Welcome to our updates from the world of corporate law and regulation.
COVID-19, a disease originating in Wuhan in China, has impacted almost every corner of the world. India has also been adversely impacted economically and socially, affecting corporates and individuals alike. The Government of India too has reacted, much like many other governments, to contain the spread of COVID 19, by declaring a complete lockdown in the country. To minimise the economic and other hardships, various Government departments have also come out with various relaxations.
The Reserve Bank of India (“RBI”) in its seventh bi-monthly monetary policy statement has announced major relief for both the borrowers as well as the organised lenders. It has permitted financial institutions to reduce the amount of cash that they are expected to reserve with the central bank to 3% of net demand and time liabilities, ensuring sufficient cash flow in the economy. Further, in a circular directed to all financial institutions (including non-banking financial institutions), it has allowed such financial institutions to enhance the ‘drawing power’ of individuals, defer the repayment of all term loans and interest on the same for a period of three months (starting from March 1, 2020 and ending on May 31, 2020). These economic reliefs will only be fruitful if the financial institutions choose to frame board approved policies for implementing such reliefs on the ground level.
The Ministry of Corporate Affairs (“MCA”) has extended the due date for several compliance requirements under the Companies Act, 2013, including the filing of documents with the MCA – 21 registry, the conducting of board meetings, the mandatory independent director’s meeting for the financial year 2019-20, the creation of the deposit repayment reserve, and the declaration of commencement of business of newly incorporated companies. To help the victims of COVID – 19, the MCA has classified any spending on COVID-19 as a permissible Corporate Social Responsibility spending for corporates. It also notified a voluntary Form CAR to be filed for company affirmation of readiness towards COVID-19. The MCA has also allowed the conduct of meetings via video-conferencing or through other means, waiving off the in-person requirement on certain matters until June 30, 2020. It has also amended the Companies (Appointment and Qualification of Directors) Rules, 2014 to exempt individuals (who have served as a director in a listed public company or unlisted company having a turnover of ten crores or more for ten years) from online proficiency test.
Last month, RBI notified guidelines for regulating the business of payment aggregators and payment gateways. These guidelines lay down the minimum capital requirement, governance structure, compliance with RBI’s Know Your Customer (KYC) directions, amongst other compliance requirements. It has also been directing banks and other financial institutions to take measures to minimise the impact of COVID-19. Similar to MCA, the securities regulator – the Securities Exchange Board of India (“SEBI”) has also relaxed certain compliance requirements under the SEBI (Mutual Funds) Regulations, 1996, the SEBI (Infrastructure Investment Trusts) Regulations, 2014, the SEBI (Real estate Investment Trusts) Regulations, 2014, the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Joint Parliamentary Committee has deferred the submission of their report on the Personal Data Protection Bill to next session amidst the current crisis. If the PDP Bill is passed in its current form, it may increase the compliance cost for data-dependent sectors.
The MCA has invited comments on the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2020 and the National Action Plan for Business and Human Rights. The MCA also plans to amend the Companies Act, 2013. Do get in touch with us to know how it may impact you or your organisation.
From the docket
Amidst this outbreak of COVID 19, the Supreme Court of India in a suo motu proceeding has extended the period of limitation under applicable laws of India, for all matters pending before any court or tribunal in India, until further orders.
In New India Assurance v. Hilli Multipurpose Cold Storage, the apex court decided that the time limit for responding to complaints under the Consumer Protection Act, 1986 was mandatory and not directory in nature. It further held that the district forum did not have the power to extend the time beyond 45 days for filing the response to the complaint under the said Act.
In Indian Social Action Forum (INSAF) v. Union of India, the constitutionality of some provisions of the Foreign Contribution (Regulation) Act, 2010 were challenged on the ground that no guidelines were prescribed for exercising of power to declare an organization of political nature. The Supreme Court held that any organization which supports a public cause by resorting to legitimate means of dissent like bandh, hartal etc. cannot be deprived of its legitimate right to receive foreign contribution.
In Joint Labour Commissioner and Registering Officer and Anr v. Kesar Lal, the Supreme Court of India reiterated that a registered beneficiary of a welfare scheme enacted under a statute would qualify as a ‘consumer’ under the Consumer Protection Act, 1986.
These were the updates from India’s corporate legal landscape for the month of March. We hope you enjoyed them and look forward to reading more! If you have any questions, please write to us at firstname.lastname@example.org.
Stay inside! Stay safe!