DIRECT TAX
1. The last date for making a declaration under Vivad Se Vishwas Scheme has been extended to 31st January, 2021 from 31st December, 2020. [Notification No. 92 of 2020 dated 31st December, 2020.]
2. Government notifies extended due dates for issuing Tax Audit Reports, filing of tax returns and VSV Scheme. [Notification No. 93 of 2020 dated 31st December, 2020.]
3. Introduction of Faceless Penalty Scheme, 2021. [Notification No. 2 of 2021 dated 12th January, 2021.]
4. Directions for the Implementation of the Faceless Penalty Scheme, 2021. [Notification No. 3 of 2021 dated 12th January, 2021.]
COMPANY LAW
I. COMPANIES ACT, 2013
(I) MCA enforces certain provisions of Companies (Amendment Act, 2020) w.e.f. 21st December, 2020. MCA has appointed the 21st day of December, 2020 as the date on which certain provisions of the Companies (Amendment) Act, 2020 shall come into force. Accordingly, major defaulting provisions such as defaults related to formation of section 8 companies, non-compliance of provisions related to matters to be stated in the prospectus, transfer and transmission of securities and rectification of register of members, etc., are decriminalised effective from the said date. [MCA Notification S.O. 4646 (E) dated 23rd December, 2020.]
(II) MCA allows ROC to extend timeline for name reservation up to 60 days The MCA has made an amendment to the Companies (Incorporation) Rules, 2014 whereby a new Rule 9A has been inserted. The said rule allows the Registrar to extend the period of a name reserved under rule 9 by using web service SPICe+INC-32, up to 40 days from the date of approval on payment of a fee of Rs. 1,000 before expiry of 20 days under rule 9; 60 days on payment of Rs. 2,000 before expiry of 40 days; and extension up to 60 days on payment of Rs. 3,000 in case of expiry of 20 days from the date of approval. [MCA Notification G.S.R. 795(E) dated 26th December, 2020.]
(III) Companies allowed to conduct board and general meetings virtually till 30th June, 2021 Owing to the Covid-19 outbreak, the MCA has further extended the due date in relation to companies for conducting their meetings virtually from 31st December, 2020 to 30th June, 2021. [MCA Notification G.S.R. 806 (E) dated 2nd January, 2021.]
(IV) MCA clarifies that ‘Spending of CSR funds for awareness campaigns on Covid-19 vaccination programme is an “eligible CSR activity”’ under item Nos. (i), (ii) and (xii) of Schedule VII of the Companies Act, 2013 relating to promotion of healthcare, including preventive healthcare and sanitization, promoting education and, disaster management, respectively. [MCA General Circular 1/2021 dated 13th January, 2021.]
(V) Timeline for companies to hold AGMs through video conferencing extended till 31st December, 2021 In continuation of Circular 20/2020 dated 5th May, 2020, the MCA has decided to allow companies whose AGMs were due to be held in the year 2020, or become due in the year 2021, to conduct their AGMs on or before 31st December, 2021 through video conferencing or other audio visual means. [MCA General Circular 2/2021 dated 13th January, 2021.]
(VI) MCA launches ‘Scheme for condonation of delay for companies restored on the Register of Companies between 1st and 31st December, 2020 under section 252 of the Companies Act, 2013’. The Companies Fresh Start Scheme, 2020 [CFSS-2020] is no longer applicable for various filings done under the provisions of the Companies Act, 2013. The companies restored between 1st and 31st December, 2020 could not avail benefit of CFSS-2020 scheme and as such are liable to pay additional fees on filing overdue e-forms. MCA has accordingly launched the scheme for the purpose of condoning the delay in filing forms with the Registrar, insofar as it relates to charging of additional fees on account of delay in such filings. [MCA General Circular 3/2021 dated 16th January, 2021.]
II. SEBI
(VII) SEBI further extends relaxations for compliance with certain provisions of the SEBI (LODR) Regulations, 2015 due to the Covid-19 pandemic The MCA has further extended relaxations to companies to conduct their Extraordinary General Meetings through video conferencing or through other audio-visual means up to 30th June, 2021. It has also extended these relaxations to Annual General Meetings of the companies due in the year 2021 (i.e. till 31st December, 2021). Accordingly, the relaxations in respect of sending physical copies of annual reports to shareholders and the requirement of proxy for general meetings held through electronic mode are extended for listed entities till 31st December, 2021. [Circular SEBI/HO/CFD/CMD2/CIR/P/2021/11 dated 15th January, 2021.]
(VIII) SEBI extends relaxations for compliance with rights issues In view of the difficulties faced due to the Covid-19 pandemic and the lockdown measures, the SEBI has further extended the relaxations for compliance with rights issues in order to ensure that all eligible shareholders are able to apply to the rights issues during hard times. The validity of relaxations shall be applicable for rights issues opening up to 31st March, 2021. [Circular SEBI/HO/CFD/DIL1/CIR/P/2021/13 dated 20th January, 2021.]
ACCOUNTS AND AUDIT
(A) Risk-Based Internal Audit (RBIA) Framework. The RBI has issued a Notification on the RBIA Framework applicable to Scheduled Commercial Banks (excluding RRBs), Local Area Banks, Small Finance Banks and Payments Banks. Banks are expected to re-orient their approach, in line with evolving best practices, as part of their overall Governance and Internal Control framework. Banks are also encouraged to adopt International Internal Audit Standards. The Notification also contains advisories aimed at bringing uniformity in the approach followed by banks. [Notification No. RBI/2020-21/83 Ref. No. DoS.CO.PPG./SEC.04/11.01.005/2020-21 dated 7th January, 2021.]
FEMA
(i) The DPIIT has, vide a Circular, revised the SOP for seeking approval in FDI Proposals setting down the procedures, timelines and advisories to other Ministries / Departments. Some of the important changes are:
* An inter-Ministerial committee will assess delayed proposals and proposals escalated for quicker disposal.
* A review mechanism has been brought in before rejection of a proposal along with mandatory concurrence of DPIIT before rejection, including detailed guidelines regarding rejection or closure due to incomplete applications, proposals requiring amendments to earlier approvals, requirement of NCLT approval first for M&A applications, and imposition of compounding provisions in case of FEMA violations.
* Applications covered under Press Note 3 will be dealt with by the respective Ministries / Departments and
will also require clearance from the Ministry of Home Affairs.
* Regular review of pending proposals by the DPIIT along with the departments concerned will take place every four to six weeks, instead of the three months earlier.
* DPIIT and each of the Competent Authorities shall maintain a database on the proposals received along with details such as date of receipt, investor and investee company details, volume of foreign investment involved and date of grant of approval / rejection letter.
* The number of mandatory documents to be submitted has been reduced.
* Digitally-signed online submissions are now accepted.
* Overall time limit for processing of applications is set at 10-12 weeks.
The SOP also provides for other important points, advisories and formats for submitting FDI proposals and for Approval letter. [Circular No. 1/8/2016-FDI POLICY dated 9th November, 2020.]
(ii) The Directorate-General of Civil Aviation (DGCA) had, in March, 2019, issued revised SOPs for export of aircraft by companies lending them in case of defaults by companies which have leased such aircraft under the ‘Cape Town Convention’. RBI has now amended the Export of Goods and Services Regulations exempting the furnishing of declaration in case of re-export of leased aircraft / helicopters and / or engines / auxiliary power units (APUs) re-possessed by overseas lessor and duly de-registered by the DGCA on the request of Irrevocable Deregistration and Export Request Authorisation (IDERA) holder, subject to permission by the DGCA / Ministry of Civil Aviation for such exports. [Notification No. FEMA 23 (R )/(4)/2021-RB, dated 8th January, 2021.]
ICAI ADVISORIES AND ANNOUNCEMENTS
* Advisory – ICAI Valuation Standards 2018 to be followed while conducting any type of Valuation Engagement. [21st December, 2020.]
* Announcement – Clarification on Statutory Auditor of a company giving feedback to Credit Rating Agencies about Auditee Client. [5th January, 2021.]
ICAI MATERIAL
* Report on Audit Quality Review 2019-20. [29th December, 2020.]
* Handbook on Audit of CSR Activities. [11th January, 2021.]
* Compendium of Opinions of the Expert Advisory Committee – Volume XXXVII. [12th January, 2021.]
