Passage of the new Companies Bill by Lok Sabha

Passing of the new Companies Bill  by the Lok Sabha:

The passing of the Companies Bill, 2011 by the Lok Sabha on 18^th December 2012 has been a great achievement of the Ministry of Corporate Affairs during the year. On its enactment this new Companies law will allow the country to have a modern legislation for growth and regulation of corporate sector in India. The existing statute for regulation of companies in the country, viz. the Companies Act, 1956 had been under consideration for quite long for comprehensive revision in view of the changing economic and commercial environment nationally as well as internationally. In view of various reformatory and contemporary provisions proposed in the Companies Bill, 2011, together with omission of existing unwanted and obsolete compliance requirements, the companies in the country will be able to comply with the requirements of the proposed Companies Act in a better and more effective manner.

In October the Union Cabinet approved the proposal to make official amendments to the Companies Bill, 2011. The Companies Bill, 2011 had earlier been introduced in the Lok Sabha on 14^th December, 2011 and was considered by the Parliamentary Standing Committee on Finance which submitted its report to the  Speaker, Lok Sabha, on 26^th June, 2012. The report was laid in the Parliament on 13^th August 2012. Keeping in view the recommendations made by such Committee it was decided to make certain modifications in the Companies Bill, 2011 through official amendments after which it was presented in the Lok Sabha which passed it.

Competition Commission of India (Amendment) Bill 

The year also saw the introduction of a Bill in the Lok Sabha on 7^th December 2012 by the Ministry of Corporate Affairs to further amend the Competition Act, 2002, with a view to fine tune it and to meet the present day needs in the field of competition, in the light of the experiences gained in the actual working of the Competition Commission of India in the last few years.

Major amendments proposed in the Bill relate to changing the definition of turnover, Group, reducing the overall time limit of finalization of combinations from 210 days to 180 days and insertion of a new Section 5A enabling the Central Government to lay down, in consultation with the Competition Commission of India, different thresholds for any class or classes of enterprises for the purpose of examining acquisitions, mergers and amalgamations by the Commission. The other amendments relate to procedural aspects in working of the Commission.

The proposal after its initial consideration in April, 2012 was referred to a Group of Ministers to examine it in details, with particular reference to jurisdiction of sectoral regulators on Competition related issues.

The Group of Ministers considered the issues referred to it by the Cabinet and while endorsing the original proposal also proposed amendment in the Competition Act requiring other regulators to mandatorily refer matters impinging on Competition to the Competition Commission of India, and vice-versa to concerned regulators by CCI, on matters relating to those regulators. To this extent the original proposal has been modified.

National Competition Policy:  

With a view to make the ˜culture of Competition™ an intrinsic part of governance at each tier of administration- Centre, State or local body, the Government is considering bringing out a National Competition Policy. During the year Ministry had sought the opinion of the State Governments on the said policy and the State Governments are broadly in agreement with the proposed policy. The Ministry  also invited comments and initiated  consultations thereon with various sections of the society such as Stakeholders, Industry, Law Firms, Researchers, Economists etc. and incorporated their responses suitably in the Policy. The Policy is expected to be finalized shortly.

Continuation of the MCA21 Project in its new avatar:

During the year the Cabinet Committee on Economic Affairs approved continuation of the flagship programme of the Ministry: the MCA21 Project for its second cycle from January, 2013 to July, 2021. The new cycle of the Project will be a Non-Plan Scheme at a total project outlay of Rs. 357.81 crore -including an outlay of Rs.54.42 crore for independent project management and certification – over eight and a half year period. It also includes an outlay of Rs. 29.84 crore for continuous improvements and up-gradation to the electronic service delivery of the Ministry of Corporate Affairs.

The project will benefit all the companies and LLPs registered in India. In addition, the project benefits citizens through its IEPF sub-portal for investor awareness and disclosures. Banks and financial institutions also benefit immensely from MCA21 as it acts as a repository of charge information on company/company`s assets. MCA21 project has also benefited various state governments through innovative use of electronic stamps (e-stamp).

MCA21 e-governance programme has already resulted in improved service delivery and in its second cycle it is expected to continue the same. In addition, the project will improve corporate governance through better scrutiny of company disclosures, better enforcement of corporate laws and paperless working.

The “MCA21 Project” of the Ministry of Corporate Affairs, launched in February 2006, is a major e-Governance initiative covering all aspects of incorporation and regulation of companies as defined under the Companies Act. It is an end-to-end e-Governance program envisaging electronic filing of documents, registration of companies and public access to corporate information online through a secure interactive portal. The portal services can be accessed/ availed from anywhere, at any time that best suits the corporate entities, professionals and the public at large.

The Ministry of Corporate Affairs has proposed similar service delivery model as in first project cycle. In addition to continuing all the services being provided presently, Ministry of Corporate Affairs will extend e-governance to its OL offices, connect attached offices like SFIO and CLB, etc. in its second cycle. Ministry envisages redesigning of the portal to improve the stakeholder`s experience. New services like SMS and mobile enabled interfaces will be provided for improved service delivery. A new vendor for running the portal in its new cycle was also chosen during the year.

Another record achieved  in Peak Filing:

With the strengthening of the MCA 21 portal, the filing of Annual Report and Balance Sheet has further streamlined resulting in a new record for the peak filing during 2012. The Ministry had done special preparatory work under MCA 21 for the smooth conduct of the processes during the peak filing months of October and November. As a result about 15.76 lakh filings (all forms) were received in the month of October and November 2012 which is about 2.74 lakh filings more than the previous year. The final figure for this entire year is 17.40 lakh filings as against 15 lakh filings made last year.

A total of 6.69 lakh annual filings (Annual Reports and Balance Sheets) were received which is about 1.02 lakh more than the previous year. Also, the MCA 21 received 88,119 FILINGS ON ONE SINGLE DAY on 21^st November 2012 which is highest ever compared to previous years 24% more than the last year™s peak filing on a single day. Notably, this progress is achieved in addition to XBRL filings.

Release of MCA XBRL Validation Tool (Final Version):

Final version of the MCA XBRL Validation Tool (for Financial Statements based upon new Schedule VI of the Companies Act, 1956) was released during the year. Under this initiative XBRL filings of financial statements for accounting year commencing on or after 01.04.2011 were  enabled on MCA website with effect from 14.10.2012. For end users a ˜Filing Manual™ was made available on the XBRL portal of the Ministry™s website for filing the financial statements in XBRL format.

MCA XBRL Validation Tool (for costing taxonomy) was also released and XBRL filings of Cost Audit report and Compliance report were enabled on MCA website with effect from 02.12.2012.

As per General Circular number 39/2012 dated 12.12.2012, time limit to file financial statements in XBRL mode (for the financial year commencing on or after 01.04.2011) without any additional fee has been extended up to 15th January´2013 or within 30 days of AGM of the company, whichever is later. As per latest available data more than 1,500 filings have been done under XBRL which will zoom to new records when the last date approaches.

Integration of LLP with MCA 21 system:

In order to enhance and extend the operational convenience to the stakeholders and grouping of all registry related functions on a single platform, Limited Liability Partenership (LLP) e-governance was integrated with MCA 21 from 11^th June 2012. With this integration, the filing and approval of ˜LLP forms™ is being done through MCA 21 website and the stakeholders are now availing all existing facilities of MCA 21 for LLP forms filing including online payment or use of internet banking from designated banks in addition to credit card payment.

In addition, the regulation of LLPs has been decentralized amongst 20 Registrars of Companies across country, enabling direct promotion of the new form of corporate entity in their region. This was earlier being handled centrally by the Registrar of Companies, Delhi.

Continuous effort to improve Corporate Governance: The Damodaran and the Godrej Committees

A committee has been formed under the Chairmanship of Mr. M.Damodaran, former Chairman, to suggest a road map for improvement in ease of doing business in India. The aim is to have a measurable target in terms of improvement in the rankings within a period of next 3 to 5 years and place India at one of the top five positions with zero hassles. The Committte completed the exercise of collecting background materials. The Committee is likely to submit its report by end of June  2013.

Ministry of Corporate Affairs constituted a committee to formulate a Policy document on Corporate Governance under the Chairmanship of Shri Adi Godrej on 07.03.2012.  The committee has since submitted its report to the Central Government suggesting adoption of certain ˜guiding principles of Corporate Governance™.  It is proposed to obtain comments/suggestions of public to the recommended principles before deciding further course of action in the matter, the Minister said.

The Ministry is also working towards developing a business confidence index for the corporate sector in India based on robust economic parameters which would reflect true strengths and quicker analysis of the corporate sector in India. It is expected that such index for the corporate sector in India based on robust economic parameters which would reflect true strengths and quicker analysis of the corporate sector in India. It is expected that such index will be in place in the near future.

Central Monitoring Committee and Regional Task Forces on vanishing companies:

The Ministry has constituted a Central Monitoring Committee and Regional Task Forces on vanishing companies to keep a check on such cases. As on date, 87 companies are considered falling under the ˜vanishing™ category. FIRs have been lodged against all these 87 vanishing companies and their directors with the Police to trace their whereabouts and also to take action under Indian Penal Code (IPC). Further, prosecutions have been filed against vanishing companies and their Directors under Sections 162 and 220 of the Companies Act, 1956 for non-filing of Statutory Returns and under Sections 62/63, 68 and 628 of the Companies Act, 1956 for mis-statement in prospectus/fraudulently inducing persons to invest money/false statements made in the offer documents, etc. Promoters/directors of the vanishing companies were also debarred by Securities and Exchange Board of India (SEBI) from raising money from the public under Section 11B of the Securities and Exchange Board of India Act.  Besides, details of vanishing companies and their promoters/directors have been published in the Newspapers as well as placed on the website of the Ministry (www.mca.gov.in) to facilitate the investors to come forward and lodge their complaints against vanishing companies.

Investor Awareness Programmes :

A large number of Investor Awareness Programmes have been conducted during the year in partnership with the 3 Professional Institutes i.e. ICAI, ICSI and ICSAI to educate the investors, including the young investors, about the various investments options.  These programmes cover various cities and towns (including Tier II and Tier III towns) across the country. During the year till November 2012, about 1,200 investor awareness programmes had been organized through.

The Ministry organized the ˜India Corporate and Investor Meet™ during February 2012 to reach out to the investors and educate them for greater participation in the corporate economy of the country.

During the year a new website was set up for the companies to file details of unpaid and unclaimed amounts of investors for last 7 years and not yet transferred to the Consolidation Fund of India. This website enables the investors to search and locate the relevant information of such amounts. More than 4,500 companies have uploaded their data on this website.