MCA’s New Rule to contain the spread of COVID-19

As we all are aware of the Novel Coronavirus i.e. COVID-19 which has affected over 110 Countries in the world, and has affected India in large. Due to this the public health as well as the economy of the country is getting affected. The Ministry of Corporate Affairs in order to deal with this situation has implemented a strategic policy decision of social distancing, which is most crucial for reducing the rate and extent of the disease transmission at the community level.

MCA’s New Rule to contain the spread of COVID-19

To whom is this applicable?

The Ministry of Corporate Affairs has asked every company irrespective of whether that company is a public company or private company or small company as well as every LLP to implement the policy of ‘work from home’ in their Companies/LLP. The Ministry of Corporate Affairs has implemented a form CAR(Company Affirmation of Readiness towards COVID-19) wherein every Companies/LLPs need to file their Work from Home Policy which will be available on the MCA website from 23rd March 2020.

So what does the rule say?

According to the section 173(2) of the Companies Act 2013, read with rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014, the following matters shall not be dealt with in any meeting held through video conferencing or other audio-visual means-

(i) the approval of the annual financial statements;

(ii) the approval of the Board’s report;

(iii) the approval of the prospectus;

(iv) the Audit Committee Meetings for 2[consideration of financial statement including consolidated financial statement if any, to be approved by the Board under sub-section (1) of section 134 of the Act]; and

(v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.

The Government has decided to relax the requirement of holding Board meetings with the physical presence of directors under section 173 (2) read with rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 for approval of the annual financial statements, Board’s report, etc. Such meetings may till 30th June 2020 be held through video conferencing or other audio-visual means by duly ensuring compliance of Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014.

As most of the employees working in Companies/LLPs are from urban areas and full participation and cooperation will be required by the Companies/LLPs to fully realize the objective of social distancing as a means to contain the spread, morbidity and mortality due to the disease. Due to this the Ministry of Corporate Affairs has advised all companies/LLPs to implement the ‘Work from Home’ policy in their headquarters and field offices to the maximum extent possible, including by conduct of meetings through video conference or other electronic/ telephonic/ computerized means.

What form is required to be filed?

CAR(Company Affirmation of Readiness towards COVID-19) should be filed by an authorized signatory of companies and LLPs concerned.

The form will be available from 23rd March 2020. Once the form is deployed on the MCA website, a LLP/Company can proceed with the Compliance. 

 

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