Updates under Companies Act, 2013
Further relaxation for dispatch of Notice under Rights Issue:
In view of the difficulties faced on account of COVID-19 pandemic, The MCA vide General Circular 21/2020 dated 11th May, 2020 had clarified that the inability to dispatch the notice to shareholders for rights issue by listed companies through registered post or speed post or courier would not be viewed as a violation of Section 62(2) of the Companies Act, 2013. This relaxation that was provided initially until 31st July 2020 has now been further extended to 31st December, 2020 vide General Circular No.27/2020 dated 3rd August, 2020.
MCA advises to opt for Extension of Annual General Meetings:
Due to the COVID-19 pandemic, the Ministry of Corporate Affairs vide General circular no.28/2020 dated 17th August, 2020, has advised such companies that are unable to hold their Annual General Meeting (AGM) through Video Conferencing or Other Audio Visual Means, to file an application seeking extension of time in holding of AGM and the Registrar of Companies are advised to consider all such applications liberally.
Note: Based on the power vested with the Registrar of Companies (RoC) under the Companies Act, 2013, various RoCs have extended the time for holding the Annual General Meeting for all the Companies under their jurisdiction, for a period of 3 months from the due date.
Hence, the companies need not file a separate application for extension with respective RoCs.
Amendment in Activities considered for Corporate Social Responsibility:
The Ministry of Corporate Affairs has brought two amendments vide Notification dated 24th August, 2020 relating to Activities covered under Corporate Social Responsibility and are as follows:
- A Company which in normal course of business does research and development activity of new vaccine, drugs and medical devices, is now permitted to show the expenditure incurred in respect of research and development activity of new vaccine, drugs and medical devices related to COVID-19 for financial year 2020-21, 2021-22 and 2022-23 as CSR expenditure subject to the following conditions:
- such activities shall be carried out in collaboration with any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Act and
- details of such activity shall be disclosed separately in the Annual Report on CSR included in the Board’s Report.
- Companies may also contribute the CSR amount towards the following:
- R & D projects in the field of Science, Technology, Engineering and Medicine funded by the Central Government or State Government or any agency or PSU of the Central Government or State Government; and
- Autonomous Bodies established by the Department of Pharmaceuticals and Ministry of AYUSH.
Requirement of Extract of Annual Return (MGT-9) Amended:
Under the erstwhile Act, Extract of Annual Return in Form MGT-9 is required to be annexed to the Directors report. This provision has been amended vide Notification dated 28th August, 2020 which provides relaxation to those companies which places the extract of Annual Return in their websites. Such companies are only required to provide the web link of the Annual Return in their Board’s report and are exempted from annexing it to the report.
Updates under SEBI
Intimation of Record Date:
SEBI vide notification dated 5th August, 2020, has amended Regulation 42 of LODR to ensure that listed entities intimate the record date for the events to all stock exchanges where it is listed or where stock derivatives are available on the stock of the listed entity or where listed entity’s stock forms part of an index on which derivatives are available.
SCORES compliant- Standard Operating Procedure for non redressal:
SEBI vide circular dated 13th August, 2020 has come up with the procedure for handling the complaints raised on SCORES platform by Stock exchanges and the Standard operating procedure on the action to be taken in case of failure to redress investor complaints that are pending beyond 60 days.