YEAR END REVIEW-2007- MINISTRY OF CORPORATE AFFAIRS
The name of the Ministry has been changed from ‘Ministry of Company Affairs’ to the ‘Ministry of Corporate Affairs’ vide Presidential Notification dated May 9, 2007 keeping in view the wide scope and activities of the Ministry and emergence of new business models in the current economic environment in the country. Stabilisation of operations under the MCA21 e-Governance Project leading to efficiency in service delivery, strengthening of compliance management and regulatory functions, amendment in the Competition Act, 2002, steps towards improvement in the physical infrastructure and initiation of the process of establishment of Indian Institute of Corporate Affairs have been the major achievements of the Ministry during 2007.
Initiatives undertaken by the Ministry – Progress achieved
(i) Notification of New Accounting standards
On the basis of recommendations of the National Advisory Committee on Accounting Standards (NACAS), the Accounting Standards have been prescribed under the Companies Act, 1956 through a Notification dated December 7, 2006 for application for accounting year commencing April 1, 2007. The new Accounting Standards would enable the Indian Accounting Standards to converge conforming to International Financial Reporting Standards (IFRs) issued by the International Accounting Standards Board.
(ii) Amendments to the Acts governing the professions of Chartered Accountants, Cost & Works Accountants and the Company Secretaries:
Reform of the legal framework for professional institutes of Chartered Accountants, Cost and Works Accountants, and Company Secretaries took place through amendments enabled in 2006/ 2007 with a view to providing an enabling environment for orderly growth of the professions along with increased accountability in discharge of responsibilities. The amended Acts were implemented through preparation and notification of Rules/ Regulations under the Acts. Councils for the three Institutes were constituted in accordance with the revised statutory provisions.
(iii) Amendments to the Competition Act, 2002
The Competition Act, 2002 was amended in 2007 pursuant to the Report of the Standing Committee of Parliament and keeping in view observations of the Hon’ble Apex Court and the submissions made by the Union of India. The Competition (Amendment) Act, 2007 has been passed by the Parliament and has also received the assent of the President of India. Action is being taken for early operationalsiation of the Competition Commission of India which also constitutes a thrust area of Prime Minister for this Ministry.
(iv) Limited Liability Partnerships Bill.
Keeping in view the need for a new form of body corporate and the vast potential for the growth of the knowledge and service sector in the country, a Bill containing proposals on Limited Liability Partnerships was introduced in the Parliament in December, 2006. The draft Bill has since been examined by the Department related Parliamentary Standing Committee and its Report tabled in the Parliament on 27th November, 2007. The Ministry is now examining the recommendations of the Standing Committee for preparation and introduction of the LLP for consideration and passing by the Parliament.
(v) Comprehensive Revision of Company Law:
Companies Act, 1956 is a 50 year old legal framework having gone through 25 amendments by now. In order to provide a simple, forward looking legal framework that enables the growth of Corporate sector with effective compliance, a massive exercise has been undertaken by the Ministry. It is proposed to retain the substantive law on the statute book, while the procedural aspects are envisaged to be relegated to the rules and regulations under the Act. The draft Bill is proposed to be introduced in the Parliament during the Budget Session, 2008.
(vi) National Company Law Tribunal (NCLT) and NCLAT
NCLT is envisaged to have its principal bench at Delhi and other benches at 15 locations throughout the country, with a total of 62 members, along with the requisite supporting organization staff. Besides, National Company Law Appellate Tribunal (NCLAT) is to be constituted, which will be an appellate body with its bench at Delhi. However, NCLT and NCLAT have not yet been set up on account of legal challenge. The Hon’ble Supreme Court, after hearing the matter has referred it for the consideration of a Constitution Bench.
(vii) Indian Institute of Corporate Affairs (IICA)
It is proposed to set up IICA to serve as a think-tank and to provide knowledge support to the Ministry in order to enable it to respond to the emerging requirements of the present day corporate sector and plan future strategies in a dynamic process of change. Additionally, it is proposed to serve as a capacity building centre for the staff of the Ministry. This is the first Plan Scheme of this Ministry. The scheme involves procurement of land in the NCR and construction of building infrastructure with requisite facilities. The project involves an outlay of Rs. 211 crore over the 11th Plan period.
Service Delivery
(viii) MCA21 Project:
Implemented as a mission mode project of the Government of India under the National e-governance Plan (NeGP), the MCA21 focuses on prompt and efficient service delivery of services. The project is fully operational from all 20 registry locations. During the year 2007, the emphasis has been on stabilization of operations and enhancement/ value addition, standardization of the processes and testing of the system to meet the aspirations of stakeholders amidst an unprecedented growth of the companies from about 30,000 in 1956 to more than 8 lakh at present.
(a) New features under MCA21:
Besides stabilisation of operations, a number of new features have been introduced in the project during 2007, including the following:
· Mandating regular DIN for e-filing from 1.7.2007. Details of Directors of a company can now be viewed on the portal free of charge.
· Implementation of Role-check for authorised signatory of a company and for professionals introduced w.e.f. 1.7.2007 so as to ensure the authenticity of the documents and non-repudiation by the signatory.
· Internet Banking facility from SBI implemented. The number of authorised Bank branches almost doubled from 200 to 399.
· Master Data of about 60,000 companies corrected on request.
· Provision for addendum for hassle-free filing of large size documents (in particular, the Balance-sheets and the Annual Returns).
(b)DIN Allotment facility:
The Director Identification Number (DIN) has been made mandatory for all the existing Directors as well as the future intending Directors. It is a unique identifier for a Director on a company and captures the particulars of his identity and address. This feature is expected to take care of the cases of frauds committed by individual Directors and the phenomena of vanishing companies. Approximately 07 lakh DINs have been issued so far.
(c)Turn around time in service delivery:
There has been a remarkable improvement in service delivery efficiencies. The Ministry intends to reach a level of service delivery of 24 hours within the shortest possible time, in order to match the international service benchmarks. There is a significant improvement in reporting payment realization by the Banks with more than 97% of the statutory payments being reported within T+3 days, and 47% of the payment transactions being made using the on-line system of payment.
Empowering Investors
A number of steps have been taken in the direction of creating Investor Awareness and addressing their grievances:
(ix) Investor Awareness Month
The Ministry, under the aegis of Investor Education Protection Fund (IEPF), organised ‘Investor Awareness Month’ in September 2007 in association with the Institutes of Chartered Accountants and Company Secretaries and Investor Awareness programmes organised at 61 locations across the country. These programmes generated encouraging response from the general public as well as professionals.
(x) www.iepf.gov.in
A new website has been launched on September 27, 2007 with a view to provide online information regarding various activities undertaken under Investor Education Protection Fund and educative information for investors without any charges. It also provides the facility of download of forms for applying for registration and submission of proposals. Besides, the website provides valuable education content on capital markets, instruments of investments, financial literacy, Dos and Don’ts, etc. along with details of NGOs and VOs registered under IEPF and projects supported by IEPF. The website also gives replies to queries on various topics on IEPF.
(xi) www.investorhelpline.in
Sponsored under the IEPF, this website provides an interactive, internet-based service to the investors for assistance in redressal of their grievances. It provides for on-line filing of grievances/ online status to the complainant and reply to each complainant is sent after redressal. Out of the 3690 valid grievances registered till 31 October 2007, 1092 grievances have been settled to the satisfaction of the complainants so far.
(xii) www.watchoutinvestors.com
This website provides free of charge online information about entities and persons indicted by regulators for any economic offences. As on date, information of about 60,000 entities and 27,285 persons indicted by various regulators for economic offences is available on the website.
BY- 68/07
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