The Conundrum of Moratorium on ROC Filings

The Conundrum of Moratorium on ROC Filings

Ever since COVID-19 has hit the world, economies of the world are fighting a constant battle with an invisible force to keep up their economies stable. Amidst such situation, Indian govt. had announced various relaxations vide General Circular No. 11/2020 dated March 24, 2020 for companies (including LLPs) operating in India. The circular provided for various relaxations such as:

  1. Moratorium on additional fee on late filings to the Registrar of Companies (ROC) through the MCA-21 Registry (MCA portal)
  2. Relaxation in time gap between two consecutive meetings
  3. Deferment of applicability of Companies (Auditor's Report) Order, 2020 to FY 2020-21
  4. Relaxation from holding mandatory meeting of Independent Directors
  5. Relaxation in timeline for creating deposit repayment reserve
  6. Relaxation in making investment for redemption of debenture
  7. Relaxation in filing application for Certificate of Commencement of Business for newly incorporated companies
  8. Relaxation in residency status of resident director
However, all the above relaxations came with a deadline of September 30, 2020. It was clear from the circular that beyond September 30, 2020 these relaxations shall not be effective unless extended by the government. Simultaneously, the govt issued various circulars / amendments to Rules, to give effect to these relaxations. 

Today in our quick read blog (No. 08/2020-21), we intend to break the rounds of discussion regarding the moratorium on ROC filings at MCA portal. It has been observed that various stakeholders are seeking extension of the moratorium period from Ministry of Corporate Affairs (MCA) for filing various forms, documents, statements, returns, etc. with delay to save the burden of bearing any additional fee. To clarify the position here, it is important to understand that the relaxations were supposed to come into effect with their respective circular / amendments to Rule, etc. Originally, the moratorium was given effect vide General Circular No. 12/2020 dated March 30, 2020 which brought into effect the "Companies Fresh Start Scheme 2020" (CFSS 2020) and to support this, one may refer to the language of General Circular No.11/2020 which reads as follows:
No additional fees shall be charged for late filing during a moratorium period from 01st April to 30th September 2020, in respect of any document, return, statement etc., required to be filed in the MCA-21 Registry, irrespective of its due date, which will not only reduce the compliance burden, including financial burden of companies/ LLPs at large, but also enable long-standing non-compliant companies/ LLPs to make a 'fresh start'. The Circulars specifying detailed requirements in this regard are being issued separately. [Emphasis supplied]

The circular clearly stated that the moratorium is not only for giving relaxation from additional fee on late filing during the moratorium period but also a chance for the non-compliant entities (companies & LLPs) to make a "fresh start". Accordingly, the CFSS 2020 was announced to give effect to this relaxation. One must note that the mandatory condition to avail benefit under CFSS 2020 was to file Form CFSS within 6 months from the end of CFSS 2020. This scheme also provided immunity to users availing it against the delayed filings, which otherwise would not be available due to the provisions of Section 403 of the Companies Act, 2013. Once the deadline of circular was lapsed i.e. Sep 30, 2020, stakeholders started making representations seeking extension of moratorium and other relaxations made in the General Circular No. 11/ 2020 dated March 24, 2020. The government considered the situation caused due to COVID-19 pandemic and extended few relaxations vide separate circulars, including the General Circular No. 12/2020 vide General Circular No. 30/2020 dated September 28, 2020. 

Note - Similar to CFSS 2020, there is LLP Settlement Scheme, which due to similarity is not explained separately in this post. 

Since, there was no circular for extending the relaxations provided under General Circular No. 11/2020, stakeholders believed that moratorium has ended on delayed filings. However, this is not the true picture. Moratorium on ROC late filing stands extended up to December 31, 2020 vide General Circular No. 30/2020 dated September 28, 2020. Accordingly, through this post, the following is clarified for benefit of stakeholders:

  1. Moratorium on ROC filings stand extended up to December 31, 2020 
  2. Form CFSS is mandatory for all delayed filings during moratorium period i.e. all forms filed with even delay of 1 day, up to December 31, 2020, are mandatorily required to be reported to MCA in Form CFSS
  3. MCA portal is not levying additional fee on delayed filings for the same reason as CFSS 2020 stands extended thereby extending the moratorium
  4. List of forms (for companies and LLPs) eligible for delayed filings under CFSS can be viewed at http://www.mca.gov.in/Ministry/pdf/CFSS2020_02042020.pdf 
  5. There will be no separate circular issued for extension of moratorium unlike General Circular No. 11/2020 as General Circular No. 30/2020 is already in place till December 31, 2020. 


Comments

Post a Comment

Popular posts from this blog

Mediation Process under Consumer Protection Act 2019

Corporate India Blog - Mediation Process under Consumer Protection Act 2019 Today in our quick read blog (No. 06/2020-21), we continue to present an outlook on the Consumer Protection Act, 2019 (‘Act’ or ‘Act 2019’) which has come into force from July 20, 2020 (except the sections yet to be notified) thereby repealing the erstwhile Consumer Protection Act 1986. Our quick blog will feature this Act in phased manner for next few days. We have covered some portions of this Act in our previous blogs and today our emphasis is on the new established concept of “mediation” under this Act: Mediation:  It means “the process by which a mediator mediates the consumer disputes”. As short as it is, the definition, being introduced for the first time in the Act 2019 (as against Consumer Protection Act 1986) does not dwell into the depth of what the term stands for. It simply specifies it to be a process to resolve consumer disputes. Section 79 though seem to describe this process as i...
Read More »

E-Commerce Rules Under Consumer Protection Act 2019

Corporate India Blog - E-Commerce Rules Under Consumer Protection Act 2019 Today in our quick read blog (No. 07/2020-21), we continue to present an outlook on the Consumer Protection Act, 2019 (‘Act’ or ‘Act 2019’) which has come into force from July 20, 2020, thereby repealing the erstwhile Consumer Protection Act 1986. Our quick blog will feature this Act in phased manner for next few days. We have covered some portions of this Act in our previous blogs and today our emphasis is on the e-commerce transaction mechanism, which have been introduced under this Act: E-commerce has been defined in the Act 2019, which should have been defined long back when we started to move towards a digital economy in mid 2000. Under the Act 2019 it means buying or selling of goods or services including digital products over digital or electronic network. It is clear that this definition has been drafted with open ends to cover any and every good or service, which may possess the component of digital...
Read More »

Advertisment under Consumer Protection Act 2019

Corporate India Blog - Advertisment under Consumer Protection Act 2019 Today in our quick read blog (No. 04/2020-21), we continue to present an outlook on The Consumer Protection Act, 2019 (‘Act’ or ‘Act 2019’) which has come into force from July 20, 2020 (except the sections yet to be notified) thereby repealing the erstwhile Consumer Protection Act 1986. Our quick blog will feature this Act in phased manner for next few days. We have covered key highlights of the Act in our previous blog and today our emphasis is on the new definition of the term “Advertisement” introduced in the Act. Advertisement: From being used only 4-5 times in the previous law, this word has found a whole new meaning and emphasis under the Act 2019 with a separate definition. It means “any audio or visual publicity, representation, endorsement or pronouncement by means of light, sound, smoke, gas, print, electronic media, internet or website and includes any notice, circular, label, wrapper, invoice or such ...
Read More »

Overview of POSH Act 2013

Corporate India Blog - Overview of POSH Act 2013 Today in our quick blog (No. 01/2020–21) we have presented an outlook on Prevention of Sexual Harassment at Workplace. The provisions are detailed in the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act). The POSH Act particularly aims to reduce and minimize incidents of sexual harassment at workplace against women or men, both. It’s applicable to all office premises, households, etc. where 10 or more employees are engaged. The provisions also cover places where any person travels for work related matters. The primary requirements for compliance are:- setup Internal Complaints Committee (ICC) in the organisation with mandatory expert external member impart frequennt training for awareness of staff members and ICC members annual reporting to District Officer under the POSH Act 2013 and in Board’s Report prepared under the Companies Act 2013 The employer is responsible to organise frequent...
Read More »

Contact Us

Name

Email *

Message *