18/01/2015
Ministry of Corporate Affairs – initiatives and salient achievements in
the last six months
The mandate of the Ministry of Corporate Affairs primarily concerns
administration of the legal framework within which companies registered
in India are to operate along with some other connected matters. Within
this mandate rapid strides have been made in the last six months to improve
the legal framework, simplify procedures and speed up decision-making for
ease of doing business to usher in a healthy environment for investment and
corporate growth.
Attention is invited to the following salient achievements.
1. Enhancing Efficacy of Companies Act, 2013.
After consultations and interactions with business chambers, corporate
and accounts professionals 40 clarifications/elaborations have been
made in the form of circulars. These have removed doubts and
facilitated a smooth implementation of Companies Act, 2013.
Fifteen amendments in various Companies Rules have also carried out
to achieve similar objectives.
In seven instances statutory orders to ‘remove difficulties’ have been
issued for smooth implementation of Companies Act, 2013. These
notifications have received wide appreciation in the corporate world.
To derive greater benefits of outcomes of CSR initiatives, relevant rules
have been amended enabling wider spread of CSR funding; new items
eligible for funding have also been added to provide impetus to
sanitation and environment-related concerns.
2. Providing Greater Clarity in Companies Act, 2013 for Ease of
Doing Business
To make Company Law even more business and growth friendly
amendments have been moved and already approved by the Lok Sabha to:
Bring provisions for minimum capital and company seal at par with
international best practices.
Make approval for related party transactions simpler without unduly
diluting safeguards for minority shareholders.
Provide explicit penalties for failure to honour terms and conditions of
deposits.
To retain the stringent bail provision only for the serious offences of
fraud.
To rationalize procedural aspects to deal with frauds detected during the
course of audit.
3. Simplification for forms and procedures for Easy Compliance
To make compliances and reporting easy and convenient to
companies following major initiatives have been taken:
Four prescribed forms have been discontinued along with substitution
of a simple declaration instead of affidavits for several purposes.
Procedural requirements for foreign nationals to be Directors in Indian
Companies have been drastically reduced.
Arrangements have been completed for integration of Name Availability,
allotment of Direct Identification Number (DIN), Company
Incorporation and Commencement of Business with the unified ebusiness
portal being developed by the Ministry of Industries and
Commerce.
Fee payable by small companies for various services significantly
reduced.
Arrangements to enable Indian companies to follow new Accounting
Standards, i.e. IndAS (compatible with the International Financial
Reporting Standards – IFRS) completed. This will facilitate access for
Indian companies to international capital markets.
4. Dealing with Corporate Delinquency
SFIO completed the investigations in the affairs of 17 so-called ‘Chit Fund
Companies’ unravelling their modus operandi. Apart from prosecuting
such companies for failure of Companies Act, evidence gathered has been
shared with the CBI which is looking into criminal offences of such
companies.
Initial steps have been taken to cause merger of NSEL Limited with its
parent company Financial Technologies (India) Limited to protect the
interest of investors in NSEL on account of its regulatory defaults and the
failure of the holding company to exercise oversight. This is the first ever
initiative.
Investigation in serious cases of online fraud have been completed.
Lessons learnt in this investigation should play a positive role in
checking such frauds.
5. Investor Education initiatives.
1380 programs were conducted in various locations to familiarize
small investors of the opportunities and pitfalls in making investments.
