With COVID-19 continuing to spread across India, Indian policymakers are fighting hard to minimize its impact on the economy. In the past three months, the policymakers have introduced several reforms in Indian regulations to boost the economy and ease the burden of enterprises resuming operations in India. Some of the key regulatory changes introduced have been summarized below:
Foreign Direct Investment
- The FDI Policy of India has been recently amended to prevent ‘opportunistic takeovers/acquisitions of Indian companies’ during COVID-19. Under the recent amendment, any direct or indirect foreign investment by a country sharing land borders with India, will require the prior approval of the Government of India (please refer to our previous article for more details). Up until December 2019, China’s cumulative investment in India exceeded US$8 Billion. Many experts are of the opinion that this amendment will hamper the bilateral trade between the two nations going forward.
Corporate Law Measures
- The Indian Ministry of Corporate Affairs (MCA) has relaxed the rules for holding Indian subsidiaries’ board meetings. The MCA has dispensed the requirement of holding physical (in-person) board meetings on matters such as the approval of financial statements, board reports and restructurings, through to June 30th, 2020 and now such meetings can be conducted through video conferences.
- From April 1st, 2020, and in the following next two quarters (i.e. Until September 30th, 2020), the time period to hold mandatory board meetings shall be extended by an additional 60 days. This means that board meetings can now be held with a gap of 180 days.
- The MCA announced that all spending’s incurred by a company in relation to COVID-19 shall be counted towards the Corporate Social Responsibility activity to be compulsorily undertaken by companies having a certain net worth.
- The deadlines in relation to the filing of the tax returns for the financial year 2018-2019 have been extended to the 30th of June 2020.
- The last date for the filing of GST returns for the months of March, April and May 2020 have been extended to the 30th of June 2020.
Employment Law Related Measures
- Over the last few months, the central and state regulators have passed numerous notifications on employment laws in India. The most important of which is the notification of the Ministry of Home Affairs in India dated March 29th Under the notification, all employers were urged not to reduce salaries or terminate employment during the lockdown. However, this notification is currently being challenged in the Supreme Court of India by several employers in India who are finding it hard to stay afloat under the present economic downfall. The decision on this petition would be of paramount importance to employers in India.
Insolvency and Bankruptcy related Measures
- To benefit MSME’s and SME’s, all banks and lending institutions are allowing a 3-month moratorium on payment of installments of loans outstanding on the 1st of March 2020.
- No corporate insolvency or bankruptcy proceedings can be initiated for 6 months under the Insolvency and Bankruptcy Code of India.
Our legal team at D’ Andrea and Partners Legal Counsel is following the changes in the Indian regulations on a daily basis. Please do get in touch at firstname.lastname@example.org if you have any questions or require further clarifications.