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.
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.
The Personal Data Protection Bill, 2019 (“PDP Bill”), which was presented before the lower house of the Indian Parliament on December 11, 2019, seeks to provide for the protection of personal data of individuals and establish a Data Protection Authority. The PDP Bill has been referred to a joint select committee of both the houses of the Indian Parliament, which is expected to submit its report in early 2020. Accordingly, there may be changes to the PDP Bill based on the recommendations of the joint select committee. Once enacted, the PDP Bill will replace Section 43 of the Information Technology Act, 2000 and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 and prevail over any other inconsistent laws in this regard (e.g., any sector-specific laws). This note provides an overview of the PDP Bill
Directors of a company in financial difficulty should be aware that their conduct may be subject to close scrutiny if the company is subject to insolvency proceedings under the Insolvency and Bankruptcy Code, 2016, as amended. The directors of such companies should take all steps to ensure that the company continues as a going concern. This is relevant as courts have held that unless all measures have been taken to revive a company, the making of a winding-up order may not be in the best interests of creditors, and going concern values may result in higher repayments to the creditors. In this regard, directors of a company in financial difficulty should be aware that their conduct may be subject to close scrutiny if the company falls into insolvency and such directors should be able to defend their actions provided that they were made in good faith.
Investors or other stakeholders routinely participate in the governance of an investee entity through nominees, often appointing a nominee as a director to safeguard its interests through the exercise of a veto or an affirmative vote (that is the right to approve or reject an act or resolution concerning the business and governance of the investee company).
The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (Insider Trading Regulations) require listed companies to use a trading window for monitoring trades by designated persons and their immediate relatives. The compliance officer is responsible for closing the trading window under certain circumstances when designated persons are reasonably expected to be in possession of unpublished price sensitive information.
The Securities and Exchange Board of India (SEBI) faces numerous challenges in investigating and determining insider trading violations. Lack of direct or conclusive evidence of violations is a key challenge in most cases. On 10 June 2019, SEBI issued a discussion paper on a proposed informant mechanism under which whistleblowers will be rewarded for reporting instances of insider trading.
The roles of various gatekeepers of corporate governance, such as auditors, independent directors and credit rating agencies, has increasingly come under scrutiny as a response to the various financial scandals that shook corporate India – from Satyam to IL&FS, and more recently, in the case of the auditor resigning from Reliance Capital.
The Securities and Exchange Board of India (SEBI) recently issued a consultation paper seeking public comments on a proposed regulatory regime for issuance of equity shares with differential voting rights (DVRs) by listed and to-be-listed companies in India.
Recent shareholder activism and regulatory action have focused attention on the issue of executive compensation in India. The Companies Act, 2013 (act), restricts the total managerial remuneration payable by a public company to its directors and managers in a financial year to no more than 11% of its net profits for that financial year.