COVID-19: Key Compliances Entrepreneurs Need To Know

Though the government is taking many measures to ease the anxiety and enable businesses to bounce back, there is a widespread anxiety among entrepreneurs on how they should operate their businesses

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The world today is fighting an unprecedented situation. Apart from health, the possible economic impact the situation can result in is at the core of all conversations across the world today. Though the government is taking many measures to ease the anxiety and enable businesses to bounce back, there is widespread anxiety among entrepreneurs on how they should operate their businesses, especially with regards to the key compliances that they need to maintain. The coronavirus crisis has given new relevance to the legal term ‘force majeure’. Some of the key compliances changes that have happened owing to COVID-19 and companies need to adhere to are:

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CAR (Company Affirmation of Readiness towards Covid-19) form

The ministry of corporate affairs on 23 March 2020 issued CAR (Company Affirmation of Readiness towards Covid-19) form. As per the advice, all companies and LLPs registered under the Companies Act are required to report their compliance with all the guidelines issued by the public health authorities (like work from home) using the CAR form. The form is a simple ‘yes/no’ on the adoption of work-from-home policies. The intention of this form is to enable the government of India to collect data in relation to the approach followed by companies/LLPs to enable them to implement further steps to combat the spread of virus.

Relaxation from ESIC & PF Remittance

The Employee State Insurance Corporation on 16 March 2020 had announced that the ESI contribution for February and March 2020 can be filed and paid up to 15 April 2020 and 15 May 2020, respectively, instead of 15 March 2020 and 15 April 2020. Similarly, to ease the financial strain on both employees and employers, the government of India had announced that the EPFO contribution of both—the employer and the employee—for the three months starting wage month from March 2020 shall be paid by the government of India. The benefit can be availed by all establishments who have up to 100 employees and about 90 per cent of which earn less than INR 15,000 per month. The Employee State Insurance Corporation issued a notification on 15 April 2020 announced the extension of the due date to remit the contribution for February 2020 from the first extension of 15 April 2020 to 15 May 2020, further extension of 30 days.

Additional filing fees waived 

The ministry of corporate affairs has also brought out a fresh scheme as per which there will be a moratorium from 1 April 2020 to 30 September 2020 (moratorium period) on levying any late/additional fees upon filings of any returns, statements, documents, etc., by companies or LLPs on the MCA portal irrespective of the due date of such filings. The benefit of this moratorium will be available not only for those forms and returns which are due during the moratorium period but also for those which were already due prior to the moratorium period. The benefit of this relaxation can be availed by existing defaulting companies. This would lead to a reduction of not only the compliance burden but also the financial burden.

Work From Home

The MCA has strongly advised all companies and LLPs to immediately implement a work-from-home policy with respect to their employees until 31 March 2020. The policy to allow employees to work from home wherever doing so is feasible through using technology, conducting the meetings through video conference or any other electronic/telephonic/ computerized mode. Companies or LLP have to equip the employees with the required technology to handle the day to day works from home. The only essential staff of companies falling under essential commodities such as pharma, FMCG (eatables/personal and home care), media, transport, etc., allowed to work in and out from the office with the preventive measures like maintaining the social distance, monitoring the temperature of the employees before entering into office, adequate sanitizer provided to the employees, cleaning the common area with disinfectant cleaners, educating the employees for awareness and more.     

Auditor's Report

The MCA has now postponed the applicability of Companies (Auditor's Report) Order, 2020 (CARO 2020) to the financial year 2020-21. This will significantly reduce the burden on the companies and its auditors to deal with more than 25 additional checks introduced under CARO 2020. 

Declaration of Commencement of Business

The MCA has extended the timeline for newly established companies to comply with Form 20-A to 1 year from 6 months from the date of incorporation

Not to invoke the Industrial Dispute Act, 1947 for layoff, retrenchment or closure, reduce wages

The government of India and the state governments have called upon employers not to terminate or lay off employees. They have also asked the employers to pay wages without any cut during the lockdown period. This is not exclusive to the permanent worker alone. It is applicable to contract laborers and inter-state migrant workers.

In the current COVID-19 lockdown scenario, the relaxations granted by the MCA can be appreciated by the financial burden to bear the cost of the employee on the account of no work-no pay is challenging and debatable. A comprehensive approach with the involvement of all the parties, government, employers and employees will be the need of the hour to successfully come of out of the impact of COVID-19.

Prashant Singh

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Chronicled success of over 21 years + in Diverse Industries like ( FMCG , Telecom , BFSI , E Comm. Alco- beverages , HR Solutions and Retail). Possess an integrated set of competencies that encompass areas related to Sales, Client Servicing , Business Acquisitions & Development , Operational Mgmt. (Direct & Various Distribution Channel). Specialise in New launches , Start -ups and Alliances.

Repeatedly produced sustained business and revenue growth in changing markets with Complete P& L responsibility.

People development n Innovation had been the key in driving input parameters for sustainable business growth.

Exposed to Collaborate & Manage Relationship with Global Partners , Services and Group Cos.