News Summary

Vignettes from the Law and Practice relating to Company Meetings

CS. Ramaswamy Kalidas, an eminent Company Secretary and author of the book “The Law and Practice relating to Company Meetings” has analysed the provisions w.r.t. Law and practices relating to company meeting in the attached article titled “Vignettes from the Law and Practice relating to Company Meetings”. The article contains an analysis of various provisions relating to meetings, case laws to back them and all of it in simple understandable language.

It’s 15 minutes of your time well spent! Happy reading!

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GST Updates

Our Associate CA. R Krishnamurthy has detailed the CBIC Circular dated 21.06.2021, clarifying the applicability of Dynamic Quick Response (QR) Code on B2C. The article has a 5 minutes read time.

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IT Updates

Our Associate CA. R Krishnamurthy has compiled the extended due dates for various compliances under Income Tax Act notified by CBDT in the last fortnight. Please refer to the Notification links in the article for further details.

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MCA updates

Relaxation of levy of additional fee upto 31.08.2021

MCA has notified vide Circular dated 30.06.2021 that due to the existing pandemic situation, no additional fee shall be levied upto 31.08.2021 on forms to be filed under Companies Act, 2013 (except for charge related forms) and Limited Liability Partnership Act, 2008 for the forms due for filing between 01.04.2021 and 31.07.2021. Accordingly, only normal fees shall be levied upto 31.08.2021 for forms required to be filed during the period 01.04.2021 and 31.07.2021.

Open Circular No. 11/2021 dtd. 30.06.2021

Relaxation of time for filing Charge forms (creation or modification)

As part of the pandemic related relaxation, a scheme had been introduced to condone the delay in filing forms CHG-1(Creation / modification of charge) and CHG-9 (Creation / modification of charge for debenture) for a brief 2 months period i.e. April & May, 2021.

Vide Circular dated 30.06.2021, the scheme has been made available till 01.08.2021. The Scheme shall be applicable for Forms were / are due for filing between 01.04.2021 and 31.07.2021. The other requirements of the Circular shall remain applicable.

Please refer to Samhita #260 for details.

Open Circular No. 12/2021 dtd. 30.06.2021

Increased threshold limits for SMCs – Companies (Accounting Standards) Rules, 2021

MCA has notified the Companies (Accounting Standards) Rules, 2021 vide Notification dated 23.06.2021. Effective from 01.04.2021, these Rules have increased the threshold for eligible enterprises to be treated as Small and Medium Sized Companies (SMCs) as below:

Turnover – from 50 crores to 250 crores

Borrowing – from 10 crores to 50 crores

Other criteria for SMC remains the same. This provides exemption and relaxation under Accounting Standards to a higher number of SMCs, aiding the Ease of Doing Business criteria. The Notification calls for an elaborate analysis.

It is interesting to note that a Small Company has a different criteria under Companies Act, 2013 – paid up capital upto Rs. 2 crores and turnover upto Rs. 20 crores read with other conditions. Small enterprise under the MSMED Act, 2006 prescribes yet another criteria – investment in plant & machinery upto 10 crores and turnover upto Rs. 50 crores.

Open Notification No. G.S.R. 432(E) dtd. 23.06.2021

Increased threshold limits for SMCs – Companies (Accounting Standards) Rules, 2021

The Companies (Indian Accounting Standards) Amendment Rules, 2021

MCA notified the Companies (Indian Accounting Standards) Amendment Rules, 2021 on 18.06.2021 amending following standards:

Sl. No. IND AS
1 Ind AS 1 |Presentation of Financial Statements
2 Ind AS 8 |Accounting Policies, Changes in Accounting Estimates and Errors1
3 Ind AS 12 | Income Taxes
4 Ind AS 16 | Property, Plant and Equipment
5 Ind AS 27 | Separate Financial Statements.
6 Ind AS 34 | Interim Financial Reporting
7 Ind AS 37 | Provisions, Contingent Liabilities and Contingent Assets
8 Ind AS 38 | Intangible Assets
9 Ind AS 40 | Investment Property
10 Ind AS 101 |First-time Adoption of Indian Accounting Standards
11 Ind AS 102 |Share-based Payment
12 Ind AS 103 |Business Combinations
13 Ind AS 104 |Insurance Contracts
14 Ind AS 105 |Non-current Assets Held for Sale and Discontinued Operations
15 Ind AS 106 |Exploration for and Evaluation of Mineral Resources
16 Ind AS 107 |Financial Instruments: Disclosures
17 Ind AS 108 |Operating Segments
18 Ind AS 109 |Financial Instruments

Noteworthy changes include:

  • The extension of benefits of the COVID 19 related rent concession that was introduced last year which allowed lessees to recognize COVID 19 related rent concessions as income rather than as lease modification – upto 30.06.2022.

  • Additional disclosures related to interest rate benchmark reform to enable users of financial statements to understand the effect of interest rate benchmark reform on an entity’s financial instruments and risk management strategy.

Open Notification No. G.S.R. 419(E) dtd. 18.06.2021

EGMs through VC/OAVM – extended till 31.12.2021

Considering the COVID-19 pandemic related stress on companies, MCA in 2020 and 2021 had allowed companies to convene their EGMs through Video Conferencing (VC) or Other Audio Visual Means (OAVM) upto 30.06.2021. The facility shall now be available to all companies till 31.12.2021.

Open Circular No. 10/2021 dtd. 23.06.2021

Fee for renewal of name in ID data bank

The Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 notified on 22.10.2019 included an enabling clause allowing the Central Government to prescribe the applicable fee payable by IDs willing to include their names in the ID data bank.

MCA notification dated 18.06.2021 provides for payment of Rs. 1,000 as fee for inclusion or renewal of their name in the databank in case of delayed filing of application. The registration on the data bank is valid either for 1 year or 5 years or lifetime as per the IDs choice. Renewals have to be completed withing 30 days from 1 year or 5 years.

Open Notification No. G.S.R. 418(E) dtd. 18.06.2021

No restriction on matters that can be dealt with in VC / OAVM BMs

Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 listed the matters which cannot be dealt with in a Board Meeting (BM) held through Video Conferencing (VC) or Other Audio Visual Means (OAVM). Considering the COVID-19 pandemic related stress on companies the same was relaxed through various MCA Circulars in the past year.

Vide Notification dated 15.06.2021, Rule 4 has been omitted allowing the following agendas to be considered in BMs held through VC/OAVM:

  • approval of the annual financial statements (including Audit Committee meetings for the same)
  • the approval of the Board’s report
  • the approval of the prospectus
  • the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover

With this all matters of the Board can be transacted through VC/OAVM meetings, subject to following the prescribed meeting procedures.

Open Notification No. G.S.R. 409(E) dtd. 15.06.2021
SEBI Updates

SEBI BM Press release

SEBI after it’s meeting on 29.06.2021 released a press note of the decisions taken in the meeting. The decisions taken include:

  1. Review of regulatory provisions related to Independent Directors
  2. Review and Merger of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 and SEBI (Non-Convertible Redeemable Preference Shares) Regulations, 2013 into a single Regulation – SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021
  3. Amendments to SEBI (Infrastructure Investment Trusts) Regulations, 2014 and SEBI (Real Estate Investment Trusts) Regulations, 2014
  4. Amendments to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015

Please refer to the attached article for details of the decision w.r.t. provisions related to Independent Directors

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Open Press Release

Revised Framework for Regulatory Sandbox

The Regulatory Sandbox was introduced by SEBI to grant certain facilities and flexibilities to SEBI regulated entities so that they can experiment with FinTech. Updated guidelines including revised eligibility criteria for the project, application and approval process etc. have been notified vide Circular dated 14.06.2021.

Open Circular No. SEBI/HO/ITD/ITD/CIR/P/2021/575 dtd. 14.06.2021

Minimum vesting period of ESOPs and SARs – relaxed in case of death of employees

In view of the pandemic situation, to provide relief to the families of the deceased employees of listed companies, vide Circular dated 15.06.2021 SEBI has relaxed the minimum vesting period of 1 year for ESOPs and Stock Appreciation Rights (SARs) in case of death of ESOP or SAR holders. This means that in case of death of an employee, SARs / ESOPs shall vest with his / her legal heir or nominee on the date of death of the employee.

This relaxation shall be available to all such employees who have deceased on or after 01.04.2020.

Open Circular No. SEBI/HO/CFD/DCR2/CIR/P/2021/576 dtd. 15.06.2021

System Driven Disclosures now applicable for debt securities as well

System Driven Disclosures pertaining to trading in equity shares and Futures and Options by members of promoter group and designated persons in addition to the promoters and directors of company was implemented by SEBI vide Circular dated 09.09.2020. According to the same Circular disclosures of Equity and Futures and Options are displayed on SEBI website.

In addition to the above, listed debt securities of equity listed companies shall also be included in the System Driven Disclosures w.e.f. 16.06.2021.

Open Circular No. SEBI/HO/ISD/ISD/CIR/P/2021/578 dtd. 16.06.2021

Ministry of MSME: Extended period for Udyam Registration

The Ministry of MSMEs introduced various changes vide master Notification dated 26.06.2020 which included that registration of existing MSME (MSMEs registered prior to 30.06.2020) shall remain valid only till 31.03.2021 post which they were required to take fresh Udyam Registrations. Vide Notification dated 16.06.2021 the said period has been extended upto 31.12.2021.

This seems to be another COVID related extension.

Open Notification No. S.O. 2347(E) dtd. 16.06.2021