The ministry also amended the rules regarding the transfer of shares of minority shareholders of a company undergoing a merger or amalgamation, to provide for further checks on intimation and payment to such shareholders.
In another notification, the MCA provided further relief to auditors by pushing back until the coming fiscal, the applicability of the Companies (Auditor’s Reporting) Order (CARO) 2020 on account of disruptions due to the pandemic.
Where earlier, individuals had to take the test within a year from the inclusion of their name in the MCA’s databank of independent directors, the amended rules extended this time frame to two years.
Further, the passing criteria for the test has been reduced to 50% from 60% before, according to a notification on Friday.
The ministry also expanded the eligibility criteria for exemption from taking the test to individuals who served as independent directors or key managerial personnel for three years, from a threshold experience of ten years earlier.
In December last year, the MCA had launched the databank to help firms connect with individuals whose expertise they would need on their boards. The government had set a deadline of three months from then for individuals to register with the databank, which was later twice extended till September 30.
In an amendment to the Companies (Compromises, Arrangements and Amalgamations) Rules on Thursday, the ministry set a two week deadline from the date a company receives payment from the acquiring firm in lieu of shares, to verify the details of minority shareholders.
Further, the company needs to provide such shareholders with a cut-off date by when their shares will be transferred to the acquiring firm, immediately after which payment needs to be made to these shareholders.
The notification also added the definition of ‘corporate actions’ to the rules, which includes any action taken by the company relating to transfer of shares and the benefits accruing on such shares.
Introduced in February this year, the CARO 2020 guidelines were supposed to be applicable from April 1, 2019, that is, for FY20. The move, involving enhanced audit norms, was aimed at curbing corporate scams by introducing more transparency and accountability in the audited financial numbers.
However, as the revised guidelines would require significant changes both on the companies’ and auditors’ side, it was pushed to FY21, in a notification in March.
The latest amendment, on Friday, has pushed the commencement date to April 1, 2021, on account of the pandemic-induced disruptions.