India:
Regulators Grants Relaxations In Compliances Amidst COVID-19
03 April 2020
Nexdigm Private Limited
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After the World Health Organization changed the status of the
novel coronavirus (COVID-19) as a pandemic, there has been a slew
of emergency actions that the Indian Government has taken to
prevent further proliferation of the virus. These include strict
restrictive measures around movement and public gatherings across
the nation, leading to 'work from home' arrangements being
implemented by employers. To ease the burden on compliance
functions in light of the restricted work arrangements, certain
regulatory authorities have granted relaxations to the corporate
world, which are summarized below:
Regulatory Authority |
Relaxation
Granted |
Ministry of Corporate Affairs (MCA) |
- The following matters can be dealt with in Board Meetings held
through video conferencing till 30 June 2020 (which otherwise can
only be considered in Board Meetings held in the physical presence
of directors):
- approval of annual financial statements;
- approval of the Board's report;
- approval of prospectus;
- audit committee meetings for consideration of financial
statements; and
- approvals relating to amalgamation, merger, demerger,
acquisition, and takeover.
- The above relaxation is granted by amending rule 4 of Companies
(Meetings of Board and Its Powers) Rules, 2014.
- MCA advises companies and LLPs to implement 'work from
home' ('WFH') policy as a measure to contain the spread
of COVID-19.
- MCA introduces a form for 'Company Affirmation of Readiness
towards COVID-19' (CAR), to confirm their readiness to deal
with the COVID-19 threat. CAR is a simplified web-based form with
radio buttons 'YES/NO,' which effectively asks if the
company/LLP has implemented WFH policy. There is no requirement of
DSC for filing CAR and does not involve payment of any
fee.
|
National Company Law Tribunal (NCLT) |
All benches of NCLT to remain closed till 31 March 2020. It was
earlier provided that if there is a 'limitation issue,'
matters may be filed online at the Delhi, Mumbai, Hyderabad,
Amaravati, and Jaipur benches, hard copies of which could be filed
upon re-opening of the filing counters. Other than matters which
are likely to be hit by limitation, it has been directed that
filings may be postponed until the filing counters are re-opened.
For NCLT benches other than Delhi, Mumbai, Hyderabad, Amaravati,
and Jaipur, applications in matters which are possibly hit by a
limitation issue may be filed (without annexures) by way of emails
to the Registrars of the respective benches.
|
Securities And Exchange Board of India (SEBI) |
SEBI issued a circular granting relaxation for the following
compliances under SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ('LODR'):
- The date for submitting the certificate relating to the share
transfer facility is extended up to 31 May 2020 [Reg. 7(3) of
LODR];
- The date for submitting the statement of investors'
complaints is extended up to 31 May 2020 [Reg. 13(3) of LODR];
- The date for filing secretarial compliance report is extended
up to 30 June 2020 [Reg.24A of LODR];
- The date for submitting the corporate governance report is
extended up to 15 May 2020 [Reg. 27(2) of LODR];
- The date for submitting the shareholding pattern is extended up
to 15.05.2020 [Reg. 31 of LODR];
- The date for submitting audited quarterly and yearly financial
results is extended up to 30.06.2020 [Reg. 33 of LODR];
- A relaxed time gap between two board/audit committee meetings
held or proposed to be held between the period 1 December 2019 and
30 June 2020. This move effectively relaxes the gap of 120 days
between two meetings (which otherwise mandates that a gap between
two meetings cannot exceed 120 days). [Reg. 17(2) & 18(2) (a)
of LODR].
However, MCA has yet to come out with circular supporting this
relaxation under Companies Act, 2013. |
Hon'ble Supreme Court |
It is understood that the Hon'ble Supreme Court is also
considering the aspect of video conferencing. A decision on the
modalities of the same may be taken shortly.
Further, it is also learned that the Hon'ble Supreme Court
indefinitely extends the limitation period for filing appeals
against orders of High Court or any tribunal before Supreme Court.
No appeal is to be time-barred in the wake of the shutdown of the
Apex Court due to COVID-19. |
Our Comments
Undoubtedly, prevention is the best course of action to contain
COVID-19 spread, and in that direction, cooperation from all the
stakeholders is expected by the Government. While that expectation
is legitimate, the regulators have also responsively issued
immediate relief that corporates may require while ensuring their
compliance obligations. Moving ahead, further relaxations are
expected to come into effect because COVID-19 has effectively
impaired the ability of corporate and regulators to comply with
regulatory requirements in a time-bound manner.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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