(1) of the Companies Act, 2013;

Applicability of CFSS 2020

Any ‘defaulting company’ is permitted to file belated documents which were due for filing on any given date in accordance with the provisions of this Scheme.

Immunity from the launch of prosecution or proceedings for imposing penalty shall be provided only to the extent such prosecution or the proceedings for imposing penalty under the Act pertain to any delay associated with the filings of belated documents.

The Ministry received much representation from the stakeholders to provide a one-time opportunity to file all the pending documents including the annual filing of the company without charging higher additional fees on any delay. The Scheme provides the above opportunity to the inactive company to convert into a dormant company under section 455 of Companies Act, 2013 by filing form MSC-1 with nominal fees & help the inactive companies to remain on ROCs register with minimum compliance requirements.

The defaulting company shall be required to file the belated documents including annual filing by paying nominal fees (without including Additional Fees) as per Companies (Registration Offices and Feel Rules, 2014) as prescribed under the Companies Act, on the date of filing of each belated document.

Both the Schemes also contain a provision for giving immunity from penal proceedings, including against imposition of penalties for late submissions and also provide additional time for filing appeals before the concerned Regional Directors against the imposition of penalties, if already imposed. However, the immunity is only against delayed filings in MCA 21 and not against any substantive violation of the law. 

Application for issue of immunity under the CFSS

An application for seeking immunity in respect of belated documents can be filed under the Scheme in the Form CFSS-2020, after closure of the Scheme and after the document(s) are taken on file, or on record or approved by the Designated authority as the case may be but not after the expiry of six months from the date of closure of the Scheme. There is no fee payable on this Form.

Provided also that no immunity shall provide in case any court has ordered conviction in any matter, or an order imposing penalty has been passed by an adjudicating authority under the Act and no appeal has been preferred against such orders of the court or of the adjudicating authority.

Immunity certificate under CFSS-2020

Based on the declaration made in the Form CFS-S-2020, an immunity certificate in respect of documents filed under this Scheme shall be issued by the designated authority.

Effect of immunity

After granting the immunity, the ROC office shall withdraw the prosecution(s) and the proceedings of adjudication of penalties under section 454 of the Act, if any, in respect of defaults against which immunity has been so granted and shall be deemed to have been completed without any further action.

Any other consequential proceedings, including any proceedings involving interests of any shareholder or any other person of the company for its directors or key managerial personnel, would not be covered by such Immunity. If the company appeals against any order of prosecution for penalty passed by the competent court or adjudicating authority, then the company first needs to withdraw its application of appeal and furnish the proof of withdrawal to avail immunity in this CFSS 2020 scheme.

Scheme not to apply

This scheme shall not apply

  • to companies against which action for final notice for striking off the name u/s 248 of the Act (previously section 560 of Companies Act, 1956 has already been initiated by the ROC.
  • where any application has already been filed by the companies for action of striking off the name of the company from the register of companies;
  • to companies which have amalgamated under a scheme of arrangement or compromise under the Act;
  • where applications have already been filed for obtaining Dormant Status under section 455 of the Act before this Scheme;
  • to vanishing companies;
  • Where any increase in Authorized Capital is involved (Form SH7);
  • also Charge related documents (CHG-I, CHG-A. CHG-8 and CHG-9).

The defaulting inactive companies while filing documents under CFSS-2020 can simultaneously apply for the following actions :

  1. Apply to get themselves declared as Dormant Company under section 455 of the Companies Act, 2013 by filing e-form MSC-I  at a normal fee on said form; or
  2. Apply for striking off the name of the company by filing e-Form STK-2 by paying the fee payable on form STK-2. 

Companies and LLPs confirm their readiness towards COVID-19: MCA

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Advisory on Preventive measures to contain the spread of COVID19

Advisory on Preventive measures to contain the spread of COVID19

The Ministry of Corporate Affairs ( MCA ) is in the process of developing and deploying a simple web form named CAR (Company Affirmation of Readiness towards COVID-19) for companies/LLPs to confirm their readiness to deal with the COVID-19 threat.

Since the wake of the Novel Coronavirus(COVID-19) affecting over 110 countries including India, the WHO had declared it a Pandemic. Apart from human suffering, it is also causing major economic disruptions. In order to contain the spreading of the virus, the corporate sector is required to play a key role in implementing the strategic policy decision of social distancing, which is most crucial in reducing the rate and extent of disease transmission at the community level.

Taking cognizance of the gravity of the public health situation, the Government in the Ministry of Corporate Affairs has relaxed the rules with respect of Board and dispensed with the necessity of holding physical meetings on matters relating to approval of financial statements, board report, restructuring etc., up to 30th June, 2020. They are also examining any other relaxation under the Companies Act, 2013 that may be necessitated on account of COVID-19.

As part of disaster management to meet this urgent and severe health exigency, all companies/LLPs are strongly advised to put in place an immediate plan to implement the “Work from Home” in the Headquarters and field offices to the maximum extent possible, including by conduct of meeting through video conference or other electronic/telephonic/computerized means. They further instructed that even with the essential staff on duty, staggered timings may be followed so as to minimize physical interaction. Apart from that, the preventive measures including the Do’s and Don’t’s advised by the public health authorities are to be strictly followed.

The Webform named CAR will be deployed on 23rd March 2020. All companies/LLPs are requested to using compliance with the web form named CAR on the 23rd of March instant while following all possible preventive measures to contain the disease and its contagious effect.

Frequently Asked Questions on (CAR) – 2020

1. To whom is this form applicable?

To All Companies / LLP including small companies, private companies, One Person Company (OPC) .All Companies/LLP include the companies, whether incorporated in India or not, but having operations in India.

2. When will the form be deployed?

The form is expected to be deployed on 23rd March, 2020 and is required to be submitted by 30th March, 2020 (extended by a week).

3. Is there any fees for filing the form?

No.

4. Who can file the form on behalf of Companies / LLP?

CS, CFO, Managing Director, Director, Designated Partners or Authorized person who has been authorised for such purposes.

5. Whose Mobile number has to be entered in the form?

In case of Director / Designated Partner signing the form their mobile number will be automatically prefilled from database. In all other case, the Mobile Number shall be editable should be that of the person who is authenticating the form as it has to be verified by a One Time Password (OTP).

6. What if my organization does not have a whole time / permanent employee?

The form still has to be filed, but the Company / LLP will be eased of future compliance burden, if any.

7. Till when does such policy needs to be in place?

The policy needs to be in place till 31st March, 2020 as per present scenario but may be extended based on the review made by appropriate Govt. Authorities.

8. What if I do not adhere to filing of such web form?

There has not been any information on the same but going by the intent of the form, non – filing of it may not lead to any penal outcome.

9. On what basis can I prepare “Work from Home” policy?

This shall be prepared based on the guidelines and advisory issued by the Government from time to time to check the spread of COVID – 19.

10. How to track the filing of form?

Once the form is filed, a system based acknowledgement will be sent to:

  • Email id of the Company / LLP
  • Email Id of the person affirming the form
  • Email id of FO user submitting the affirmation.