In the framework of corporate governance, the Ministry of Corporate Affairs (MCA) continues to focus on bolstering 'ease of compliance' and 'ease of doing business' in the year 2023.
The establishment of Central Processing for Accelerated Corporate Exit (C-PACE) signifies a proactive approach to facilitate swift approvals for companies opting for voluntary closures. Notably, during the year 2023, 1,96,028 companies and LLPs were incorporated, showcasing a robust growth compared to the corresponding period in the previous fiscal year.
In an important development, the amendment to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 empowers Regional Directors (RDs) to expedite merger approvals. The groundbreaking Competition (Amendment) Bill, 2023, passed by both Houses of Parliament and received Presidential assent, introduces pivotal changes, including CCI's approval for transactions over Rs 2,000 crore and a reduced timeline for final orders to 150 days.
The MCA also introduced amendments in key accounting standards with the Companies (Indian Accounting Standards) Amendment Rules, 2023, enhancing disclosure requirements. Additionally, strategic amendments in Companies (Incorporation) Rules, 2014, signify a commitment to minimising bureaucratic hurdles.
Promoting flexibility in corporate procedures through General Circular no. 09/2023, MCA extended timelines for conducting Annual and Extraordinary General Meetings through virtual means. The removal of processing costs in shifting registered offices and enabling such shifts after resolution plan approval under the Insolvency and Bankruptcy Code highlights a pragmatic regulatory environment.
The adoption of Straight Through Process (STP) for additional e-forms eliminates manual intervention, expediting electronic approvals and streamlining operations.
Lastly, the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023, introduce mandatory dematerialisation of shares for larger private companies, aligning regulations with contemporary market trends. These achievements collectively underscore the MCA's commitment to fostering a dynamic, efficient, and responsive corporate ecosystem in India.
Following are some of the major achievements of the Ministry of Corporate Affairs, in 2023:
The processing type of additional e-forms have been changed to STP (Straight through Process) from Non-STP i.e, these forms can be approved electronically without human intervention and hence would lead to 'ease of compliance' and 'ease of doing business'.
Central Processing for Accelerated Corporate Exit (C-PACE) has been operationalised w.e.f. 01.05.23 pursuant to Union Budget announcement in 2022, as a measure to provide expeditious approval of applications filed by the companies with intention to close operations voluntarily.
During Calander Year 2023, 1,96,028 companies and LLPs got incorporated as on 30th November 2023 as against 1,88,364 companies and LLPs for the corresponding period during Calander Year 2022.
The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 have been amended in May, 2023 pursuant to which, in case a Regional Director (RD) does not file an application before NCLT for considering the scheme of merger under section 232 or does not issue confirmation order for approval of merger u/s 233 within the time limit provided, it shall be deemed that RD has no objection and the confirmation order shall be issued accordingly.
The Competition (Amendment) Bill, 2023 had been passed by both the Houses of the Parliament (Lok Sabha on 29th March, 2023 and Rajya Sabha 3rd April, 2023) and received the Presidential assent (on 11th April, 2023).
Some highlights of the Amendment Act, 2023 are as under: -
- Deals with transaction value of more than Rs 2,000 crore will require CCI's approval. The timeline for the CCI to pass a final order on combination transactions has been reduced to 150 days from 210 days.
- The Act expands the scope of entities that can be adjudged to be a part of anti-competitive agreements. Currently, enterprises or persons engaged in similar businesses can be held to be a part of anti-competitive agreements. The Act expands this to also include enterprises or persons who are not engaged in similar businesses.
- The Act provides a framework for settlement and commitment for faster resolution of investigations of anti-competitive agreements (except cartels) and abuse of dominant position.
- For the purpose of regulation of combinations, the Act modifies the definition of control as the ability to exercise material influence over the management, affairs, or strategic commercial decisions.
The MCA had notified the Companies (Indian Accounting Standards) Amendment Rules, 2023 vide G.S.R. No.242(E), dated 31.03.2023 effective from 01.04.2023. The said rule inter-alia brings amendments to IndAS 1, IndAS 8 and IndAS 12 relating to disclosures of material accounting policies, definition of Accounting estimates and deferred Tax related to Assets and Liabilities arising from a Single Transaction respectively along with other consequential amendment in IndAS 107, IndAS 34 and IndAS 101. Further, some editorial corrections have also been carried out in IndAS 101, IndAS 102, IndAS 103, IndAS 109 and IndAS 115.
The MCA vide General Circular no. 09/2023 dated 25.09.2023 has extended the time line to conduct Annual General Meeting (AGM) and Extra- ordinary General meeting (EGM) through Video Conference (VC) or other Audio visual (OVAM) or transact items through postal ballot for the year 2023 or 2024 on or before 30th September, 2024.
The MCA vide notification number G.S.R. 790 (E) dated 20.10.2023 has amended the Companies (Incorporation) Rules, 2014 through which imposition of cost at the time of processing of application filed for shifting of registered office has been removed.
When the management of the company has been taken over by new management under a resolution plan approved under section 31 of the Insolvency Bankruptcy Code, 2016 (31 of 2016) and no appeal against the resolution plan is pending in any Court or Tribunal and no inquiry, inspection, investigation is pending or initiated after the approval of the said resolution plan, the shifting of the registered office has been allowed.
A new rule has been inserted vide Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023 issued vide notification no. GSR 802(E) dated 27.10.2023 which provides for mandatory dematerialisation of shares of bigger private companies (i.e. private companies other than small companies). Adequate transitional period has been provided for such purpose.
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