Ministry of Corporate Affairs marching ahead on the path of reforms
December, 24th 2008
In the wake of the current global economic scenario, most of the countries are passing through turbulence. In view of the growing integration of our economy with the global economy we are also facing difficult times. The Government is fully geared up to take all necessary measures under the circumstances and is confident that the present challenges will offer new opportunities for the country and the people of India.
For the last 4 years our economy has been amongst the fastest growing economies of the world and in this growth process the Indian corporate sector has played a significant role. We have even greater potential in the long run. We have to prepare ourselves for maintaining the growth momentum and accelerating it in the long run. We are aware that we can succeed in our mission only if our legal and regulatory framework is conducive for the fast but inclusive growth our delivery systems are comparable with the best in the world and the right institutional mechanisms are in place our human resources are able to equip themselves with the necessary skills and attitudes an overall environment is created which promotes unleashing energies of our entrepreneurs in a responsible and orderly manner.
Keeping these objectives in view, the Ministry of Corporate Affairs have made sincere efforts to provide our corporates a level playing field and to ensure that interests of all the stakeholders are duly promoted and protected. Continuing the series of initiatives that the Ministry has taken during the last four years, this year also the Ministry of Corporate Affairs has taken a number of steps that will go a long way to help create a more cordial and professional environment for the Indian corporates to work in . A few examples of such initiates are given hereafter.
LEGAL AND REGULATORY FRAMEWORK:
Comprehensive Revision of the Companies Act, 1956: The 50 year old legislation was finally sought to be replaced by a new, less voluminous and more practical Company law after a wide consultative process. The Companies Bill 2008 was recently introduced in the Lok Sabha.
Another feather in the cap of the Ministry of Corporate Affairs was the passage of the Limited Liability Partnership Bill by the Parliament in the current Session of the Parliament. This LLP provides a new corporate form in the country. Thus now the Indian entities also have an alternate choice in corporate organization to compete internationally on level playing field. LLPs will be extremely suitable for knowledge based enterprises and other small and medium enterprises in the country.
As a result of the continuous efforts of the Ministry of Corporate Affairs, soon a Competition Regulator will be functional in the country. This will follow the amendments made in the Competition Act, 2002. The new dispensation will replace the existing Monopolies and Restrictive Trade Practices Act, 1969. The Competition Commission is being fully constituted in a fast track mode and is expected to be functional within this fiscal (08-09). Thus Competition advocacy and capacity building is high on the priority of the Ministry. The CCI will effectively check anti- competitive practices such as cartelization, abuse of dominance and anti competitive agreements. These steps ultimately will benefit the consumers in a big way and will give a further boost to our economy.
As the Accounting Standards have been notified for convergence with IFRS, this will ensure full, fair and transparent financial reporting by corporates. It will provide meaningful information to various users of financial statements and to enable them to make informed economic decisions. This is also consistent with the international best practices. So far 29 accounting standards have been notified. Further action is being taken to achieve convergence with the International Financial Reporting standards (IFRS) by April 2011. It will benefit Indian corporates and also the country as a whole.
The Professional Institutes ICAI, ICSI And ICWAI - attached to the Ministry, have been extended more autonomy. The Ministry of Corporate Affairs has been enabling multidisciplinary partnerships which leads to greater opportunities, more transparency and accountability. A regular review of the quality of services is also carried out by the Ministry.
In order to further promote good corporate governance, the Ministry is in the process of developing new law on Valuation Professionals. Valuation plays a very important role in different business processes but at present there is no recognized institution in India to provide training and guidance or to set standards or to regulate the profession of valuers. In this regard the Irani Committee had opined that proper business valuation and transparency is required for good corporate governance. Accordingly a new law is being developed for setting up a Regulatory Body and Institute for Valuation Professional in India. An Expert Group headed by Dr Amit Mitra has been constituted to submit report within 2 months.
DELIVERY SYSTEMS / INSTITUTIONAL MECHANISMS:
1. MCA21 e-GOVERNANCE Project to provide prompt and efficient services to the companies is being implemented with new vigour. In 2008 also the Ministry continued to provide under this Project easy, secure, online services to different stakeholders by an interactive and paperless process through the Internet. It enables electronic filing, payment, storage, retrieval, viewing, processing and transmission to transactions and a number of services.
And the result: speed, ease, transparency, effective regulation and promotes good corporate governance
2. Indian Institute of Corporate Affairs (IICA) is a unique Governmental initiative in the field of knowledge infrastructure. During the year the Foundation Stone was laid for the Institute in Haryana. It is a think tank based on action research, comprehensive knowledge management and partnerships with other organizations to serve the ministry and Government in policy making as also to other stakeholders in organizational objectives.
3. National Foundation for Corporate Governance (NFCG) is an important aspect of sustainable economic growth. Set up as a not-for-profit trust on 1st October 2003 the Foundation provides a platform to deliberate issues relating to good corporate governance and to sensitize corporate leaders on the importance of good corporate governance. During 2008 various activities have been taken up in partnership with CII, ICAI, ICSI & others.
New Look MCA- Office infrastructure is being upgraded for the right physical environment for our officials to discharge their functions properly. New office complexes are being constructed at a number of locations in the country.
CORPORATE INSOLVENCY REFORMS AND
RESTRUCTURING OF THE FUNCTIONING OF
Liquidation in India is still a slow process in which the average time taken is ten years. Thus loss of valuable assets takes place during this time. NCLT/NCLAT when cleared by the Supreme Court will pave the way for speedy and transparent system of settling the claims of the creditors, employees and other stakeholders. Meanwhile, restructuring the functioning of the official liquidators is being undertaken by the Ministry of Corporate Affairs. Under this computerization of OL offices is being carried out and better infrastructure is being provide to the OL offices. Also details of properties to be auctioned is to be made available on website.
A new class of professionals in the form of Accounting Technicians is being created. ICAI has already launched the course and ICWAI will also be launching a similar course soon. This step will bridge the gap between demand and supply of accounting professionals. It will benefit the small and medium enterprise who may not need services of chartered accountants on a regular basis. Accounting Technician course will provide employment to lakhs of people.