CORONA RESTRICTION EFFECTING COMPLIANCE


Corona Virus is spreading eliminating mighty economies. It created unprecedented Socio-economical legal issues all over the world. India announced Visa Restrictions vide No.1/Comm/BoI/2020-81 dated 11th March 2020. On a simple reading, this looks draconian but essential. Just thereafter, stock exchange dropped an unprecedented manner. Board meetings cancelled even for companies with a foreigner in the board of Directors. Corporate India needs business plans and legislative support.

The Restrictions

All existing visas, except diplomatic, official, UN/International organisations, employment and project visas, stand suspended till 15th April 2020. This will come into effect from 1200GMT on 13th March 2020 at the port of departure for onward journey to India.

Visa-free travel facility granted to Overseas Citizenship of India (OCI) card-holders shall be kept in abeyance till April 15, 2020. This will come into effect from 1200GMT on 13th March 2020 at the port of departure for onward journey to India.

This means no new entry of directors of foreign nationalities into India on business or employment visa. This impacts businesses a lot.

Visa of all foreign national already in India remains valid and may be extended or converted.

Directors already in India may choose to stay longer during the period. This is quite advisable as all countries may quarantine all incoming travellers up to 14 days even if they are their own citizen. Who wants to be in quarantine and delay reaching home due to it? Better serve India and earn remuneration.

Travel Advisories

Indian travellers presently abroad are advised to avoid non-essential travel. They are hereby informed that they can be quarantined for a minimum period of 14 days on their arrival in India.

All Indian nationals are strongly advised to avoid all non-essential travel abroad. On their return, they can be subject to quarantine for a minimum period of 14 days on their arrival in India.

Certainly, Business travels will be casualties.

The Centre also advised all states and Union territories to invoke provisions of the Epidemic Diseases Act, 1897, which will enable them to enforce advisories as and when needed. This is one of the smallest, draconian and colonial-era law. This was one of the laws which fueled Indian sentiments against the British due to inhumane treatment of plague patients.

Section 2 of the Act states: “When at any time the (state government) is satisfied that (the state) or any part thereof is visited by, or threatened with, an outbreak of any dangerous epidemic disease, the (state government), if (it) thinks that the ordinary provisions of the law for the time being in force are insufficient for the purpose, may take, or require or empower any person to take, such measures and, by public notice, prescribe such temporary regulations to be observed by, the public or by any person or class of persons as (it) shall deem necessary to prevent the outbreak of such disease or the spread thereof, and may determine in what manner and by whom any expenses incurred (including compensation if any) shall be defrayed.”

In a separate order invoking the National Disaster Management Act, 2005, the Ministry of Home Affairs designated Secretary (Health) Preeti Sudan as the nodal authority for coordination, monitoring, preparation and implementation of a national disaster management plan.

The Impact:

According to Section 173 (2) of the Companies Act, 2013, the physical quorum at Board and Audit Committee is required and certain matters cannot be dealt with in by or resolution by circulation or meeting through Video Conferencing such as approval of annual financial statements, board reports, merger, amalgamation etc.

The participation of directors in a meeting of the Board may be either in person or through video conferencing or other audiovisual means, as may be prescribed, which are capable of recording and recognising the participation of the directors and of recording and storing the proceedings of such meetings along with date and time:

Provided that the Central Government may, by notification, specify such matters which shall not be dealt with in a meeting through video conferencing or other audio visual means.

Provided further that where there is quorum in a meeting through the physical presence of directors, any other director may participate through video conferencing or other audiovisual means in such meeting on any matter specified under the first proviso.

In April and May, every company will have its 4th quarterly BM to approve annual financials for the period ended March 31, 2020.

Additionally, many companies have restrictions in their Articles of Association which do permit Board meeting if a particular director is physically present.

Further due to increasing gross fear, directors are avoiding travelling not only abroad but also within India.

The Request

Ministry of Corporate Affairs may immediately relax provisions relating to quorum by permitting video conferencing with foreign directors for the purpose of Board Meetings and also relax the provision requiring a board meeting within 120 days of the earlier meeting.

SEBI may also relax provisions of the SEBI (Listing Obligation and Disclosure Requirement) Regulations – LODR.

  • Aishwarya Mohan Gahrana

Subscribe on WhatsApp; Send a WhatsApp message “Subscribe AishMGhrana” to +91 96503 38103. For Email Subscription use this form –

Enter your email address to follow this blog and receive notifications of new posts by email.

2 responses to “CORONA RESTRICTION EFFECTING COMPLIANCE

  1. G V PANDURANGA GUPTA

    Nature is above all.

    Laws are for our convenience in the interest of Economy of any Nations.

    So, GOI is bound relax many laws to address the present Nature’s fury.

    Like

  2. Pingback: CORONA AMENDMENTS UNDER THE COMPANIES ACT, 2013 | AishMGhrana

No professional query in comments (but in mail). Only academic discussion here. Comments moderated. Sometime, I reply to your mail ID.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.