Month: March 2020

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SEBI relaxes Filing and Meeting requirements

On 19 March 2020, SEBI issued a circular (SEBI/HO/CFD/CMD1/CIR/P/2020/38) providing relaxations in filing timelines under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”). They are as follows:

Reg no. Nature of filing Frequency Original due date Relaxation period Extended due date
7(3) Compliance certificate on share transfer facility Half yearly
One month from the end of each half of    the financial year		 30 April 2020 1 month 31 May 2020
13(3) Statement of Investor complaints Quarterly
21 days from the end   of each quarter		 21 April 2020 3 weeks 15 May 2020
24A [1] Secretarial Compliance Report Yearly
60 days from the end of the financial year 		 30 May 2020 1 month 30 June 2020
27(2) Corporate Governance Report Quarterly
15 days from the end of the quarter		 15 April 2020 1 month 15 May 2020
31 Shareholding Pattern Quarterly
21 days from the end of the quarter		 21 April 2020 3 weeks 15 May 2020
33 Financial Results Quarterly
45 days from the end of the quarter		 15 May 2020 45 days 30 June 2020
Annual
60 days from the end of Financial Year 		 30 May 2020 1 month 30 June 2020

Regulations 17(2) and 18(2)(a) of the LODR require listed entities to conduct a minimum of 4 board and audit committee meetings each year, with a gap of no more than 120 days between two successive meetings. SEBI relaxed this requirement vide its circular (SEBI/HO/CFD/CMD1/CIR/P/2020/38) stating that although the Board and Audit Committee must meet no less than 4 times each year, listed companies are exempted from the need to observe the stipulated time lapse of 120 days between 2 successive meetings. This concession applies only to meetings that are to be held between 01 December 2019 and 30 June 2020.

[1] Read with circular No CIR/CFD/CMD1/27/2019 dated 08 February 2019

Corporate Expenditure on COVID-19 to count as eligible CSR Expenditure

As regulators across India grapple with the impact of COVID-19, amendments and relaxations are announced constantly. On 23 March 2020, the Ministry of Corporate Affairs (“MCA”), announced that corporate expenditure on fighting COVID-19 will constitute eligible expenditure towards corporate social responsibility (CSR).

CSR is the obligation laid on companies requiring them to spend a portion of their income in giving back to the society in which they prosper. Every company having:

  • a net worth of INR 500,00,00,000 (Indian Rupees Five Hundred Crores) or more, or

  • turnover of INR 1000,00,00,000 (Indian Rupees One Thousand Crores) or more or

  • a net profit of INR 5,00,00,000 (Indian Rupees Five Crores) or more

during the 3 immediately preceding financial years from the date of reckoning, shall be required to spend at least 2% of its average net profits from the 3 preceding financial years towards CSR.

Such companies are also required to set up a CSR Committee. (It must be noted that draft amendments to the CSR Rules are in the works, although, at the time of writing, no amendments have been notified.)

Schedule VII of the Companies Act, 2013 lists out acceptable areas of CSR expenses. Among these:

  • Schedule VII (i) states that “Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation and making available safe drinking water” are eligible CSR expenses. (emphasis supplied); and

  • Schedule VII (xii) notes that “disaster management, including relief, rehabilitation and reconstruction activities” is a valid CSR expense under the Act.

Further, the MCA, through its General Circular No. 21/2014 dated 18 June 2014, has categorically stated:


“The statutory provision and provisions of CSR Rules, 2014, is to ensure that while activities undertaken in pursuance of the CSR policy must be relatable to Schedule VII of the Companies Act 2013, the entries in the said Schedule VII must be interpreted liberally so as to capture the essence of the subjects enumerated in the said Schedule. The items enlisted in the amended Schedule VII of the Act, are broad-based and are intended to cover a wide range of activities… It is further clarified that CSR activities should be undertaken by the companies in project/ programme mode as referred in Rule 4 (1) of Companies CSR Rules, 2014. One-off events such as marathons/ awards/ charitable contribution/ advertisement/ sponsorship of TV programmes etc. would not be qualified as part of CSR expenditure.”

The MCA clarification dated 23 March 2020, further incentivises corporate expenditure to combat COVID-19.

This is a good step to help prod business communities into contributing generously and to enable the society to avail of additional sources of corporate funds to finance the battle against the pandemic. With paucity in testing kits and their high cost (approx. Indian Rupees 4,500 for a bundle of two tests); the difficulties in screening and testing patients; scarcity of beds, ventilators and other life-saving equipment; the economic burden of both the pandemic and its containment measures (such as lock-downs; need for financial stimulus; reimbursements required for loss of day wage earners etc.) this is a welcome move by the government.

Update

Schedule VII(viii) of the Companies Act, 2013 considers contributions to Central Government funds for socio-economic development and relief as a valid CSR expense. On 28 March 2020, the MCA issued an Office Memorandum notifying that contributions to the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund, or PM CARES Fund, which was established to handle the COVID-19 crisis, shall constitute valid CSR expenditure.

Implications of Data Collection during the Pandemic on Data Principals In India

Documented pandemics have occurred at periodic intervals, often causing widespread devastation to the human community. In the wake of the alarming numbers and visuals of the ongoing COVID-19 pandemic, it becomes important for citizens to stay aware on multiple fronts, including the knowledge of how mass surveillance and access to their personal data by the government can affect their legal rights and privacy.

A preparedness planning exercise certainly requires enhanced surveillance measures to monitor the evolution of the disease. This post aims to analyse the various measures that countries adopt to collect personal data and how they are legitimizing restrictions on freedoms during such an emergency, with special emphasis on the existing and upcoming data laws in India.

Technology, Public health Vs. Personal Privacy – The Emerging Trends

COVID-19 has clearly indicated how several countries, including India have leaned on technology, especially Artificial Intelligence, to monitor and track the data of quarantined and potentially exposed individuals. BlueDot, Infervision, Google’s Verily and the Alibaba AI systems are significant examples of how AI assists in predictions, data collection, surveillance analysis of the official numbers and most importantly, contact tracing.

In China, for example, under the guidance of the e-government office of the State Council General, AI has accelerated the development of a new unified national Health Code for epidemic prevention and control based on the national integrated government service platform “System”. To apply for a code, residents must register with their name, national identification number, and phone number; and answer basic questions, including travel history and health status – all this self-reported information is verified using public data. The system generates green, yellow, or red codes based on these answers. Individuals with a green code can move around the city freely, yellow codes require a seven-day quarantine, and red-coded persons must observe a fourteen-day quarantine.

In EU, the European Data Protection Board has released a statement [1], which was adopted on 19th March 2020, where it was confirmed that safeguarding public health will enjoy the national and/or public security exemption (Articles 6 and 9) of the General Data Protection Regulation (GDPR). The public security exemption refers to the global emergency posed by the pandemic and recognizes that this emergency is a legal condition which may legitimize restrictions of freedoms, provided these restrictions are proportionate and limited to the emergency period.

The Centre for Disease Control and Prevention (CDC) at the United States has a Field Epidemiology Manual[2] which lists out actions that can potentially stop the spread of disease. These include obtaining clinical specimens, including data, from persons affected by an outbreak; obtaining data from healthcare facilities; protecting the privacy of personal information; and implementing and enforcing control measures (such as vaccination, chemoprophylaxis, quarantine), through appropriate actions which could extend to seizure or destruction of private property.

In India, there have been reports of government officials obtaining citizen and reservation data from airlines and the railways to track suspected infections. Some states were using indelible ink to stamp people arriving at airports. The hand stamps include the data that a person must remain under home quarantine and some people have reportedly signed self-declaration forms stating that they would not travel as they could be potential carriers. Thousands of squads have been formed to track people following reports of people skipping quarantine. Use of GPS, travel data, address tracking, facial recognition techniques, etc. are some of the most common mechanisms currently being used in India for data collection and mass surveillance.

Indian law relating to COVID-19 response through Data Processing and Mass Surveillance

The landmark Justice Puttaswamy judgment[3] called the right to privacy a fundamental right, which should be subject to ‘reasonable restrictions’ and demanded a comprehensive data protection policy. The population of India generates a phenomenal volume of health-related information, but, unfortunately, such information remains unprotected as draft laws in this sphere are yet to be enacted and the present laws on data protection in general, and health data privacy in particular, are woefully inadequate.

This raises a critical question- What legal authority do Indian governments have to access health-related personal data and impose restrictions?

Generally, the state is often provided with significant authoritarian powers in circumstances that entail ‘legitimate or public interest’, in order to ensure general well-being and protection of its citizens.

  • The Epidemic Diseases Act 1897, which was enacted to tackle the bubonic plague in Bombay, has been used routinely to contain various diseases in India. It explicitly bestows power on the Central Government to take special measures if the state is threatened with an outbreak of any dangerous epidemic disease, and where the ordinary provisions of the law, for the time being in force, are insufficient for the purpose[4].

  • The Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules (the SPDI Rules), 2011 recognize health information as constituting ‘sensitive personal data’[5] and, thus, regulate its collection, use and disclosure. However, SPDI Rules apply only to a very limited section – “body corporate”. Body Corporate, for the purpose of the SPDI Rules, is defined in Explanation (i) of Section 43A (Compensation for failure to protect data) to mean “any company and includes a firm, sole proprietorship or other association of individuals engaged in commercial or professional activities”. This definition will encompass the for-profit private sector and instrumentality of state engaged in commercial activities (such as BSNL). But, non-profit organizations (whose activities cannot be called “commercial” or “professional” and sovereign state actions (such as Aadhar/ID cards, public health initiatives) will remain outside the scope of the SPDI Rules. This becomes problematic when considering data privacy of health information.

  • The Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002 set the professional standards for medical practice whereby physicians are obliged to protect the confidentiality of patients during all stages of interaction. These Regulations govern all aspects of information provided by the patient to the doctor, including information relating to their personal and domestic lives. It also imposes an obligation on the physician to enlighten the public concerning quarantine regulations and measures for prevention of epidemic and communicable diseases. The only exception to this mandate of confidentiality is if the law requires the revelation of certain information, or if there is a serious and identifiable risk of a notifiable disease to a specific person and/or community[6]. In case of such communicable/notifiable diseases, the concerned public health authorities should be informed immediately.

  • It is evident that the world today has pinned its hopes for salvation from COVID-19 on clinical trials for development of vaccines. Data protection and privacy rights for clinical trials are governed by the Ethical Guidelines for Biomedical Research on Human Subjects [7], under which confidentiality is an important principle. The researcher is obligated to safeguard the data of participants involved in clinical trials. The guidelines mandate that best practices should be adhered to for the collection of data; that researchers should be sensitive to the participants’ needs; and that due informed consent shall be obtained in the prescribed manner[8].

  • Surveillance powers are vested in the Central Government primarily under the Information Technology Procedure and Safeguards for Interception, Monitoring and Decryption of Information) Rules, 2009 which was framed under Section 69 of the Information Technology Act, 2000. Under this Rule, the government authorized ten agencies, including the Intelligence Bureau, the Central Bureau of Investigation, the National Investigation Agency, etc., to conduct surveillance[9]. However, there was backlash against this move as it led people to feel that the country was becoming a surveillance state.

Significant Bills on Data protection in India

(a) Digital Information in Security and Healthcare, 2018 (DISHA)

  • In 2018, the Ministry of Health and Family Welfare published the draft of the “Digital Information in Security and Healthcare, Act – DISHA” and solicited public comments. The Ministry planned to set up a nodal body called the “National Digital Health Authority”, through an Act of Parliament, as a statutory body for the promotion/ adoption of e-health standards, to enforce privacy & security measures for electronic health data, and to regulate storage & exchange of electronic health records.

  • Some of the main objectives of the Act are: (a) to provide for electronic health data privacy, confidentiality, security and standardization; (b) to standardize and regulate the processes related to collection, storing, transmission and use of digital health data; (c) to ensure reliability, data privacy, confidentiality and security of digital health data; and (d) such other incidental or related matters.

  • Under this proposed Act, ‘Sensitive health-related information’ refers to information, that if lost, compromised, or disclosed, could result in substantial harm, embarrassment, inconvenience, violence, discrimination or unfairness to an individual and it includes, but is not limited to, one’s physical or mental health condition and HIV status.

  • The processing of health data by smartphone apps and the like is not permissible, even if consent is in place. DISHA, moreover, goes on to place an express bar on all commercial uses of health data, whether such data is in an identifiable form or has been anonymized.[10]

  • Under DISHA, government departments, through their respective secretaries, may submit request for digital data in de-identified or anonymized form, to the National Electronic Health Authority to improve public health activities and facilitate the early identification and rapid response to public health threats and emergencies, including bio-terror events and infectious disease outbreaks[11].

(b) Personal Data Protection (PDP) Bill, 2019

  • The Personal Data Protection Bill, 2019 is one of the most anticipated, discussed and well-known draft legislation on data protection in India. Despite being nearly 2 years in the making, it is still under scrutiny by a Joint Parliamentary Committee (JPC).

  • In this Bill, ‘Health data’ is categorized as ‘Sensitive Personal Data’ under s.3(36)(2). Similar to the GDPR, this Bill provides for processing of Personal Data without consent, if such processing is necessary to respond to any medical emergency involving a threat to the life of a person or a severe threat to the health of the data principal or any other individual[12]. The Bill also authorizes the State to take any measure to provide medical treatment or health services to any individual during an epidemic, outbreak of disease or any other threat to public health;

  • The Bill provides a plethora of exemptions and powers to the sovereign. , Section 35 is a broad and sweeping section that permits the Central Government to, by order, specify that all or any of the provisions of this Act (now, Bill) shall not apply to any agency of the Government with respect to processing of such personal data, as may be specified in the order, if it is in the interest of sovereignty and integrity of India, security of the State or friendly relations with foreign states . If the Bill had been enacted, as is, prior to the pandemic, these provisions would have given the government carte blanche to obtain and process personal data of individuals.

If one compares DISHA and the PDP Bill 2019, one observes that DISHA contains far more stringent restrictions on the processing of health data than the PDP Bill 2019. These contradictions are problematic. In scenarios like the present COVID-19 pandemic, if India had had conflicting laws, i.e., if both Disha and the PDP Bill had co-existed in their current forms, it does not tax the imagination to envision a scenario where all players, but particularly State players, seek refuge under the PDP Bill, to benefit from its flexibility. State actors, in particular, would certainly seek the benefit of the blanket exemptions under Section 35 of the PDP Bill. However, despite the public consultation process, DISHA was never pursued as a law to be enacted and was never introduced in the Parliament because, by this time, the Srikrishna Committee Report on Data Privacy and the Personal Data Protection Bill, 2018 (predecessor of the PDP Bill, 2019) had taken over the role of addressing all data privacy concerns.

To ensure that the goal of data privacy and protection is met, it is incumbent on the Government to prioritize the enactment of a comprehensive data privacy law in India which will meet the stated objective of safeguarding personal data, including health data.

Conclusion

A pandemic like COVID-19 requires certain restrictions to be placed by the government in order to contain its effects. Scientific experiments, contact tracing, clinical trials, statistical analyses, all require the processing of sensitive health data of individuals. However, privacy is an important and deep routed issue that haunts such data collection and storage.

Like the EU laws require, public authorities should first seek to process location data in an anonymous way (i.e. processing data aggregated in a way that individuals cannot be re-identified), which could enable generating reports on the concentration of mobile devices at a certain location (“cartography”). Personal data protection rules do not apply to data which has been appropriately anonymized. When it is not possible to only process anonymous data, the e-Privacy Directive enables Member States to introduce legislative measures to safeguard public security (Art. 15). If measures allowing for the processing of non-anonymized location data are introduced, a Member State is obliged to put in place adequate safeguards, such as providing individuals of electronic communication services the right to a judicial remedy.

In order to seek a balance of conflicting requirements, it is important that data collectors such as the government address questions relating to use of data collected once the health crisis is over, and make voluntary submissions to data principals that restricting the use of data is the duty of the government. The purpose limitation principle should be adhered to while collecting and processing personal data under such emergencies and a commitment that, while data principals will offer informed consent, by the same token governments must guarantee that this data will not be normalized in order to track people for other ‘public interest’ causes. The balance between protecting public health and the personal privacy of individuals will be a long drawn out battle for rights of data principals and data collectors. However, the State, in a democratic system, must never become the perpetual owner of such data to use it at its will alone.

[1] EDPB official statement available at: https://edpb.europa.eu/sites/edpb/files/files/news/edpb_statement_2020_processingpersonaldataandcovid-19_en.pdf
[2] Available at: https://www.cdc.gov/eis/field-epi-manual/chapters/Legal.html
[3] Justice Puttaswamy and Anr Vs. Union of India Ors {WRIT PETITION (CIVIL) NO 494 OF 2012} ; Full Judgment available at: https://main.sci.gov.in/supremecourt/2012/35071/35071_2012_Judgement_24-Aug-2017.pdf
[4] s.2(1) of the Epidemic Diseases Act
[5] s. 3(iii) of the SPDI Rules.
[6] Chapter 7, reg.7.14 (ii) and 7.14(iii)
[7] Available at : https://www.icmr.nic.in/sites/default/files/guidelines/ICMR_Ethical_Guidelines_2017.pdf
[8] Guideline 3.3.2 of the Ethical Guidelines for Biomedical Research, 2017
[9] The order can be viewed at : http://egazette.nic.in/WriteReadData/2018/194066.pdf
[10] s. 29(5), DISHA: Purposes of collection, storage, transmission and use of digital health data
[11] s.34(3) of the DISHA read with S.29 (1) (d).
[12] s.12 (d) and (e) of the Personal Data Protection Bill 2019

COVID-19 and Section 144

Empty seats with a social distancing

If you follow Indian news, your feed is sure to have been inundated with announcements that one state or another had imposed “Section 144” within its limits. This post seeks to demystify the meaning and import of this section, particularly in the context of its current use.

The COVID-19 pandemic poses a key public health challenge to countries – how does one prevent community transmission? In epidemiology, “community transmission” means that the source of infection can no longer be traced i.e., an infected person can no longer be shown to have a link to the carrier of the disease – the virus is everywhere. The World Health Organisation defines it by saying: “Community transmission is evidenced by the inability to relate confirmed cases through chains of transmission for a large number of cases, or by increasing positive tests through sentinel samples (routine systematic testing of respiratory samples from established laboratories).”[i]

One of the key strategies that has been used to combat the risk of community transmission is Social Distancing – a technique that the Indian governments (Central and State) have been encouraging vociferously. The persistent bugbear, however, has been the sheer reluctance of people to stay at home. In a populous country like India, with her overcrowded public transport, spotty sense of hygiene, penchant for large public gatherings, and a large and vulnerable at-risk population of older people, this is a recipe for disaster. To begin with various state governments announced shutdowns of public gathering places including malls, gyms, shopping centres (other than essential commodities), and wedding halls. However, as the incidence of new cases increases in geometric progression and as global infection rates and fatalities show no signs of abating, several state governments have started imposing Section 144 orders in their states.

Section 144 of India’s Criminal Procedure Code, 1973 is titled “Power to issue order in urgent cases of nuisance or apprehended danger”. It empowers a District Magistrate to pass an order, in writing, to order a person/persons or the public at large to do or refrain from doing anything that could be a “danger to human life, health or safely, or a disturbance of the public tranquility”. An order under this section can remain valid only for 2 months, although the relevant State Government has the power to extend it for a further 6 months. A contravention of this order is punishable under Section 188 of the Indian Penal Code, 1860 (Disobedience to order duly promulgated by public servant) with imprisonment for up to 6 months or a fine up to INR 1,000 or both.

To offer a mere taste of the scale of its use, as of 21 March 2020:

· The union territory of Puducherry has imposed Section 144 across all its districts (i.e. Puducherry, Mahe, Karaikal and Yanam) restricting public gatherings to no more than 4 people. This will not apply to essentials such as groceries and medicines, although vegetable markets will have more restricted hours. The government has appealed to its people to refrain from overcrowding.

· Section 144 has been imposed in South Goa[ii] and North Goa[iii] to restrict large public gatherings. Section 144 was imposed in a staggered manner, covering an increasing number of establishments.[iv] Inter-state supply of non-essentials has also been suspended.

· Noida, an early adopter of Section 144, has extended the order until April 5, banning public gatherings of more than 4 people.

· Erstwhile Jammu and Kashmir (now union territories of Jammu & Kashmir, and Ladakh), no stranger to Section 144 orders, now faces this prohibition to promote public health, instead of as a means to address law and order challenges. Multiple districts in Jammu[v] have imposed restrictions. Anantnag prohibits gatherings of more than 5 people, as do the districts of Budgam, Shopian, Kishtwar and Ramban[vi].

· Section 144 has been imposed in Rajasthan to prevent a gathering of 4 or more people.

· In Mumbai, Section 144 has been against tour operators. Other Maharashtrian regions of Nashik and Nagpur have broader Section 144 orders. Nevertheless, extensive lock-downs have been ordered in Mumbai over the coming weeks.

· Four districts in Himachal Pradesh (Una, Chamba, Hamirpur and Solan) are under Section 144.

· The southern state of Kerala, and one of the epicenters of COVID-19 in India, has imposed stringent prohibitions against public gatherings under the Epidemic Disease Control Act, 1897 and has authorized district magistrates to issue Section 144.

· The Kodagu district of Karnataka also faces a Section 144 which shall remain in place till 31 March 2020.

UPDATE: On 22 March 2020, Section 144 was imposed in two more key locations:

· The National Capital Territory of Delhi – this will be in force till midnight on 31 March 2020. No public gathering of more than 5 people will be permitted. Only half of Delhi’s buses will run during this time. No one is allowed to leave their houses unless for a purpose related to essential services.

· All cities in Maharashtra – only 5% of government employees will come in to work. No public gathering of more than 5 people will be permitted. All forms of public transport will be unavailable. There will be no inter-state buses and international flights will not be permitted to land.

It is easy to see why Section 144 is such a powerful and desirable tool in the fight against SARS-CoV-2 (COVID-19) – State governments can, for their most affected districts, order a limitation of public gathering, delineate working hours for public transport and essential services and, act quickly to mitigate risks in high-risk districts. Above all, this kind of order has a crucial advantage over other lock-down orders (such as those passed under Epidemic Diseases Control Act, 1897), which is that governments can enforce Section 144 orders, through well-established modes of criminal prosecution, against those who disobey them. This can be a huge deterrent for those who would otherwise have been asymptomatic/mildly infected vectors of a deadly disease.

Caution must, however, be exercised to ensure minimal disruption of essentials (such as vegetables, groceries and pharmacies) to prevent panic buying and hoarding. Constant communication of reliable information from authentic government sources, regarding what is and is not prohibited, can serve the dual purpose of educating the public while also fighting the scourge of fake news that inundates social media.

In short, Section 144 orders are unambiguous communications by a state of the seriousness of the public health situation in a district. While these can, and do, pose large economic and social burdens on many, the public health benefits they can usher will outweigh their difficulties. Section 144, to be truly effective, must be coupled with intensive screening and testing, regular follow-up of suspicious cases, stringent enforcement of quarantine for those infected or suspected of infection, constant awareness of hygiene best practices, co-opting of India’s vast private sector healthcare infrastructure to ease the burden on state resources, travel restrictions and coordinated international efforts to find effective means of risk management (including vaccines). These must also be coupled with economic stimulus packages or social security payments to those whose livelihoods and employment will be derailed by such restrictions.

Section 144 is no magic wand, but as part of the arsenal in a holistic approach to fighting COVID-19, it is a robust weapon.

[i] Available at https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200320-sitrep-60-covid-19.pdf?sfvrsn=d2bb4f1f_2 As an example, if people infected in India have no history of international travel and no contact, direct or indirect, can be established between them and any person with such travel history/a confirmed patient, then the community transmission stage will have begun.

[ii] https://www.goa.gov.in/wp-content/uploads/2020/03/Order-Section-144-Collectorate-South.pdf

[iii] https://www.goa.gov.in/wp-content/uploads/2020/03/order-977-collectorate-north.pdf

[iv] https://www.goa.gov.in/covid-19/

[v] https://jk.gov.in/jammukashmir/sites/default/files/Order%20for%20Imposition%20of%20section%20144.pdf

[vi] https://jk.gov.in/jammukashmir/sites/default/files/Order%20for%20Imposition%20of%20section%20144.pdf

Department of Financial Services: Trade Notice Issued to Enable Smooth Functioning of Banking and Insurance Related Operations

A. In view of the COVID-19 situation, the Department of Financial Services issued a trade notice on 12 March 2020 listing the steps it has taken to ease the global disruption caused to banking and insurance related operations. Public Sector Banks (PSBs) have been given the following directions:

i. To immediately set up special cells that will provide comprehensive assistance to industry segments and MSME units affected by COVID-19 and to process requests for assistance with appropriate sensitivity;

ii. Customers should be informed about all documents/procedural requirements upfront, in a one-time effort. Further, banks shall accept self-certifications as far as possible to ensure that procedural deficiencies do not inhibit fund remittance;

iii. Identify opportunities for import substitution/ramping up of production to counteract the inevitable impact of the pandemic. If units require support in this regard, all necessary assistance shall be rendered.

B. Insurance Development Authority of India (IRDAI) has been requested to assess/review the existing insurance products/policies to ensure that the policy covers loss due to abnormal delay in delivery of shipments (where such delay is due to COVID-19) . Additionally, and against this background, IRDAI has been asked to permit necessary modification to the terms and conditions of the policy.

On 16 March 2020, the Reserve Bank of India (RBI) followed suit with its press release on “Operational and Business Continuity Measures”. The RBI directed all banks and financial institutions to do as follows:

i. Design and implement strategies and monitoring mechanisms to control the spread of COVID-19 within the organization – this will include directions to the staff, quarantine policy and travel policies;

ii. Revisit and revise business continuity plans in the context of the current pandemic and ensure that critical services can continue without disruptions;

iii. Instructing, sensitizing and training staff with the latest reliable information;

iv. Encourage and promote a shift to digital banking services among customers.

These two notices show one common purpose – a commitment from regulators to ensure non-disruption of internet and banking services despite the determined spread of COVID-19. Since high-speed (and affordable) internet and a robust banking system are both crucial to any economy, the sustained maintenance of such infrastructure, even during a lock-down, can go a long way towards minimizing the destructive impact of the pandemic on lives and livelihoods.

Preventive Measures Taken by the Government to Contain the Entry and Spread of COVID-19

Hands at the gel bottle to wash hands and squeeze for others to wash hands.

The Indian government has announced a number of preventive measures to minimize the entry and spread of COVID-19. This is an evolving situation and some of these measures are important for businesses to be aware of so that they can take steps to inform their stakeholders accordingly. Boards of Directors are required to be mindful of the following and factor them in while assessing business continuity risks.

  • Evacuation measures: The Indian Government has been evacuating thousands of Indian citizens in batches from various locations since January 2020. These passengers are placed under quarantine for a 14 (fourteen) day period and their health conditions are monitored on a daily basis. Now that there is a moratorium on international flights landing in India, Indians abroad are being asked to extend their stay there, with Indian missions in various countries assisting with alternative accommodation. India has also been requesting various countries to extend the visa duration of Indians abroad, in light of the COVID-19 disaster.

  • Screening, testing and quarantining: Universal screening at all airports in the country has been mandated due to the given rise in coronavirus imports. Screening measures have also been implemented at 12 major seaports and 65 minor seaports and land borders. Quarantine centers have been set-up to isolate passengers showing symptoms of the infection. [Press note, 2 March 2020, Ministry of Health and Family Welfare https://pib.gov.in/PressReleseDetail.aspx?PRID=1604909]

  • Labs testing: The National Institute of Virology, Pune (NIV) and 52 other laboratories under the Indian Council of Medical Research’s (ICMR) Viral Research and Diagnostics Laboratories network are equipped to test samples. NIV has facilities for COVID-19 molecular diagnosis and next-generation sequencing. The labs are equipped with reagents to test up to 25,000 samples. Recently, certain private laboratories have also been approved for testing (see our post on testing guidelines)

  • Travel restrictions: Travel advisories are being issued by the Indian Government to avoid non-essential travel abroad. Self-quarantine was mandated to passengers arriving in India from China, Hong Kong, Republic of Korea, Japan, Italy, Thailand, Singapore, Iran, Malaysia, France, Spain and Germany. India has now imposed a moratorium on all international flights. Indian Railways has suspended all its passenger train operations till 31 March 2020 (with the exception of a handful of suburban trains). Most inter-state road travel is banned. Several states have taken measures to cancel most forms of intra-state public transport in an effort to prevent community transmission.

  • Visa restrictions: From February onward, the e-visas issued to foreign nationals of China were cancelled, followed by cancellation of visas issued to foreign national of various other affected counties such as Japan, South Korea, Iran, Italy. Now, all tourist visas to India stand cancelled.

  • Directing the shut-down of educational institutions, malls, cinema halls, restaurants, bars, pubs and certain other establishments in some States. The Central Government imposed a “Janata Curfew” or voluntary curfew on 22 March 2020. Following this, the Government recommended that the relevant state governments implement shutdowns in the 75 districts that have reported confirmed COVID-19 cases or casualties. While several state governments have reacted immediately with their own shutdown orders, others are expected to make their announcements very shortly. (Stay tuned to this blog for updates on developments)

  • Restriction on public gatherings in various States. (see our post on Section 144)

  • Social Distancing. (see our post on the social distancing advisory)

  • Restriction on functioning of courts in various States. (see our post on the restrictions on court functioning)

Indian Council of Medical Research (ICMR): Testing guidelines for COVID-19

Woman getting a mouth swab to test for coronavirus

The Ministry of Health and Family Welfare and the Indian Council of Medical Research have issued guidelines on 17th March 2020, detailing the testing process for COVID-19 in India.

It is the firm belief of government authorities that India is currently (as of mid-March 2020) in its second stage of COVID-19 transmission. These guidelines have been issued to contain the spread of this infection via community transmission (stage III) by providing free of cost and reliable diagnosis to every person who meets the eligibility for COVID-19 testing.

The guidelines state that the government will provide free testing although the cost of first step screening assay is INR 1500 and additional confirmatory assays is INR 3000. Indian Council of Medical Research (ICMR) has engaged with non-ICMR/MoHFW government laboratories to initiate testing facilities, to expand the number of laboratories testing for COVID-19. This includes CSIR, DBT, DRDO, government medical colleges etc. The testing strategies are being continually reviewed and the advisories issued for testing are being updated regularly (i.e. on 9th March 2020 and on 16th March 2020).

The current testing strategy states the following:

i. All asymptomatic people who have undertaken international travel should stay in home quarantine for 14 days. They should be tested only if they have developed symptoms of COVID-19 like fever, cough, difficulty in breathing etc.

ii. Every person in contact with patients confirmed positive by the laboratory should stay in home quarantine for 14 days. They should be tested only if they have developed symptoms of COVID-19.

iii. Health care workers managing respiratory distress/severe illness should be tested when they develop symptoms of COVID-19.

The guidelines further contained provision for private laboratories planning to initiate testing for COVID-19. It, inter alia, states:

i. Laboratories shall test only those patients whose testing has been prescribed by a qualified physician as per ICMR guidance for testing.

ii. Commercial kits may be used for testing based on the validations conducted by lCMR’s National Institute of Virology (NIV), Pune.

iii. Private testing laboratories shall take all appropriate bio-safety and bio-security precautions while collecting samples and may consider creating a separate collection site for COVID-19 samples.

iv. All the private testing laboratories shall report on real-time basis to the state officials of the Integrated Disease Surveillance Program of the Government of India and to the ICMR headquarters in order to enable them to timely initiate the tracing of contacts and for research activities.

On 21 March 2020, ICMR has permitted private laboratories to carry out testing if certain conditions are satisfied. Private laboratories are not permitted to charge more than INR 4,500 per test.

It is to be hoped that, as the private and public sector join hands, they become a formidable infrastructure in the fight against COVID-19.

Department of Telecommunications – Relaxed Regulations for Work from Home

In the wake of recent COVID-19 related developments across the globe, the Department of Telecommunications (“DoT”) has issued Circular No. 18-5/2015-CS-I (Pt.) dated March 13, 2020 , relaxing certain terms and conditions relating to ‘Work from Home’ (“WFH”) for registered ‘Other Service Providers’ (“OSPs”) for a temporary period.

According to the Circular:

  1. The requirement of seeking prior permission for WFH has been exempted. OSPs are required to give prior intimation to the jurisdictional DoT office before implementing WFH, along with certain details;
  2. The requirement of signing a separate WFH Agreement and furnishing Security Deposit for WFH registration has been temporarily suspended;
  3. OSP’s have been permitted to use secured VPN configuration using ‘Static IP’ by themselves for interconnection between the employee at home and the OSP centre;
  4. These exemptions are effective till April 30, 2020.

Any violations of the WFH facility by an agent or employee of the OSP during the exemption period will leave the OSP liable for a penalty of INR 5,00,000 per location.

This is a welcome move, indicative of regulatory awareness of the on-ground challenges posed by the pandemic. In the days and weeks to come, the DoT will need to increase its vigilance, especially to ensure uninterrupted high-speed internet services across the country.

In that context, the Cellular Operators Association of India (COAI) has written to the government requesting the issue of directions to direct video streaming services (Netflix, Hotstar, Amazon) etc., asking such services to reduce their streaming quality. This is to prevent or minimize strain on network infrastructure. This is not an unusual ask – Netflix has, in the European Union, reduced its streaming quality in an effort to ease network congestion.

As large swathes of India’s laptop-toting population shifts to WFH, the decision taken in this regard will be of enormous importance and impact.

Ministry of Consumer Affairs, Food and Public Distribution: Notification of Masks and Hand Sanitizer as Essential Commodities

The Ministry of Consumer Affairs, Food and Public Distribution (Department of Consumer Affairs) in its order dated 13th March 2020 notified masks (2ply & 3ply surgical masks, N95 masks) & hand sanitizers as essential commodities under the Essential Commodities Act, 1955. This was done to regulate the production, quality, distribution, logistics of masks (2ply & 3ply surgical masks, N95 masks) & hand sanitizers for the effective management of COVID-19. This notification shall remain in force for a period up to 30th June, 2020.

The addition of masks and hand sanitizers in the Schedule of essential commodities will enable the government to protect the interest of the general public as it will be able to control the production, supply and distribution of and trade and commerce in such commodities and their prices and quality standard. The government has also issued an advisory under the Legal Metrology Act. Under the Essential Commodities Act, the states can ask the manufacturers to enhance their production capacity of these commodities and under the Legal Metrology Act the states can ensure sale of both the masks and the sanitizers at MRP.

Section 2A of the Essential Commodities Act, 1955 defines essential commodity to mean the items listed in the Schedule which, inter alia includes drugs, fertilizers, food stuff etc. It further empowers the Central Government to add or remove a commodity from the Schedule in the public interest and for reasons to be specified in the notification published in the Official Gazette amending the Schedule. Any such notification shall also specify that the commodity added to the Schedule shall be deemed to be an essential commodity for a period of up to 6 months. However, the Central Government may extend such period beyond the said 6 months in public interest.

Given the spree of panic buying and hoarding that spread through the public, this is an essential move to ensure that sufficient protective equipment is available for those who need it most – healthcare workers and infected patients.

Ministry of Corporate Affairs: Relaxation of Rules Pertaining to Conduct of Statutory Meetings

In view of the ongoing travel restrictions to restrict the spread of COVID-19, multiple stakeholders, including the Institute of Company Secretaries of India (“ICSI”), had made representations to the Ministry of Corporate Affairs (MCA) requesting a relaxation in the applicability of certain provisions of the Companies Act, 2013 (“Act”) pertaining to the conduct of board and shareholder meetings.

Section 173 of the Act permits directors to attend board meetings through video/audio-visual conference and Section 174 states that attendance through video/audio-visual conference counts as quorum. Rule 3 of the Companies (Meetings of Board and its Powers) Rules, 2014 discusses procedures to be followed if any director elects to attend a board meeting through audio-visual/video conference.

However, Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 states that the following matters shall not be dealt with in any meeting held through audio-visual /video conferencing provided that where there is quorum presence in a meeting through physical presence of directors, any other director may participate conferencing through video or other audio visual means:

(i) the approval of the annual financial statements;

(ii) the approval of the board’s report;

(iii) the approval of the prospectus;

(iv) the audit committee meetings for consideration of financial statement (including consolidated financial statement if any), to be approved by the board; and

(v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover

On 18 March 2020, the MCA issued a notice granting in-principle approval for relaxation of the requirement of physical presence of directors in board meetings until 30 June 2020. On 19 March 2020, the MCA notified the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 – to insert the following in Rule 4:

“(2) For the period beginning from the commencement of the Companies (Meetings of Board and its Powers) Amendment Rules, 2020 and ending on the 30 June 2020, the meetings on matters referred to in sub-rule (1) may be held through video conferencing or other audio visual means in accordance with rule 3”

This is a welcome step indeed and will provide some much needed relief to companies whose directors do not operate out of the same geographic location. However, it must be noted that no relaxation has been made for the conduct of shareholders’ meetings.

Simultaneously, the MCA also issued an “Advisory on Preventive Measures to Contain the spread of COVID-19”. Here, the MCA affirmed that it was examining the Act to ascertain other relaxations that would increase the ease of functioning for companies under the pandemic. The MCA also stated that companies and LLPs are “expected and strongly advised” to institute work from home policies at least until 31 March 2020, to help propagate social distancing as a weapon against the spread of COVID-19. The MCA also recommended the institution of staggered shifts for essential workers.

To adjudge corporate preparedness, the MCA stated that a web-form CAR (Companies Affirmation of Readiness towards COVID-19) would be made available from 23 March 2020 onward. This form will need to be filed by every company and LLP. The format of web-form CAR (available here) requires each company and LLP to self-declare its compliance with COVID-19 guidelines, including the availability of a work-from-home policy.

However, web-form CAR does not appear to need any attachments (such as a copy of a COVID-19 Preparedness Policy or a work from home policy. Further, the consequences of non-compliance have not been outlined. This is probably because, as on date of writing, no binding rule or mandate has been issued by MCA obligating companies and LLPs to institute a work from home policy – it remains a strong suggestion.

As India enters a rigorous lock-down phase across large swathes of the country, it may be necessary for MCA to bolster this requirement, at least for those enterprises where some or all of the employees can work remotely.

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