New Delhi: The government has provided big relief to the corporate sectors on compliance related issues related to incorporation of businesses, qualifications of directors and board meetings, among others.
As per the announcements made by Finance Minister Nirmala Sitharaman on Tuesday, a company has now been given six more months to file declaration of commencement of business. At present, such declaration has to be made within six months from incorporation.
She also announced that the mandatory requirement of holding meetings of the Board of the companies within prescribed interval provided in the Companies Act, 2013 shall be extended by a period of 60 days till next two quarters, up to September 30.
Applicability of Companies (Auditor's Report) Order, 2020 shall be made applicable from the financial year 2020-2021 instead of FY 2019-2020 as was notified earlier, she said, adding that this will significantly ease the burden on companies and their auditors for the year 2019-20.
As per Schedule 4 of the Companies Act, 2013, independent directors are required to hold at least one meeting without the attendance of non-independent directors and members of the management. For the year 2019-20, if the independent directors of a company have not been able to hold even one meeting, the same shall not be viewed as a violation, the minister said.
Directors of registered Indian companies have also been freed from complying with the residency rules that mandate them to be in India for a minimum period of 182 days.
"Under Section 149 of the Companies Act, non-compliance of this rule was treated as a violation. Now, it shall not be treated as a violation," the Finance Minister said.
The government has also decided to give more flexibility to the companies over the need to create a deposit reserve from 20 per cent of the deposits maturing in FY21 by April 30. This requirement can now be met by June 30.
Also, companies have been given time till June 30 to invest 15 per cent of debentures maturing during a year in specified instruments. The date of compliance for this earlier was April 30.