Company LawArticle

MCA Amendments : Amendments in Companies Act duding April & May 2021

Ministry of Corporate Affairs has caused myriad amendments in the Companies Act, 2013.

No. of Notifications appeared in April 2021 One
No. of Circulars appeared in April 2021 One
No. of Amendments in Rules appeared in April 2021 NIL
No. of Notifications appeared in May 2021 NIL
No. of Circulars appeared in May 2021 Five
No. of Amendments in Rules appeared in May 2021 NIL

Reporting by the Auditors on the requirement of having Accounting Software with Audit Trail is also deferred from FY April 01, 2021, to April 01, 2022 

Amendments through Notifications

Notification dated April 01, 2021 -The Companies (Audit and Auditors) 2nd  Amendment Rules, 2021 On April 01, 2021, MCA vide its Notification notified the Companies (Audit and Auditors) Second Amendment Rules, 2021 (the 2nd Amended Rules) by which it has extended the applicability of reporting by the Auditors with respect to use of the accounting software by the company having feature of recording audit trail, etc from the FY commencing on or after April 01, 2022, and all other amendment made under 1st amendment dated March 24, 2021, shall remain effective from April 01, 2021.

The link for the aforesaid Notification is as below: http://www.mca.gov.in/Ministry/pdf/AuditAuditorsSecondAmendmentRules_13042021.pdf

No Amendment through Notification in the Month of May 2021.

Amendment THROUGH Circulars

Setting up makeshift hospitals and temporary COVID care facilities’

As per this circular, MCA clarified that the spending of the CSR funds for “Setting up makeshift hospitals and temporary COVID care facilities’ is an eligible CSR activity.

The Companies to take this activity in consultation with State Government. The link for the aforesaid Notification is as below:

http://www.mca.gov.in/Ministry/pdf/GeneralCircularNo5_22042021.pdf

Relaxation of Levy of Additional Fees on 53 e-forms:

 [1]Circular No. 06/2021 Dated 03rd May 2021.

As per this circular, if the due date of any form i.e. 53 Forms (except CHG-1, CHG-4, and CHG-9) falling between 1st April 2021 to 30th May 2020 then those forms can be file without additional fees till 31st July 2021.

Eg: Due date for PAS-6 was 30th May 2021. This date is falling under the above dates. Therefore, this can be file till 31st July 2021.

FAQ’s on Relaxation on e-Forms: http://csdiveshgoyal.in/faqs-on-relaxations-of-time-of-filling-of-forms-having-due-date-01-04-to-30-05/

Relaxation on the calculation of 120 days for Charge Creation/ Modification:

[2]Circular No. 07/2021 Dated 03rd May 2021.

Applicability:

As per provisions of Section 77 of Companies Act, 2013 form CHG-1 and CHG-9 relating to Creation and Modification of Charge need to be file in maximum 120 days from date of creation or modification.

Circular shall be applicable in the following Manner:

PART I: If the date of creation or modification of charge is before April  01, 2021.

If the date of creation or modification of charge is before April 01, 2021, but the timeline for filing of such form had not expired under Section 77 (i.e. 120 days) as on April 01, 2021

EG.

  • The charge created/ modified before April 01, 2021, but as of April 01, 2021, One hundred Twenty Days (120 days) has not expired.

**In other word we can say that the charge is created or modified on or after December 02, 2020, is eligible for this scheme.

PART II: If the date of creation or modification of charge is between April 01, 2021, to May 31, 2021.

If the date of creation or modification of charge is between April 01, 2021, and May 31, 2021, then all such forms shall fall under this scheme.

EG.

  • If Charge Created or modified after April 01, 2021, then this scheme is also applicable on all such forms.

Relaxation of TIME/ FEE under Scheme:

PART I: If the date of creation or modification of charge is before April 01, 2021.

TIMELINE

  • The period beginning from April 01, 2021, and ending on May 31, 2021, shall not be reckoned for the purpose of filing of form u/s 77 & 78.
  • In case the form not filed till May 31, 2021, the first day after March 31, 2021, shall be June 01, 2021.

EG.

  • If the Charge created/ modified on February 14, 2021, then what shall be the due date as per the scheme.

Ans: Maximum time for filing of form is 120 days. Till March 31, 2021, | 45 days passed. The remaining days 75 days. As per the above provision:

  • If the company files a form between April 01 to May 31 then as form filed after 30 days but before 60 days i.e. 45 days on March 31, therefore, the company is required to pay normal fees as well as additional fees.
  • If the Company file form till May 31, then June 01, shall be considered as 46th day for the purpose of fees payable on Charge Form

FEES:

  • If the company files the form between April 01 to May 31 then fees applicable on such form as of March 31, required to be pay till May 31.
  • If the Company file form till May 31, then June 01, shall be considered as next day of March 31, for the purpose of fees payable on Charge Form.

PART II: If the date of creation or modification of charge is between April 01, 2021, to May 31, 2021.

  • The period beginning from April 01, 2021, and ending on May 31, 2021, shall not be reckoned for the purpose of filing of form u/s 77 & 78.
  • In case the form not filed till May 31, 2021, then June 01 shall be the first day to count 120 days u/s 77

Relaxation in Maximum Gap Between 2 Board Meetings:

[3]Circular No. 08/2021 Dated 03rd May 2021.

MCA extended the gap between two board meetings by 60 days for the first two quarters of the financial year 2021-22. According to this, the gap between two consecutive Board Meetings may extend to 180 days during the quarter, April to June and July to August.

Eg: if the 120 days gap of the board meeting falling in between 1st April 2021 to 30th September 2021 then a maximum gap of the Board Meeting shall be considered as 180 days.

Eg: if 120 completing on 30th April then 180 days shall be considered till 30th June.

Clarification on Spending of CSR fund for CoVID related Activities:

[4]Circular No. 09/2021 Dated 05th May 2021.

Spending of CSR funds for ‘creating health infrastructure for COVID care’, ‘establishment of medical oxygen generation and storage plants’ is an eligible CSR activity: MCA

For devising more prolific approaches in dealing with the nagging pandemic circumstances predominating in the country, the Ministry of Corporate Affairs (MCA) has appeared with a circular on 5th May 2021 stating that:

  • Spending of CSR funds for ‘creating health infrastructure for COVID care’, ‘establishment of medical oxygen generation and storage plants’, ‘manufacturing and supply of Oxygen concentrators, ventilators, cylinders and other medical equipment for countering COVID-19’ or similar such activities are eligible CSR activities under item nos. (i) and (xii) of Schedule VII of the Companies Act, 2013 relating to the promotion of health care, including preventive health care, and, disaster management respectively.
  • Contribution to specified research and development projects as well as contribution to public-funded universities and certain Organisations engaged in researching science, technology, engineering, and medicine as eligible CSR activities.
  • The companies including Government companies may undertake the activities or projects or programs using CSR funds, directly by themselves or in collaboration as a shared responsibility with other companies, subject to fulfillment of Companies (CSR Policy) Rules, 2014 and the guidelines issued by this Ministry from time to time.

The step taken by MCA is a much-needed step to provide a relentless source to people in need of oxygen, concentrators, ventilators, cylinders, and other medical equipment.

Clarification on offsetting the excess CSR spent for FY 2019-20: 

[5]Dated 20th May 2021.

Offsetting the excess CSR spent for FY 2019-20 against mandatory CSR obligation for FY 2020-21.

An appeal dated 30.03.2020 was made to MDs/CEOs of top 1000 companies to contribute generously to “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund” (PM CARES Fund).

 In the appeal, it was mentioned that such contribution may, inter-alia, include the unspent CSR amount, if any, and any amount over and above the minimum prescribed CSR amount for FY 2019-20, which can later be offset against the CSR obligation arising in subsequent financial years. 

The Ministry has uploaded the appeal on the website and e-mailed it to the Corporates on 31.03.2021

 In pursuance of the said appeal, certain companies claimed to have contributed CSR funds to the ‘PM CARES Fund’ over and above their prescribed CSR amount for FY 2019-20.

As a result, several representations have been received in the Ministry for setting off the excess CSR amount spent by the companies in FY 2019-20 by way of contribution to ‘PM CARES Fund’ against the mandatory CSR obligation for FY 2020-21.

Also Like:

MCA has now in a circular dated 20th May 2021, said that where a Company has contributed any amount to “PM CARES FUND” on March 31, 2020, which is over and above the minimum amount as prescribed under Section 135 (5) of the Companies Act 2013 for FY 2019–20, and such excess amount (or part thereof) is offset against the requirement to be spent under CSR obligations for FY 2020-21, subject to the fulfillment of the following conditions;

  • The amount offset as such shall have factored the unspent CSR amount for previous financial years if any;
  • The Chief Financial Officer shall certify that the contribution to “PM CARES Fund” was indeed made on 31st March 2020 in pursuance of the appeal and the same shall also be so certified by the statutory auditor of the company; and
  • The details of such contribution shall be disclosed separately in the Annual Report on CSR as well as in the Board’s Report for FY 2020-21 in terms of section 134 (3) (o) of the Act.
For example: If in 2019-20, the requirement to spend on CSR was 50 Lakh, and in 2020-21, the requirement to spend on CSR was 60 Lakh.

 The company has already spent in 2019-20, amount of Rs. 1 crore and has spent an excess of Rs. 50 lakhs on PM Cares Fund.

 In such a case, the company will get a set-off of such excess spending in 2020-21.

 Therefore, the obligation for 2020-21 shall be Rs. 10 lakh (60-50).

To conclude, we can state that the companies which have contributed to the ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund’ (PM Cares Fund) in 2019-20 above the requirement, have some ease in performing their CSR commitments for the year 20-21.

FAQ’s

S.no FAQ’s
1 Can the company set off any contribution made in the year 2019-20 to PM CARES Fund which is over and above the minimum amount as prescribed under section 135(5) against the requirement to spend under section 135(5) for FY 2020-21 without setting off the unspent amount for previous financial years?

No, the circular has specified that the amount offset as such shall have factored the unspent CSR amount for previous financial years if any.

All the previous year unspent amount should be settled.

2 In the case of a Private Company, who shall certify that the contribution to the “PM CARES Fund” was indeed made on 31st March 2020?

In the case of a Private Company, any director can certify the same.

3 In case a company is not having CFO, who will certify that the contribution to the “PM CARES Fund” was indeed made on 31st March 2020?

If CFO is not appointed, then the Managing Director will certify and in case the MD is not there, any director can certify the same

Amendments in Rules

No Amendment through Notification in the Month of April, & May 2021.


Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.

IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF, OR IN CONNECTION WITH THE USE OF THE INFORMATION

[1] getdocument (mca.gov.in)

[2] https://mca.gov.in/bin/ebook/dms/getdocument?doc=13466&type=download

[3] https://mca.gov.in/bin/ebook/dms/getdocument?doc=13466&type=download

[4] getdocument (mca.gov.in)

[5] getdocument (mca.gov.in)

CS Divesh Goyal

CS Divesh Goyal is a Fellow member of ICSI, Practicing Company Secretary, and Steering Voice in the Corporate World. He is a Prop. at Goyal Divesh & Associates, Company Secretaries. He is a competent professional having enrich 6 years post qualification experience as Company Secretary with expertise in Corporate Law, FEMA, IBC, SEBI, RBI. He has written more than 600 editorials on Companies Act, 2013 to keep at pace with the latest changes and critically analyse the implications of various provisions of the Companies Act, 2013, Insolvency & Bankruptcy Code, 2016, FEMA, RBI, SEBI etc. He is a vibrant, sought after, and spellbinding speaker and has delivered more than 200 sessions on various aspects of Company Law at ICSI, ICAI, and online platforms. Apart from his passion for his work he also believes in elevating his profession and for that dream

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