The government on Wednesday notified 183 Sections of the Companies Act, 2013, pertaining to incorporation of a company, management, rotation of auditors and independent directors among several others. The rules to operationalise the Sections, effective April 1, are expected to be released later this week, an official source said. However, the ministry of corporate affairs (MCA) did not notify the Sections relating to the National Financial Reporting Authority (NFRA) and the National Company Law Tribunal (NCLT) along with those related to investor protection, winding up of companies, sick companies, among others.
While the NCLT is under litigation in the Supreme Court, the NFRA has been facing stiff opposition from the Institute of Chartered Accountants of India (ICAI) on the grounds that it will lead to multiplicity of institutions.
“The Sections relating to the NFRA and NCLT will come into being only when these institutions have been set up,” the official said. Lauding the development, experts said that while the notification ends the uncertainty for Corporate India, they emphasised that the rules should provide enough transition period to companies for conforming to the new act.
‘’While this has come practically in the last week of the year, giving corporate very little time to understand the ramifications of the detail in the final rules, one does hope the rules contain some additional transitional provisions that would provide companies some reasonable time to comply with the new requirements,” Sai Venkateshwaran, head of accounting advisory services, KPMG India, said.
He said the requirement to approach the NCLT intermingles with several Sections of the Companies Act, notably the Sections relating to mergers and restructuring and winding up of companies. Until the NCLT and NFRA are formed, the regulatory framework under the Companies Act, 1956, would continue to apply, he added. The MCA has also not notified Sections relating to transfer of unclaimed dividend and corresponding shares to the Investor and Education Fund. Also, the new Act requires valuation to be done by registered valuers in many cases but the section for the same is also yet to be notified.