On 11th March 2020, World Health Organisation, declared Novel Coronavirus Disease (“COVID-19”) outbreak as a pandemic and reiterated the call for countries to take immediate actions and scale up response to treat, detect and reduce its transmission.
The Prime Minister’s Office, Group of Ministers, Ministry of Health and Family Welfare and Cabinet Secretary are closely monitoring the situation. The Government has invoked powers under the Epidemic Diseases Act, 1897 (“ED Act”) to enhance preparedness and response efforts. With COVID-19 being declared a notified disaster, the “State Disaster Response Fund”, constituted under the Disaster Management Act, 2005, is now available with state governments for response measures.
The Indian Prime Minister on 24th March 2020 announced a complete nationwide lockdown for a period of 21 days with effect from 25th March 2020 to contain the pandemic.
Measures Taken/ Directions issued by courts in light of COVID-19 outbreak
The Supreme Court of India (“SC”) issued a circular on 23rd March 2020, to ensure that litigants do not have to come physically to file their petitions/ applications/ suits/ appeals/ all other proceedings in respective Courts/ Tribunals, and directed the following:
- the period of limitation expiring in several cases, irrespective of the limitation prescribed under the general law or special laws whether condonable or not, shall stand extended with effect from 15th March 2020 till further order/s are passed by SC.
- restrict the entries of all the litigants in SC and to hear only extremely urgent matters via video conferencing i.e. through the “Vidyo” application.
- filing of the petition/ miscellaneous applications, to be done through the e-filing mode available on the website of SC.
Similar restrictions have been announced by various courts, including the Bombay High Court, Delhi High Court, Karnataka High Court, NCLT and other tribunals.
The Bombay High Court, vide its order dated 26th March 2020, directed to continue all the interim orders which are operating and are not already continued by some other courts/ authority and ordered that they will remain in force till 30th April 2020, subject to liberty to parties to move for vacating such interim orders only in extreme urgent cases. The order will be effective on all interim orders passed by the High Court’s benches in Mumbai, Aurangabad, Nagpur and Panaji and also all the Courts and Tribunal.
Measures Taken by the State Government
Several States have issued advisories on management and containment of COVID-19, invoking the provisions of the ED Act. TheKarnataka Epidemic Diseases, COVID-19 Regulations, 2020 and Haryana Epidemic Diseases, COVID-19 Regulations, 2020 were notified on March 11th, 2020. The Delhi Epidemic Diseases, COVID-19 Regulations, 2020 was notified on March 12th, 2020 and theMaharashtra COVID-19 Regulations, 2020 was notified on March 14th, 2020 (“COVID-19 Regulations”). The key features of these COVID-19 Regulations are:
- No person/ institution/ organisation shall use any print or electronic media for information regarding COVID-19 without prior permission from the Department of Health and Family Welfare. Any such activity will be treated as a punishable offence under the COVID-19 Regulations.
- If any person, institution or organisation is found violating any provisions of the COVID-19 Regulations, it would be deemed as an offence under Section 188 of the Indian Penal Code, 1860.
- In Delhi, all malls (except grocery, pharmacy and vegetable shops) were closed with effect from 20th March 2020 until further orders.
- In Haryana, by way of an order dated 17th March 2020, the District Magistrate advised that all multinational companies, industries, BPOs and corporate offices situated in Gurugram should allow their employees/ officers to work from home.
- In Maharashtra, all shops and offices, except those providing essential services such as banking, internet, transportation, groceries and medical stores, were closed with effect from 20th March 2020. Thereafter, the Government of Maharashtra notified complete lockdown on 23rd March 2020, except operation of shops/ establishments providing essential goods and services, in the entire State of Maharashtra with immediate effect.
Ministry of Corporate Affairs (“MCA”)
Company Affirmation of Readiness (“CAR”) towards COVID-19 – MCA has introduced an online form with respect to confirmation of readiness to deal with COVID-19 by companies and LLPs. Form CAR has been deployed on 23rd March 2020 and all companies and LLPs are required to report their compliance with all the guidelines issued by the public health authorities (like work from home) using Form CAR i.e. on 23rd March 2020.
Clarification on spending of CSR funds for COVID-19 – MCA has issued a clarification on 23rd March 2020 that any expenditure towards various activities related to COVID-19 shall be considered as an eligible corporate social responsibility expenditure.
Special Measures under Companies Act, 2013 and Limited Liability Partnership Act, 2008 in view of COVID-19 outbreak – The Hon’ble Finance Minister, Ms. Nirmala Sitharaman announced further relaxations (as detailed hereinbelow) on the statutory compliances under the Companies Act 2013 on 24th March 2020 to companies and limited liability partnerships:
- Deferral of Additional Fees – No additional fees shall be charged for late filing during a moratorium period from 1st April to 30th September 2020, in respect of any document, return, statement, etc., required to be filed in the MCA-21 Registry, irrespective of its due date. This will not only reduce the compliance burden, including financial burden of companies/ LLPs at large, but also enable long-standing non-compliant companies/ LLPs to make a “fresh start”.
- Interval between Two Board Meetings – The mandatory requirement of holding meetings of the Board of the companies within the intervals as provided under the Companies Act 2013 (i.e. 120 days) has been extended by a period of 60 days till next two quarters i.e., till 30th September. Accordingly, as a one-time relaxation the gap between two consecutive meetings of the Board may extend to 180 days till the next two quarters, instead of 120 days as required under the Companies Act 2013.
- Applicability of Companies (Auditor’s Report) Order, 2020 – The Companies (Auditor’s Report) Order, 2020 shall be made applicable from the financial year 2020-2021 instead of being applicable from the financial year 2019-2020, as notified earlier.
- Meetings of Independent Directors – As per the Companies Act 2013, the lndependent Directors are required to hold at least one meeting without the attendance of Non-independent directors and members of management. However, for the financial year 2019-20, if the lndependent Directors of a company have not been able to hold such a meeting, the same shall not be viewed as a violation. The lndependent Directors may share their views amongst themselves through telephone or e-mail or any other mode of communication, if they deem it to be necessary.
- Deposits – The requirement under section 73(2)(c) of the Companies Act 2013 for a company to create the deposit repayment reserve of 20% of deposits maturing during the financial year 2020-21 on or before 30th April 2020 shall be allowed to be complied with till 30th June 2020.
- Debentures – The requirement under Rule 18 of the Companies (Share Capital & Debentures) Rules, 2014 to invest or deposit at least 15% of amount of debentures maturing in specified methods of investments or deposits before 30th April 2020, may be complied with till 30th June 2020.
- Timeline for filing of Commencement of Business – Newly incorporated companies are required to file a declaration for Commencement of Business within 180 days of its incorporation under section 10A of the Companies Act 2013. This timeline has been further extended for a period of 180 more days i.e. to file a declaration for Commencement of Business within 1 year of its incorporation.
- Director’s Resident Status – Every company is required to have at least 1 director who has stayed in India for a period of minimum 182 days during a financial year. Non-compliance of this minimum residency under Section 149 of the Companies Act 2013 shall not be treated as a non-compliance for the financial year 2019-20.
The Insolvency and Bankruptcy Board of India (“IBBI”) amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) on 29th March 2020. This was done with an intent to overcome the difficulty being faced by insolvency professionals to continue to conduct the process, for members of committee of creditors to attend the meetings, and for prospective resolution applicants to prepare and submit resolution plans, during the period of lockdown. The IBBI has amended the CIRP Regulations to provide that the period of lockdown imposed by the Central Government due to the COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to the lockdown in relation to a corporate insolvency resolution process. However, this would be subject to the overall time-limit provided in the Insolvency and Bankruptcy Code, 2016.
Department of Telecom (DoT)
DoT has issued a notification dated 13th March 2020 which temporarily liberalises conditions stipulated under the “Terms and Conditions – Other Service Provider (OSP) Category” with respect to “Work From Home” for a period up to 30th April 2020. Exemptions granted pursuant to this notification are:
- The notification specifies that security deposit (furnished in the form of a bank guarantee) and execution of standard-form agreement with DoT is not required up to 30th April 2020.
- Requirement to seek secured VPN from telecom service provider i.e. PPVPN is exempted.
- The Notification clarifies that no prior ‘permission’ from DoT is required for Work from Home facility for employees of entity registered as an OSP with DoT.