Asia Pacific

Relaxation Schemes for Companies and Limited Liability Partnerships

In furtherance of its previous corporate governance reliefs, the Ministry of Corporate Affairs (“MCA”) has introduced the Companies Fresh Start Scheme, 2020 (“CFS Scheme”) and amended the LLP Settlement Scheme, 2020 vide its circular dated March 30, 2020 (“LLP Modified Scheme”) to allow defaulting companies and limited liability partnerships (“LLPs”) an opportunity to file belated documents, returns etc. without charging of additional fees with respect to the delay in filing and grant immunity from prosecution with respect to such delay.

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Ministry of Corporate Affairs notifies Companies Fresh Start Scheme, 2020

The Ministry of Corporate Affairs (“MCA”) vide its circular dated 30th March 2020 has issued “Companies Fresh Start Scheme, 2020” (“CFSS 2020”) and revised the “LLP Settlement Scheme, 2020” (“LLP Scheme 2020”) to promote defaulting companies/LLPs to make a fresh start on a clean slate and waive the additional fees for delayed filings by the companies/LLPs with the Registrar of Companies (“ROC”) during the currency of the Schemes i.e. from 1st April 2020 to 30th September 2020. Both the schemes incentivize compliance and reduce compliance burden during the unprecedented public health situation caused by the outbreak of COVID-19.

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Amendment in CIRP Regulations amid Covid-19 lockdown

In a move aimed at smooth resolution of insolvent firms, 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 March 29, 2020.

Due to the declaration of 21 days lockdown by the Government of India with effect from 25th March, 2020 as a measure to contain the spread of Covid-19, it has become extremely hard for the 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 nationwide lockdown.

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Reserve Bank of India Press Conference – Financial relief measures amid Covid-19 pandemic

The Reserve Bank of India (“RBI”) Governor Shri. Shaktikanta Das, during the press conference today, announced various measures to increase liquidity and ease banking regulations during the challenging times and to safeguard country’s economy from the impact of Covid-19 pandemic related lockdowns.

The key highlights of the announcements made are as follows:

  • The Monetary Policy Committee reduced the repo rate by 75 basis points and reverse repo rate by 90 basis points.
  • The RBI will conduct auctions of Targeted longer-term refinancing operations of up to three-year tenor of appropriate sizes for a total amount up to Rs. 1 lakh crore at a floating rate, linked to policy repo rate.
  • The cash reserve ratio of all banks to be reduced by 100 basis points to 3 percent beginning March 28th, 2020 for a year. This cut down will release liquidity of Rs. 1,37,000 crores across the banking system.
  • The Marginal Standing Facility (MSR) raised from 2 percent of Statutory Liquidity Ratio (SLR) to 3 percent with immediate effect and shall be applicable up to June 30th, 2020.
  • The RBI Governor declared that the above liquidity measures will inject liquidity of Rs 3.74 lakh crores to the Indian economic system.
  • All lending institutions and banks are being permitted to allow a moratorium of three months on repayment of installments for term loans outstanding as on March 1st, 2020.
  • The lending institutions also permitted to allow deferment of three months on payment of interest w.r.t all such working capital facilities outstanding as of March 1st, 2020.
  • The RBI Governor stated that moratorium on term loans and deferment of interest payment will not result in asset classification downgrade.
  • Further deferring implementation of last tranche of 0.625 percent of capital conservation buffer to September 30th, 2020.
  • The banks in India that operate IFSC banking units allowed to participate in offshore INR NDF market w.e.f. June 1st, 2020.
The RBI Governor further stated that the projections of growth and inflation as the outlook are heavily dependent on the spread and containment of the virus. He further said that RBI will continue to remain vigilant and take whatever steps needed to mitigate the economic impact of Covid-19 and maintain financial stability in the country.
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Relief for EPFO subscribers amid COVID-19 lockdown

On 26th March 2020, Union Finance Minister Ms. Nirmala Sitharaman while unveiling a comprehensive relief package amounting to INR 1.7 lakh crores in a bid to cushion the low-income group and marginalized people from the impact of the pandemic Covid-19 lockdown and its consequential economic disruption, also announced some relief to workers and employers in the organized sector.
Under the package, the Union Government will pay both employer and employee’s contribution (12 percent each), put together 24 percent, towards the Employee Provident Fund (EPF) for the next 3 (three) months. However, the move will benefit and cover only those establishments having upto 100 employees, of which not less than 90 percent earns less than INR 15,000/- monthly.
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LEGAL AND REGULATORY FRAMEWORK FOR DIGITAL HEALTH – TELEMEDICINE PRACTICE GUIDELINES

In a significant move, the Ministry of Health and Family Welfare (“MoHFW”) on March 25, 2020 has issued the Telemedicine Practice Guidelines (“Guidelines”) for enabling Registered Medical Practitioners (“RMPs”) to provide healthcare using telemedicine. As per the Guidelines, ‘telemedicine’ is the delivery of health care services, where distance is a critical factor, by all the healthcare professionals using information and communication technologies for the exchange of valid information for diagnosis, treatment and prevention of disease and injuries, research and evaluation, all in the interests of advancing the health of individuals and their communities.

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Update on Measures Taken by Government Departments in view of Covid-19 Pandemic

Restriction on Collection of Fees by Schools in Uttarakhand:

Uttarakhand Education Department has released a circular on March 25, 2020 restricting all CBSE, ICSE and other boards affiliated aided and un-aided schools within Uttarakhand from collection of fees till re-opening of the schools. All schools within Uttarakhand have been directed not to force the parents for immediate deposit of the fees in view of the ongoing lockdown on account of the Covid-19 pandemic. The fees shall be collected only upon re-opening of the schools.

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Corporate Governance Reliefs announced in view of COVID-19

The Union Finance & Corporate Affairs Minister, Government of India, Ms. Niramla Sitharaman, in her interactions with the press yesterday, i.e., on March 24, 2020, has announced multiple relaxations to statutory and regulatory compliances under various legislations viz., the Companies Act, 2013 (“CA2013”), Limited Liability Partnership Act, 2008 (“LLP Act”), Insolvency and Bankruptcy Code, 2016 (“IBC”), Income Tax Act, 1961, the Goods and Services Tax legislations, Customs Act, 1962 etc. The complete press release vis-à-vis all measures announced can be accessed at http://pib.nic.in/newsite/PrintRelease.aspx?relid=200639.

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Highlights of Finance Minister’s Press Conference: Reliefs during COVID-19 outbreak

In the midst of the shutdown of businesses all over India to contain the spread of the highly contagious Covid-19 infection, Finance Minister Smt. Nirmala Sitharaman today addressed a press conference on various statutory and regulatory compliance issues and announced a slew of measures for providing relief amid the pandemic outbreak.

The brief highlights of the announcements made by the Finance Minister:

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Time to Protect Indian Businesses from Insolvency

The medium to long term financial effects of Coronavirus are yet to unfold, but the magnitude is already anticipated to be huge. Many countries across the world are announcing financial packages for businesses. India is also on the track to take a decision on relief packages.

With widespread lockdowns, the coming months are expected to witness a series of defaults by many viable businesses, and in this situation, we need to protect viable Indian businesses from landing up in our bankruptcy tribunals, for no fault of their promoters.

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