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SEBI’s Relaxation to Listed Companies for filing Financials amid Covid-19 and other measures taken by Regulators

Ruchi Gandhi

| Updated: Mar 26, 2020 | Category: Covid-19, Latest News, SEBI

SEBI’s Relaxation to Listed Companies for filing Financials amid Covid-19

Given the magnitude and extent of its spread, the pandemic “Covid-19” is not only causing human suffering but is also leading to major economic disruptions. It has resulted in many restrictions, including free movement of people, thus, adversely affecting businesses and day to day functioning of companies. Keeping this in view, the need for temporary relaxations in compliance requirements for listed entities is given due acknowledgement by SEBI.

To offer relief to listed companies from the challenges posed by Covid-19 outbreak, SEBI has extended the time period for mandatory filing of quarterly and annual financial results by listed companies.

I. Relaxation in filing annual statements:

SEBI has given relaxations from compliance with certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 due to the COVID-19 pandemic. This is effected vide Circular “SEBI/HO/CFD/CMD1/CIR/P/2020/38” dated March 19 2020.

SEBI has provided listed companies 45 more days to file financial results for the quarter ending March 2020 and 30 more days for filing the financial results for the financial year ending March 2020. Now, both quarterly and annual financial statements can be filed by listed companies latest by 30th June 2020. Here is a summary of due dates extended by SEBI for listed companies:

Regulation and filing Due Date Extended Due Date Relaxation Period
Regulation 7(3) relating to half yearly compliance certificate on share transfer facility April 30, 2020 May 31, 2020 1 month
Regulation 13(3)  relating to quarterly statement of Investor complaints April 21, 2020 May 15, 2020  3 weeks
Regulation  24A  read with circular No CIR/CFD/CMD1/27/2019 dated  February  8, 2019 relating to yearly Secretarial  Compliance report May 30, 2020 June 30, 2020 1 month
Regulation 27(2) relating to quarterly Corporate Governance report April 15, 2020 May 15, 2020 1 month
Regulation  31 relating to quarterly Shareholding Pattern April 21, 2020 May 15, 2020 3 weeks
Regulation 33 relating to quarterly Financial Results May 15, 2020 June 30, 2020 45 days
Regulation 33 relating to yearly Financial Results May 30, 2020 June 30, 2020 1 month

II. Relaxation in the time gap between two meetings:

For listed companies, SEBI has also granted some exemptions in the time-gap required between two board meetings and/or audit committee meetings held by them. These exemptions are detailed as under:

Regulation provision of meeting Maximum time gap allowed under provision Relaxation
Regulation 17(2) relating to board of directors’ meetings   Maximum 120 days between two meetings and minimum 4 times in a financial year For meetings held between the period December 1, 2019 to June 30, 2020 – more than 120 days between two meetings is allowed (however, minimum 4 meetings a year is still stipulated)
Regulation 18(2)(a) relating to audit committee meetings Maximum 120 days between two meetings and minimum 4 times in a financial year For meetings held between the period December 1, 2019 to June 30, 2020 – more than 120 days between two meetings is allowed (however, minimum 4 meetings a year is still stipulated)

The official SEBI circular on ‘relaxation to listed companies for filing of financials’ can be accessed from the link below:

Extension of timeline by SEBI for filings

III. Relaxation to REITs and InvITs:

Owing to the problems faced by businesses due to the spread of COVID-19, SEBI has decided to extend the due date for regulatory filings and compliances for REIT and InvIT. For the period ending March 31, 2020, the deadline of all regulatory compliances shall be extended by one month over and above the timelines, prescribed under SEBI (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations) and SEBI (Real Estate Investment Trusts) Regulations, 2014 (REIT Regulations).

The official SEBI circular on ‘relaxation to REITs and InvITs for filing requirements’ can be accessed from the link below:

Relaxation from compliance to REITs and InvITs

Covid-19 Outbreak: Relief Measures Related to Covid-19 Outbreak:.

Other preventive measures taken by Regulatory Authorities

To tackle this public health situation with an unfaltering sincerity, the Ministry of Corporate Affairs requires the Indian corporate sector to play an important role in implementing strategic policy decisions of social distancing. This will result in minimisation of the disease transmission at the community and national level. The Government (MCA), being cognizant of the criticality of this hazardous health condition, is taking a number of preventive measures at its end. Some of these are as given below:

IV. Relaxation of rules in Board meetings:

Amid the spread of COVID-19, the MCA is examining some relaxations to be provided under the Companies Act, 2013. The Ministry of Corporate Affairs has relaxed the rules with respect to Board Meetings and has dispensed with the requirement of holding physical meetings on matters related to approval of financial statements, board’s report, restructuring, etc. up to 30th June, 2020.

There is a statutory 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. Now, such meetings may till 30th June 2020 be held through video conferencing, electronic or other computerised means.

Note: As per Section 173 (2) of the Companies Act, 2013, board meetings with the physical presence of directors are compulsory for matters related to approval of the prospectus, annual financial statements, Board’s report, matters relating to amalgamation, merger, demerger, acquisition and takeover and the Audit Committee meetings.

The official notification on ‘relaxation in board meetings’ can be accessed from the link below:

Companies (Meetings of Board and its Powers) Amendment Rules, 2020

V. Company Affirmation of Readiness towards COVID-19:

Since companies and Limited Liability Partnerships are the major employers in urban areas, they have been strongly advised by the appropriate authorities to implement work from home policy in their headquarters and field offices, as a step towards disaster management. Even with essential staff on duty, staggered timings should be followed in organisations to reduce physical interaction.

Further, in this regard, the Ministry of Corporate Affairs (MCA) has also notified the web-based form ‘CAR’ for companies and LLPs. The form is applicable for all Indian companies/ foreign companies/ LLPs/ Foreign LLPs. This form strives to ensure that greater awareness is generated and, thereby, seeks to record confidence of the corporate sector on the state of its readiness to meet the threat. The form has to be filed by an authorised signatory of LLPs and Companies.

Such web-based form can be filed from anywhere and there is no requirement for Digital Signature Certificate. Moreover, it is deployed on 23rd March 2020 with minimum fields and it doesn’t involve a fee for the filing of the e-form.

The official notification on ‘CAR’ can be accessed from the link below:

Company Affirmation of Readiness towards COVID-19

VI. Eligible CSR activity:

Covid-19 is declared as a notified disaster by the World Health Organisation (WHO) and the Government of India. The Ministry of Corporate Affairs has, therefore, clarified that the spending of CSR funds for COVID-19 shall be considered valid under corporate social responsibility (CSR) activities defined under the Companies Act, 2013. It shall account for eligible CSR activities under the Act.

Note: Schedule VII read with Section 135 of the Companies Act, 2013 stipulates activities which may be included by companies in their Corporate Social Responsibility Policies. They include activities relating to promoting health care including preventive health care and sanitation, and disaster management, including relief, rehabilitation and reconstruction activities.

The official notification on ‘MCA’s clarification on spending of CSR funds’ can be accessed from the link below:

Clarification on the spending of CSR funds for COVID-19

Also, Read: Finance Bill 2020 Passed by Lok Sabha: Checklist of Key Amendments.

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Ruchi Gandhi

A CA together with MBA (Fin) and M Com, she relishes taking interest in insightful writing in the domain of taxation and finance. She has gained experience as a full-time author and has also served an accounting role in industry.

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