Government activate governance companies better

New Delhi, Jan 7: To give Indian businesses a competitive edge byushering in better governance of the corporate sector, the Ministry ofCompany Affairs implemented several new initiatives including MCA21e-governance project, mandatory e-filing and introduction of LLP Billin 2006.

Side by side, the measures taken by the ministry during the yearwere aimed at empowerment of investors through measures such assegregation of defunct and inactive companies.

With the phenomenal growth of corporate sector throwing up newchallenges, the ministry recognised the need for prompt and efficientdelivery of services to enable businesses compete globally whileensuring effective compliance with the law.

In this background, the ministry is reorganising and reorientingitself for its new catalytic role of a facilitator, in addition tostreamlining the structure for enforcement.

The ambitious e-governance project known as 'MCA21', whichcommenced with the signing of contract with M/s Tata ConsultancyServices Ltd, the selected operator, on March 1, 2005. The project waslaunched by Prime Minister Manmohan Singh on March 18, 2006.

So far, MCA21 has been launched across all 20 Registrar ofCompanies (RoC) jurisdictions in the country. Conceived as a missionmode project under the National e-Governance Plan, MCA21 is acomprehensive service delivery project to bring about a fine balancebetween trade facilitation on one hand and effective enforcement of thecorporate laws on the other.

According to ministry sources, MCA21 has enabled business firms toregister a company and file statutory documents quickly and easily andin a manner that is convenient. The public is empowered to get easyaccess to relevant records and get their grievances redressedeffectively. Under the project, professionals are enabled to offerefficient services to their client companies and the financialinstitutions facilitated to register and verify charges.

Mandatory e-filing became the order of the day with electronicfiling of documents using digital signatures by the authorisedsignatories from September 16, 2006, ushering in a paperless era.

A total of 3,63,055 documents was filed electronically as onSeptember 30, 2006. It is expected that the project would reach thedesirable levels of service by March 31, 2007, doing away with problemsassociated with paper-based manual filing coupled with increasedvolumes of business. This also provides for search of comprehensivecompany databse including viewing of public documents online uponpayment of necessary fees electronically.

Under an action plan, the ministry attempt to segregate and strikeoff the names of as many defunct companies as possible. It is estimatedthat out of 7.50 lakh companies registered, about 1.50 lakh companiesare defunct or inactive. The implementation of MCA21 would help inclear identification of such companies.

This apart, the ministry took several initiatives to redefine thecontours of law for the growth of corporate sector through initiativesfor comprehensive revision of the Companies Act, a new law on LimitedLiability Partnership and notification of Accounting Standards.

Based on the inputs received by the government, including the IraniCommittee Report, the proposals for a new Companies Bill that wouldreplace the Companies Act 1956 are now being finalised. The new compactlaw is expected to focus on shareholders democracy, a disclosure basedregime, rational penal provisions with built-in required deterrence andsufficient protection for the interests of investors.

Limited Liability Partnership (LLP) Bill was introduced in theRajya Sabha on December 15. The LLP will be an alternative corporatebusiness vehicle that would give the benefits of limited liability butwould allow its members the flexibility of organising their internalstructure as a partnership based on an agreement. While the LLP will bea separate legal entity, liable to the full extent of its assets, withthe liability of the partners being limited to their agreedcontribution in the LLP. Thus, no partner would be liable on account ofthe independent or unauthorised actions of other partners.

The proposed Bill will help Indian professionals in providingaccountancy and legal services globally, encourage entrepreneurship andtake advantage of emerging opportunities in areas of science andtechnology.

Meanwhile, accounting standards were reviewed and revised forapplication in India and are being processed for notification by thegovernment. The diverse accounting practices in existence were alsoharmonised to enable uniformity.

Steps were taken to overcome legal challenges to certainprovisions of the Competition Act 2002 by introducing an Amendment Billin Parliament in the Budget session of 2006.

The Competition Commission of India is envisaged to be set up toensure free and fair competition in the market and protect consumers'interests. The Standing Committee on Finance, to which the Bill wasreferred, has submitted its report to Parliament in the winter session.

Seminars and media campaigns were organised by the Ministry forinvestors' education so as to enable them to take informed investmentdecisions with awareness of their rights and the risks involved. Awebsite known as "Investor Helpline" was sponsored under the InvestorEducation and Protection Fund (IEPF). Launch of the website,www.investorhelpline.in, was another attempt of the ministry to empowerthe investors by providing them with an alternative mechanism forredressal of their grievances through the use of information technology.

The ministry has addressed itself to the menace of vanishingcompanies by taking concerted steps against the promoters of thesevanishing companies. A new concept of Director Identification Number(DIN) was introduced under MCA21 to identify and track such directorswho try to vanish from the scene after mobilising resources from thegullible investors.

UNI
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