Navigating The Covid-19 World - Snapshot Of Government Measures

CORPORATE COMPLIANCE & FOREIGN INVESTMENT

• MCA has permitted board/ shareholders' meetings through video-conferencing or other audio-visual means
• MCA relaxed compliances with respect to
• residency requirements for the resident director
  • meetings of the independent directors of a company
  • declaration of commencement of business
  • creation of deposit reserve of maturing deposits
• The time gap between board meetings increased from 120 days to 180 days until 30 September 2020
• Fresh Start Scheme, immunity from non-compliance, waiver of the late filing fee and limited immunity from prosecution for delayed filings announced by MCA
• SEBI announced relaxations with respect to certain compliance requirements for:
  • listed companies
  • InVits, AIFs and FVCI
  • listing of NCDs/ NCRPS/ CPs
  • depository participants/ RTAs
  • trading members/ clearing members
• SEBI introduced guidelines/ amendments with respect to:
  • provision of exit options to dissenting unitholders of REITS and InVits
  • registration requirements of investment advisors
  • an operational framework for transactions in defaulted debt securities
  • creeping acquisitions by promoters and voluntary open offers
  • investment norms for sponsors/ asset management companies under the Mutual Fund Regulations
• SEBI also relaxed norms for preferential issue of shares by companies with stressed assets with additional conditions inter-alia
  • price of equity shares to be based on a look back period of 2 weeks immediately preceding the relevant date
  • allotted shares to be locked-in for 3 years from the last date of the trading approval
• SEBI amended the ICDR Regulations to revise the pricing guidelines for preferential issue of shares by a listed company with certain conditions. The price of these equity shares is to be based on a look back period of 12 weeks and 2 weeks preceding the relevant date. Further, these shares will be subject to a lock-in restriction for 3 years from the date of allotment.
• Foreign Investment from countries that share land borders with India brought under government approval route
• Revised pricing guidelines regarding subscription of shares of a listed company renounced by a resident in favour of non-resident in a rights issue.

EMPLOYMENT LAW

• Social security contributions up to September 2020 by the Central Government to a limited workforce
• Medical Insurance for health workers worth INR 5 million per individual
• Direct cash transfer and food subsidies for poor and migrant workers
• Building and Construction Workers Welfare Fund for relief to construction workers
• Guidelines on resuming operations at workplaces albeit with restrictions based on zones
• SOPs prescribed by various state governments on resuming offices/ plants
• EPF contribution rates reduced to 10% for May, June and July 2020
• Employees permitted to withdraw up to 75% of the non-refundable advance from EPF account or 3 month's basic salary and dearness allowance, whichever is lower
• Extension of timelines for filing of returns under various labour legislations
• Uttar Pradesh and Madhya Pradesh State Governments announced radical labour relaxations to woo investors

DIRECT TAX

• Extended timelines for roll-over relief on capital gains and other investments, statutory compliances (like filing tax returns, issue of notices, passing orders etc), filing of appeals/replies
• The interest rate for delayed payment of withholding tax and certain other taxes reduced to 9% per annum for tax payments up to certain dates with a waiver of penalty and consequential prosecution
• Limited extension for the validity of nil / lower withholding tax certificate in certain cases. Reduced rate of withholding tax on payment to branch offices of foreign companies up to certain dates
• Withholding tax rates for certain payments (made up to 31 March 2021) reduced by 25%
• Procedure for obtaining lower withholding tax rate certificate for FY 2020-21 eased
• The due date for settlement under Direct Tax Dispute Resolution Scheme extended to 31 December 2020
• The due date for exporters in SEZs for commencing production to claim tax exemption extended to 30 September 2020
• 100% tax deduction for donation made to the PM CARES Fund
• Tax residency criteria for stranded individuals relaxed for FY 2019-20
• Speedy disposal of refunds up to INR 500,000 and immediate release of all pending refunds to charitable trusts and non-corporate business and professions

INDIRECT TAX

Goods and Service Tax (GST)

• The due date for filing returns and depositing GST relaxed
• The time limit for filing any reply, appeal, application or furnishing any report, document or statements initially extended unconditionally till 30 June 2020. Thereafter, interest and penalty chargeable at reduced rates on delayed filings.
• The validity of e-way bills extended

Customs

• The online customs clearance system (ICEGATE) made functional round the clock (i.e. 24 hours for all seven days in a week)
• Extension of due dates for various compliances such as filing of reply, appeal, application or furnishing any report, document, return or statement, etc.
• Expedited processing of refund or drawback of customs duties to eligible exporters

Foreign Trade Policy

• Extension of validity of various export promotion schemes
• Exemption from GST on imported raw material and capital goods to specific scheme beneficiaries extended

CORPORATE FINANCE & RESTRUCTURING

• RBI introduced additional time relaxations to FPIs to invest in their committed portfolio size (CPS) as under the voluntary retention route
• RBI permitted lending institutions to (i) allow a moratorium on repayment of term loans; and (ii) defer recovery of interest on working capital facilities
• The regulatory package announced by RBI to permit lending institutions to take specific measures to ease working capital financing sanctioned to its borrowers
• RBI to conduct Targeted Long-Term Repo Operations at the policy repo rate for tenors up to 3 years for a total amount of up to INR 500 billion, to begin with, in tranches of appropriate sizes
• RBI announced:
  • reduction in repo rate under LAF by 40 basis points from 4.40% to 4%
  • reduction in bank rate by 75 basis points from 5.40% to 4.65%
  • reduction in cash reserve ratio by 100 basis points from 4% to 3%
• To ease trade, RBI announced:
  • extension of the realization period of export proceeds from 9 months to 15 months from the date of export
  • extension of time limits for settlement of import payments from 6 months to 12 months from the date of shipment
• RBI granted an extension of the timeline to NBFCs to finalize its unaudited accounts within the prescribed period
• Special liquidity facility for mutual funds of INR 500 billion opened by RBI
• Ministry of Finance announced economic packages to support businesses and micro, small and medium enterprises
• Relief from disclosure requirements for debenture and commercial paper issuances
• The threshold for initiating insolvency increased to INR 10,000,000 from the existing threshold of INR 100,000
• Exemption from IBC proceedings for financial default during the exemption period (from 25 March 2020 to 24 September 2020)
• The lockdown period to be excluded from timelines set out under the IBC for corporate insolvency resolution process and liquidation process

REAL ESTATE

• Extended timelines for statutory compliances and completion of on-going projects by state-level real estate regulatory authorities
• RBI stimulus - eye on the restructuring of loans and adding liquidity, RBI has granted a moratorium on loan repayment
• Maharashtra Government has reduced stamp duty by 1% on real estate contracts for 1 year
• Few government departments (Software Technology Parks of India, MIDC, SEZs) have either waived or deferred lease payments for lessees for a certain time period.
• Municipal Corporations have extended the expiry dates of construction approval

COMPETITION LAW

• Adjournment of oral hearings at the CCI as well as the appellate body (NCLAT)
• Extension of timelines for statutory filings at NCLAT
• Shift to e-filing system for information filing as well as combination notifications
• Pre-filing consultations are being conducted through video conferencing
• Coordinated conduct for increasing efficiencies to be favourably assessed by CCI, if necessary, and proportionate to address concerns during the crisis.

ENERGY & INFRASTRUCTURE

• Delay on account of disruption of supply chains from China and any other country recognised as 'Force Majeure' for the renewable sector
• Liquidity injection for power distribution companies
• Renewable energy generating stations continue to be 'must run' requiring timely payments from distribution companies.
• Extension of time for renewable energy projects equivalent to the lockdown period i.e. 25 March 2020 to 31 May 2020 and additional 30 days for normalization after such lockdown has been granted.
• The developers of renewable energy projects designated by the Ministry of New and Renewable Energy may also pass the benefit of time extension to other stakeholders such as EPC contractors, equipment suppliers and OEMs.
• Major Ports can permit waiver of all penal consequences on a case-to-case basis along with deferment of certain performance obligations under the concession agreement for existing and operational PPP projects.
• For the road sector, the Ministry has granted time extension to the concessionaire/ contractor for complying with obligations under the concession agreement for 3 to 6 months basis site conditions.

Note: The above report has been updated till July 17, 2020.