Tuesday 20 October 2020

Corporate affairs ministry extends deadline for schemes amid COVID

Independent directors are required to register themselves on the independent directors’ data bank maintained by the Indian Institute of Corporate Affairs (IICA)

Providing relief to companies amid the coronavirus pandemic-induced disruptions, the government has extended the duration of “several schemes” till 31 December, including the fresh start scheme.

The corporate affairs ministry has extended the Companies Fresh Start Scheme and the LLP Settlement Scheme, besides allowing companies to conduct EGMs (extraordinary general meetings) and board meetings through video conference or other audio-visual means till end of this year.

Further, the scheme for relaxation of time for filing forms related to creation or modification of charges under the Companies Act, 2013 as well as the deadline for independent directors to register themselves on a data bank for them has been extended.

The earlier deadlines were to end on 30 September.

In a series of tweets, Finance and Corporate Affairs Minister Nirmala Sitharaman’s office said the corporate affairs ministry has “extended the duration of several schemes till 31.12.2020 in view of the continued disruption caused due to the COVID-19 pandemic in certain parts of the country and to provide greater Ease of Doing Business”.

The Companies Fresh Start Scheme as well as the LLP Settlement Scheme — which began from 1 April — are aimed at enabling companies to make good on their previous defaults.

Under the schemes, entities are allowed to submit filings without late fee and also get immunity from penal proceedings with respect to delay in submission of requisite filings.

Independent directors are required to register themselves on the independent directors’ data bank maintained by the Indian Institute of Corporate Affairs (IICA), which comes under the corporate affairs ministry.

The ministry is implementing the Companies Act and LLP Act, among other activities.

Sitharaman: Not being risk-averse in face of COVID crisis

Finance minister Nirmala Sitharaman said she is not being “risk averse” in her response to coping with the economic impact of the COVID-19 pandemic and the 68-day lockdown imposed to slow its spread, which saw India’s economy come to a near-complete halt for part of the first quarter of 2020-21.

She added that she has no option but to increase government spending. “After all, among the four engines that support the economy, three have come to a complete standstill. It is public expenditure which has to do the heavy lifting.” The government’s borrowing calendar that has already been announced indicates as much, Sitharaman said. The government has already raised its gross market borrowing target for the year to Rs12 lakh crore from the Rs7.8 lakh crore announced in the Union Budget in February. Debt market analysts expect a further increase in this to Rs13 lakh crore.

The government’s relief package announced in May has been criticised for not having an adequate direct fiscal stimulus component and not doing enough to spur demand, but in an interview, the finance minister said that she believes it does enough for both supply and demand. Still, she admitted, she has been receiving feedback from industry on the need for one more stimulus. “One more may be needed is what we are hearing from the people who interact with us, and we are trying to see what it is that we can do.” Sitharaman said, like she has several times in the past, that she is open to providing more support but declined to get into details of when this might be forthcoming. “There’s no point in me hurriedly getting something out.”

She refused to get into a guessing game on this year’s GDP. Sitharaman said that while the decline in GDP in the first quarter of 2020-21, at 23.9%, has been substantial, she does not want to conclude anything about the entire year’s number just yet. She added that she expects the second and third quarter of the financial year to be better.

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