Category: Insights

COVID-19: Implications on the Data Protection Framework in India

The outbreak of COVID-19 and its development into a pandemic has led governments across the world to take extraordinary measures to protect their residents. The Central Government and various State Governments in India, along with public-health authorities, not-for-profit organizations and corporates, are collecting, tracking, and using information about individuals to slow down the spread of COVID-19; however, since a large proportion of such information could be categorized as ‘personal data’ or ‘sensitive personal data’ its use is subject to the data protection laws in India. It is, therefore, essential that a balance is struck between an individual’s right to privacy and public interest at large. Separately, as a result of the COVID-19 pandemic, corporates are also required to implement aberrant measures to safeguard their employees and extended workforce. In this regard, the collection of personal data by corporates will need to be undertaken in compliance with the requirements of data protection laws in India.

This note discusses the use of technology platforms by the Government of India to curtail the spread of COVID-19 and the obligations of corporates in India in relation to their employees or business, in each case, in the context of the legal framework for data protection in India.

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COVID-19: Certain Issues to Consider for Listed Indian Companies

While corporations across the globe brace for the full impact of the COVID-19 pandemic on their business, operations and financial results, listed companies need to be mindful of additional compliance requirements and responsibilities. This note discusses certain considerations which are relevant for listed Indian companies in the current COVID-19 scenario in relation to (i) periodic disclosures and reporting; (ii) board and shareholder meetings; (iii) impact on financial results and annual report; (iv) trading when in possession of UPSI and during trading window closure; (v) fund-raising; and (vi) duties of directors. As a practical matter, these considerations will continue to be relevant even in the future while tackling the aftermath of the COVID-19 pandemic or other crisis situations.

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COVID-19 Pandemic: Relief Measures and Restructuring Options in India

In the wake of the COVID-19 pandemic, several corporate borrowers will find themselves in challenging financial circumstances that may require negotiations with their lenders or even full-fledged restructuring. The Reserve Bank of India (RBI) and Indian courts have granted temporary relief measures to offset the strain on borrowers. If required by borrowers or lenders, India offers the following out-of-court and in-court restructuring and enforcement mechanisms: (i) the RBI Framework for Resolution of Stressed Assets (introduced in June 2019); (ii) the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act); and (iii) the Insolvency and Bankruptcy Code, 2016 (IBC). This note sets out such mechanisms and available relief measures. Given that the situation is constantly evolving, borrowers and lenders should remain vigilant about tracking legal and regulatory developments.

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Foreign Direct Investment in India: Impact of Press Note 3 of 2020

On April 17, 2020, Press Note No. 3 (2020 Series) was issued by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India. The Press Note seeks to curb opportunistic takeovers and acquisitions of Indian companies by Chinese investors and companies due to the current COVID-19 pandemic. The Press Note has far-reaching implications on the overall FDI regime. This note analyzes some key considerations arising from the changes introduced by the Press Note, including (i) interpretation of ‘beneficial owner’; (ii) impact on indirect foreign investment; (iii) exercise of warrants and options and schemes of mergers; and (iv) bonus and rights issuances.

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COVID-19 and the Workplace: An Employer’s Perspective

In a significant move, the Government of India implemented a nationwide lockdown in India in a bid to contain the COVID-19 pandemic with effect from March 25, 2020. The lockdown was initially expected to last until April 14, 2020 but has been extended until May 3, 2020. During the lockdown period, all private and commercial establishments are required to be closed down, with certain exceptions. While several employers have been providing work from home facilities to their employees during the lockdown period, due to the uncertainty over the scope of the COVID-19 public health emergency and the impact on the economy, employers are now considering options for saving labour costs for business viability reasons, including by reducing salaries of employees and/or terminating their employment. We discuss these options in the attached note.

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RBI Directions to NBFCs: Change of Shareholding Rule

Non-banking financial companies (NBFCs), as the name suggests, are companies that aren’t licensed to offer the full range of banking services. Instead, they provide a smaller bundle of financial services targeted towards particular groups. In order to provide credit to such groups, NBFCs need to raise capital at frequent intervals. Hence, raising capital is fundamental to the sector’s growth.

The Reserve Bank of India (RBI), India’s central bank, regulates NBFCs. One of the RBI’s most noteworthy rules pertains to the change of management and control of an NBFC. The RBI currently administers this rule through the Non-Banking Financial Companies (Approval of Acquisition or Transfer of Control) Directions, 2015 (NBFC Directions). It has been more than four years since the NBFC Directions came into effect. During this time, NBFCs have faced difficulties, particularly with its Change of Shareholding Rule. This note discusses its shortcomings and proffers a new rule to take its place.

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COVID-19 Pandemic: What to (or not to) do – A Quick Guide for Decision Makers

Following the outbreak of COVID-19 pandemic, the role of directors and senior management in taking appropriate measures, addressing concerns of various stakeholders and ensuring business continuity has become more important than ever. Directors and senior management should not only be cognizant of their duties and responsibilities during these turbulent times but also be mindful of the immediate and long term repercussions of their decisions on their respective businesses.

In recent times, there has been a deluge of orders, guidelines and notifications that have been issued by the Central government, state governments and various regulators in India to guide its citizens and the business corporations through the issues evolving in the course of COVID-19 pandemic. This note briefly sets out the key corporate governance and other related matters that the decisions makers should consider when responding to the COVID-19 pandemic and guiding their businesses through the lockdown and thereafter.

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Impact of COVID-19 on FDI Regimes

In mid-March 2020, German media reported that the United States President had offered to take over CureVac, a German vaccine firm which was working on a vaccine for COVID-19, to secure the vaccine only for the United States – these reports were later denied. Indian media has recently reported that the Chinese central bank now holds more than 1% shareholding in HDFC, India’s largest housing finance company. The COVID-19 pandemic has not only brought healthcare and critical infrastructure into focus from an FDI perspective, but has also weakened companies in other sectors and made them easy targets for creditors and opportunistic buyers.

This note examines the measures taken by certain countries, particularly in Europe, to protect their businesses from being taken over by foreign investors as well as India’s current position on FDI. While India has so far focused on liberalizing the FDI regime, if COVID-19 propels the Indian Government to follow suit, investors can expect introduction of additional restrictions on FDI as well as extended timelines for approval.

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A Review of the Foreign Investment Approval Process in India

With the aim of enhancing “ease of doing business” and “promoting the principle of Maximum Governance and Minimum Government”, the Government of India abolished the Foreign Investment Promotion Board on May 24, 2017. In its place, the relevant administrative ministry/department in consultation with the Department for Promotion of Industry and Internal Trade are now directly responsible for processing applications for foreign direct investment in India in sectors which require prior approval of the Government.

The move was expected to make the process of obtaining FDI approval faster and more efficient. Almost three years after the move, we consider in this note the current framework for FDI approval and areas for improvement.

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Completing an M&A Transaction On-Market – Certain Key Considerations

In case of acquisitions involving listed companies, parties often choose to complete the transaction ‘on-market’, that is, on the floor of the stock exchanges, on account of tax benefits. This note analyses certain key legal considerations in completing such on-market acquisitions, including: (i) considerations for non-FPI foreign acquirers; (ii) the modes through which negotiated transactions can be completed on-market; and (iii) considerations under the takeover regulations when completing acquisitions during the pendency of a mandatory tender offer.

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