Relaxations & Recent Amendments in Companies Act, 2013

Webinar

{ 02/06/2021 }

INDORE CHAPTER OF ICSI

By

CS. DEEPAK AMRUTKAR

Practising Company Secretary (Mumbai)

Cell : 9820529244

Email : csdeepakamrutkar@gmail.com
Relaxation in simple words means some concessions and feeling good.
The role of Company Secretary both in Employment and Practice is
most important and this role and responsibilities are more in view of
frequent amendments in Companies Act, 2013 and rules regulations
made there under from time to time.
Now let us understand various Relaxations and amendments in detail.
Relaxations and amendments are two different concepts. First let us go
through some major amendments in Companies Act, 2013 step by step.
Relaxation and Amendments are two different concepts. Explain.
Major Amendments in Companies Act, 2013 are as under :

(A) Changes with respect to Corporate Social Responsibility (CSR) :

Section 135 of the Companies Act, 2013.
(a) Every entity, covered under sub-rule (1) of Rule 4 of Companies
(Corporate Social Responsibility Policy) Amendment Rules, 2021,
who intends to undertake any CSR activity, shall register itself with the
Central Government by filing the form CSR-1 electronically with the
Registrar, with effect from the 01st day of April 2021.
Provided that the provisions of this sub-rule shall not affect the CSR
projects or programmes approved prior to the 01st day of April 2021.
Five types of entities are covered for registration in Form CSR -1 : Viz

1) Company established under Section 8 of the Companies Act, 2013 with Section 12A and
Section 80G registrations under the Income Tax Act, 1961.

2) Registered Public Trust with Section 12A and Section 80G registrations under the Income
Tax Act, 1961.

3) Company established under Section 8 of the Companies Act, 2013 or Registered Trust or
Registered Society established by the Central Government or State Government.

4) Registered Society with Section 12A and Section 80G registrations under the Income Tax
Act, 1961.

5) Entity established under an Act of Parliament or State Legislature.

If the aforesaid entities are not established by any company or group
of companies, then the entity need to have an established track
record of three years in undertaking similar activities need to be
mentioned in form CSR-1.

Copies of Certificate of Registration of respective entity self attested

by authorized signatory of an entity need to be attached mandatorily.
PAN of an entity self attested by authorized signatory of an entity
needs to be attached mandatorily.
Form CSR-1 need to be digitally signed by following persons:
a) Any one of the Directors of Section 8 Company
b) Any one of trustees of Registered Trust
c) By Chairperson/Secretary in case of Registered Society
d) Authorized Signatory in case of entity established under an Act of Parliament
or State Legislature.
e) A Practising Professional like Chartered Accountant in Practice or a Cost
Accountant in Practice or Company Secretary in Practice.
Once all details of form are correctly filled up and legible attachments are
attached to form like PAN Card and Registration Certificate of an entity, it
will be digitally signed and submitted. The Form is STP mode (Straight to
process mode. When CSR -1 Form is successfully processed, an
acknowledgement of the same is sent to the user in the form of an email to
the email address of the entity.
Further, a digitally signed approval letter along with CSR Registration
number with Format CSRXXXXXXXX where X represents system
generated unique sequential number will be sent to the User as well as the
email address of the entity as mentioned in Form CSR-1 This unique CSR
Registration Number will be quoted everywhere including letterhead of
entity concerned. This will ensure CSR spent will be with authorized and
registered entities with the Ministry of Corporate Affairs.
2) Major Changes in CSR Rules :

If a company is in default in complying with the provisions of sub-section (5) or

sub-section (6) of Section 135 of the Companies Act, 2013 :
●the company shall be liable to a penalty of twice the amount required to be
transferred by the company to the Fund specified in Schedule VII of the Unspent
Corporate Social Responsibility Account or 1 Crore, whichever is less, and
●every officer of the company who is in default shall be liable to a penalty
of 1/10th of the amount required to be transferred by the company to such Fund
specified in Schedule VII, or the Unspent Corporate Social Responsibility
Account, as the case may be, or 2 Lakhs, whichever is less.
Decriminalization by substituting the word fine with penalty.
♦ Earlier, companies could cite their reasons for not complying with the said provisions of
Section 135 in their board meetings and other than an adverse reputational Impact, there
were no penal consequences.
♦ Company having a net worth of INR 500 crore or more, or turnover of INR 1,000 crore or
more or a net profit of INR 5 crore or more are required to shell out at least 2% of their
three-year annual net profit towards CSR activities in a Financial Year and allowed to set
off such excess amount out of their obligation in the succeeding financial years after
complying with the prescribed rules.
♦ New sub-section (9) has been inserted to provide that the requirement of constitution of
CSR Committee shall not be applicable, in case the amount required to be spent on CSR
does not exceed Rs. 50 lakhs and the functions of such committee would be performed by
the board of directors of the company
● Decriminalization of offences being the main highlight of the
amendment. It removed punishment of imprisonment for certain
offences, there are reductions made in fines and penalties that
are liable to be paid.
● Decriminalization of offences means to remove or reduce the
criminal classification or status of crime or offence.
●CSR Includes :

CSR means the activities undertaken by a Company in pursuance of its statutory obligation laid
down in section 135 of the Act in accordance with the provisions contained in Companies (CSR
Policy) Amendment Rules, 2021.
Activities undertaken in pursuance of normal course of business of the company engaged in
research and development activity of new vaccine, drugs and medical devices in their normal
course of business may undertake research and development activity of new vaccine, drugs and
medical devices related to COVID-19 for financial years 2020-21, 2021-22, 2022-23 subject to the
conditions that-
(a)  such research and development activities shall be carried out in collaboration with any of the
institutes or organisations mentioned in item (ix) of Schedule VII to the Act;
(b)  details of such activity shall be disclosed separately in the Annual report on CSR included in
the Board’s Report;
Any activity undertaken by the company outside India for training of Indian sports
personnel representing any State or Union territory at national level or India at international
level;
♦ Engagement of International Organizations for CSR
Designing :
A company may engage international organizations as
defined in Rule 2 of the Rule for designing, monitoring
and evaluation of the CSR projects or programmes as per
its CSR policy as well as for the capacity building of their
own personnel for CSR.
♦  Certification by CFO of Finance head:
Certification by CFO of Finance head:
It is the responsibility of the Board of the Company to monitor the implementation of
ongoing projects and to satisfy itself that the funds of CSR have been utilized for the
approved purposes and the Chief Financial Officer (CFO) or the person responsible for
financial management shall certify to the effect.
Changes in Schedule VII of the Companies Act, 2013
●  In exercise of the powers conferred by sub-section (1) of section 467 of the
Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following further amendment to Schedule VII of the said Act, namely:—
In Schedule VII, item (viii), after the words “Prime Minister’s National Relief
Fund”, the words “or Prime Minister’s Citizen Assistance and Relief in Emergency
Situations Fund (PM CARES Fund)” shall be inserted.
●. Reporting about CSR in Financial Statement

Where the company covered under section 135 of the companies act, the following shall be
disclosed with regard to CSR activities:-
(a) amount required to be spent by the company during the year,
(b) amount of expenditure incurred,
(c) shortfall at the end of the year,
(d) total of previous years shortfall,
(e) reason for shortfall,
(f) nature of CSR activities,
(g) details of related party transactions, e.g., contribution to a trust controlled by the company in
relation to CSR expenditure as per relevant Accounting Standard,
(h) where a provision is made with respect to a liability incurred by entering into a contractual
obligation, the movements in the provision during the year should be shown separately.
(B) Major Change in Definition of Small Company

Meaning of Small Company under Companies Act, 2013 as amended shall read as
follows :
Pursuant to the amendment in the Companies (Specification of Definitions Details) Rules,
2014, a new clause (t) has been inserted in the Rule 2, in sub-rule (1), after clause (s), as
under:-
“(t) For the purposes of sub-clause (i) and sub-clause (ii) of clause (85) of section 2 of the
Act, paid up capital and turnover of the small company shall not exceed rupees two crores
and rupees twenty crores respectively.”
● Paid Up Share Capital is Less than Rupees Two Crores as at 31st March, 2021.
(Earlier Limit : Rs. 50 Lakhs) OR (Maximum Limit Rs. Ten Crores)
● Turnover of Company shall be Less than Rupees Twenty Crores as at 31st March,
2021
● Following Examples will make it clear the definition of a Small Company :

● Example 1 : If the Paid Up Share Capital of the company is Rs. 15 Lakhs and Turnover of
a Company is Rs. 15 Crores as on 31 st March, 2021, then considering the amended
definition, this company is a Small Company. (Form MGT7A needs to be filed, digitally
signed by Director Only) ).

● Example 2 : If the Paid Up Share Capital of the company is Rs. One Crores and Turnover
of a Company is Rs. 25 Crores as on 31 st March, 2021, then considering the amended
definition, this company is not a Small Company. (Form MGT7 needs to be filed, digitally
signed by the Director and a Practising Company Secretary).

● Example 3 : If the Paid Up Share Capital of the company is Rs. Three Crores and
Turnover of a Company is Rs. 15 Crores as on 31 st March, 2021, then considering the
amended definition, this company is not a Small Company. (Form MGT7 needs to be
filed, digitally signed by the Director and a Practising Company Secretary).
● Example 4 : If the Paid Up Share Capital of the company is Rs.
Three Crores and Turnover of a Company is Rs. 35 Crores as on
31st March, 2021, then considering the amended definition, this
company is not a Small Company. (Form MGT7 needs to be filed,
digitally signed by the Director and a Practising Company
Secretary).

● Note that a Company may be a Small Company in One Financial

year and may not be a small company in another financial year
based on criteria mentioned above.
Advantages to a Small Companies are as follows :
● Meetings of the Board of Directors: A small company may hold only two
board meetings in a year instead of fulfilling the requirement of four
meeting for other companies. It has to make sure that at least one Board
Meeting is held in each half of the calendar year and the gap between them
is not less than ninety days.
● Financial Statement: Preparation or including cash flow statement as a
part of its financial statement is not necessary for the small
● Signing of Annual Return: Annual Return of the company can be signed
by the Company Secretary, or where in small company if there is no
company secretary, by a single director of the company.Form MGT 7 A
introduced
● Mandatory rotation of auditors as per Section 139(2) of the Companies Act,
2013: Small companies are exempted from the requirement from mandatory
rotation of statutory auditor as per Section 139(2) of the Act, 2013 (read with Rule
5 of the Companies (Audit and Auditors) Rules, 2014).
● Internal Financial Controls: A small company is not required to report on the
adequacy of the internal financial controls and its operating effectiveness in the
auditor’s report.
● Lesser penalties for Small Companies under Section 446B of the Companies
Act, 2013 : If a small company fails to obey with the provisions of section 92(5),
section 117(2) or section 137(3), such company and officer in default of such
company shall be punishable with fine or imprisonment or both, as the case may be,
which shall not be more than one-half of the fine or imprisonment or fine and
imprisonment, as the case may be, of the minimum or maximum fine or
imprisonment or fine and imprisonment, as the case may be, specified in such
sections.
(C) Major Amendment/Change in Schedule III Of the Companies Act, 2013 are as under :
(FINANCIAL STATEMENTS DISCLOSURES)

In exercise of the powers conferred by sub-section (1) of section 467 of the Companies Act, 2013 (18 of
2013), the Central Government hereby makes the following further amendments in Schedule III to the
said Act with effect from 1st day of April, 2021, namely:-in Summarized Form :
1. Registration of charges or satisfaction with Registrar of Companies (ROC)
Where any charges or satisfaction yet to be registered with ROC beyond the statutory period, details
and reasons thereof shall be disclosed.
2. Compliance with number of layers of companies
Where the company has not complied with the number of layers prescribed under clause (87) of section
2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017, the name and CIN
of the companies beyond the specified layers and the relationship or extent of holding of the company
in such downstream companies shall be disclosed.
3) Following Ratios to be disclosed:-
(a) Current Ratio, (b) Debt-Equity Ratio, (c) Debt Service Coverage Ratio,
(d) Return on Equity Ratio,(e) Inventory turnover ratio, (f) Trade Receivables turnover ratio, (g)
Trade payables turnover ratio ,(h) Net capital turnover ratio, (i) Net profit ratio, (j) Return on
Capital employed, (k) Return on investment.

4) Compliance with approved Scheme(s) of Arrangements

Where the Scheme of Arrangements has been approved by the Competent Authority in
terms of sections 230 to 237 of the Companies Act, 2013, the company shall disclose
that the effect of such Scheme of Arrangements have been accounted for in the books
of account of the Company ‘in accordance with the Scheme’ and ‘in accordance with
accounting standards’ and any deviation in this regard shall be explained.
(5) Details of Crypto Currency or Virtual Currency
Where the Company has traded or invested in Cryptocurrency or Virtual
Currency during the financial year, the following shall be disclosed:-
(i) profit or loss on transactions involving Crypto currency or Virtual
Currency,
(ii) amount of currency held as at the reporting date,
(iii) deposits or advances from any person for the purpose of trading or
investing in CryptoCurrency or virtual currency.
(6) Trade Receivables aging schedule and Trade Payable aging Schedule
(7) Utilisation of Borrowed funds and share premium:
(8) Details of Benami Property held
Where any proceedings have been initiated or pending against the company for holding any
benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and
rules made thereunder, the company shall disclose the following:-
(a) Details of such property,
(b) Amount thereof,
(c) Details of Beneficiaries,
(d) If property is in the books, then reference to the item in the Balance Sheet,
(e) If property is not in the books, then the fact shall be stated with reasons,
(f) Where there are proceedings against the company under this law as an abetter of the
transaction or as the transferor then the details shall be provided.
(g) Nature of proceedings, status of the same and company’s view on the same.
(9) Wilful Defaulter*
Where a company is a declared wilful defaulter by any bank or financial
Institution or other lender, following details shall be given, namely:-
(a) date of declaration as wilful defaulter,
(b) details of defaults (amount and nature of defaults).
*wilful defaulter” here means a person or an issuer who or which is
categorized as a wilful defaulter by any bank or financial institution (as
defined under the Companies Act, 2013) or consortium thereof, in
accordance with the guidelines on wilful defaulters issued by the Reserve
Bank of India.
(10) Relationship with Struck off Companies
Where the company has any transactions with the companies struck off under section
248 of Companies Act, 2013 or section 560 of Companies Act, 1956, the Company
shall disclose the details prescribed.
11) More disclosure of shareholding by Promoters in prescribed Format
12) Reconciliation of the gross and net carrying amounts of each class of assets
13) Disclosure with respect to Loans or Advances granted to promoters, directors,
KMPs and the related parties
14) Reconciliation and reasons of material discrepancies, in quarterly statements
submitted to banks and books of accounts.
OTHER AMENDMENTS /CHANGES
(a) Amendments in Schedule V; Limits prescribed for remuneration
payable to ‘other directors’ in case of no profits.
● In Schedule   V   of   the   Companies   Act,   2013,   in PART   II, under the
heading
● ―REMUNERATION
● (a) in Section I, in the first para, after the words ―managerial person or
persons, the words or other director or directors shall be inserted;
● (b) in Section II
● (i) after the words ―”managerial person”, wherever occurred, the words ―”or
other director” shall be inserted
● (ii) for Table (A):, the following shall be substituted, namely:-
 ● Following explanation shall be inserted at the end, namely:-
● “Explanation.– For the purposes of Section I, Section II and Section III, the term ”or other
director“ shall mean a non-executive director or an independent director”.

(a) Minimum Offer period for Right offer reduced from 15 days to now 7
days.
In the Companies (Share Capital and Debentures) Rules 2014, after rule 12, the following rule shall
inserted, namely:—
“12A.Period for notice under sub-clause (i) of clause (a) of sub-section (1) of sec 62.–
For the purposes of sub-clause (i) of clause (a) of sub-section (1) of section 62, the time period within
which the offer shall be made for acceptance shall be not less than seven days from the date of offer.”.
(b). Companies not to be considered as Listed Companies.
● In the Companies (Specification of definitions details) Rules, 2014, after rule 2, the
following rule shall be inserted, namely:-
● “2A. Companies not to be considered as listed companies:-
● For the purposes of the proviso to clause (52) of section 2 of the Act, the following
classes of companies shall not be considered as listed companies, namely:-
● (a) Public companies which have not listed their equity shares on a recognized stock
exchange but have listed their –
● (i) non-convertible debt securities issued on private placement basis in terms of 
SEBI (Issue and Listing of Debt Securities) Regulations, 2008; or
● (ii) non-convertible redeemable preference shares issued on private placement basis in
terms of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares)
Regulations, 2013; or (iii) both categories of (i) and (ii)
● (b) Private companies which have listed their non-convertible debt
securities on private placement basis on a recognized stock exchange in
terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008;
● (c) Public companies which have not listed their equity shares on a
recognized stock exchange but whose equity shares are listed on a stock
exchange in a jurisdiction as specified in sub-section (3) of section 23
of the Act.”
 Various Relaxations under the Provisions of the Companies Act, 2013 are as under :

● Relaxation in Holding of Board Meeting and Annual General Meetings through Video
Conferencing for Restricted Matters.
● Relaxation in holding Board Meetings beyond 120 days permitted due to COVID 19
Situation.
● Relaxation in holding Annual General Meeting as at 31/03/2020 beyond 30/09/2020, Auto
approval of Extension of time of three months for holding Annual General Meeting
● Relaxation in payment of Additional fees on various forms under CFSS Scheme (Company
Fresh Start Scheme)
● MCA has notified that spending amount for Central Armed Police Forces (CAPF)
and Central Para Military Forces (CPMF) veterans, and their dependents including widows
is covered as CSR activities in Schedule VII of the Act.
● Extension of the last date of filing of Form NFRA-2 : MCA has extended the time limit for
filing of Form NFRA-2 for the reporting period F.Y. 2018-19. The said period will be 270
days from the date of deployment of this form on NFRA website.

● Independent Director —The Companies (Appointment and Qualification of Directors)

Fourth Amendment Rules, 2020

MCA had notified amendment in The Companies (Appointment and Qualification of

Directors) Fourth Amendment Rules, 2020 (“The 4th Amendment Rules, 2020”) and extended
the time limit for inclusion of name of Independent Director in data bank of Independent
Director from “ten months” to “thirteen months” that is till December 31, 2020

● Extension of Relaxation from the mandatory residency requirement of 182 days in a

year by at least one Director in every Company under the Companies Act, 2013 and
LLP Act 2008.
● Relaxation for Non Resident Indians (NRI) to form OPC (One Person
Company in India and further Residence Criteria of NRI in India, 182 days
reduced to 120 days in a Financial year.
● Restriction on conversion of OPC into Private LIMITED Company based on
Turnover and Paid Up Capital Lifted.
● Relaxation with respect to Implementation of CARO (Companies (Auditors
Report) Amendment Order 2020, Now implementation with effect from 1 st
April, 2022.
● MCA notified various forms like SPICE + and other forms for Incorporation
of Company for ease of doing business and faster approvals and single window
approvals like GST, ESIC, PF, PAN, TAN,Bank Account Opening at one go.
● Introduction of Scheme for condonation of delay for
companies restored on Register of Companies between
1st December 2020 to 31st December 2020.
● Relaxation with respect to personal hearing of matters before
NCLT (National Company Law Board Tribunal) and allowed
Video Conferencing mode of meeting and Online Submission of
scan copies of documents to NCLT Office electronically.
● Companies use accounting software with an audit trail of each
transaction.*
In the Companies (Accounts) Rules, 2014,-
Every company which uses accounting software for maintaining its
books of account, shall use only such accounting software which
has a feature of recording audit trail of each and every
transaction, creating an edit log   of each change made in books of
account along with the date when such changes were made and
ensuring that the audit trail cannot be disabled.
*This amendment is effective from 01st April 2022. A Relaxation
● Form INC 35 allows Aadhar based Registration for GST (Goods & Service
Tax Registration)
● Facility for Extension of time for name approval beyond 20 days subject to
payment of additional fees as may be prescribed.
● MCA (Ministry of Corporate Affairs) will be introducing MCA Version 3.0
with effect from 1st October, 2021 with the help of Artificial Intelligence
and Machine Learning Languages and Simulation Process. New MCA
Version allows E-Adjudication, E-Consultation and Compliance
Management Systems for the benefit of Stakeholders.
● Merger or Amalgamation of two or more Start up Companies is allowed
with one or more small companies.
● Waiver of Additional fees for 40 Forms as on date vide MCA
Circular.Various Forms include Form AOC 4, MGT 7, MGT14, MGT 14,
CRA3, ADT 1, DIR 11,INC20A, INC 22 and other Forms for benefit of
Stakeholders : A relaxation
● Director KYC to be done before 29th April, 2021, date extended to 30th
September, 2021. First time KYC to be done on priority basis.

THANK YOU.