YEAR-END REVIEW
In recent times, Ministry of Corporate Affairs has
taken a number of initiatives by introducing e-stamping with MCA-21 to further
facilitate the e-registration of companies.
It has also made the Competition Commission of India (CCI) and
Competition Appellate Tribunal (CAT) functional.
Limited Liability Partnership Act has been enacted and relevant rules
issued. The new Companies Bill is now
being scrutinized by the Standing Committee of the Parliament. It has been the
Ministry’s constant endeavour to consult the
stakeholders, invite and welcome suggestions, recommendations and views from
all quarters before revisiting any rules and regulations in order to make them
in tune with the changing world.
Some of the major achievements of
the Ministry of Corporate Affairs during the year 2009 are enumerated below:-
A.
Legislative Business
(i) Law
on Limited Liability Partnership: Keeping in view the potential for growth of
the services sector and the dominant role played by the professionals in the
country’s economy, a new legal framework to provide for Limited Liability
Partnership has been evolved for which the Limited Liability Partnership Bill,
2008 as passed by both the Houses of the Parliament, received the assent of the
President of India on 7th January 2009 and notified in the Official
Gazette dated 9th April 2009. All the provisions of the Limited
Liability Partnership Act, 2008 (Act No. 6 of 2009), except provisions relating
to winding up and dissolution, were notified for implementation with effect
from 31st March 2009. The
Limited Liability Partnership Rules, 2009 (on all matters except winding up and
dissolution of Limited Liability Partnership) have been notified on 01st
April 2009.
(ii) Notifications
under Limited Liability Partnership Act, 2008: The notification for
revision of 7 forms [Form 1 - Application for reservation or change of name,
Form 2 - Incorporation Document and Statement, Form 3 - Information with regard
to Limited Liability Partnership Agreement and changes, if any, made therein,
Form 4 - Notice of appointment of partners/ designated partner and changes
among them, intimation of DPIN by the Limited Liability Partnership to
Registrar and consent of partner to become a partner /designated partner, Form
5 - Notice of change of name, Form 6 - Intimation of particulars of name or
address of a partner/ change in such particulars by a Partner to the Limited
Liability Partnership, Form 7 - Application for allotment of Designated Partner
Identification Number] has been sent to M/o Law for final vetting.
(iii) Convergence of Accounting Standards
with International Financial Reporting Standards (IFRS): Accounting
Standards are policy documents relating to various aspects of measurement,
treatment, presentation and disclosure of accounting transactions and events.
The purpose of Accounting Standards is to standardize diverse accounting
policies with a view to eliminate incomparability of financial statements. The
objective is to provide a set of standard accounting policies and disclosure
requirements to discourage accounting policies which are not in conformity with
generally accepted principles and policies in accounting field.
The initiative for harmonization
of Indian Accounting Standards with International Financial Reporting Standards
(IFRSs) taken up by National Advisory Committee on
Accounting Standards in 2001 and
implemented through notification of accounting standards by the Central Government
in 2006 would be continued by the Government with the intention of achieving
convergence with International Financial Reporting Standards by 2011.
(iv) Comprehensive revision of the Companies Act:
The Companies Bill,
2008, which sought comprehensive revision of the Companies Act, 1956 was
introduced in the Lok Sabha
on 23.10.2008 and subsequently referred to the Department related Parliamentary
Standing Committee on Finance for examination and report. However, before the
said Committee could present its report, 14th Lok
Sabha was dissolved and the Companies Bill, 2008
lapsed as per clause (5) of Article 107 of the Constitution of India. Ministry
has now re-introduced the Companies Bill, 2008 as Companies Bill, 2009 in the Lok Sabha on 3.8.2009. The Bill is now under examination of the
Department related Parliamentary Standing Committee on Finance.
B.
Satyam Computer Services Ltd.
(i). On 16th December, 2008, Satyam
Board passed resolution pertaining to acquisition of Maytas
Infra Limited and Maytas Properties Limited which had
valuation and related party interest issue. Due to severe opposition from the
stakeholders of Satyam, the above deal was withdrawn
leaving liquidity crunch and steep erosion of market valuation. On 7.1.09,
Ex-Chairman of Satyam, Shri
B. Ramalinga Raju, made a
statement about the falsification of accounts/ financial statements of Satyam.
(ii). On 9th January, 2009, the Central Government
moved Company Law Board seeking suspension of Satyam
Board by Government nominated directors. As authorized by Company Law Board,
the Central Government appointed six directors on the Board of Satyam under the Chairmanship of Shri
Kiran Karnik.
(iii). On the recommendation of the nominated Board the Central
Government supported the induction of strategic investor before the Company Law
Board. On 13th April, 2009, M/s Tech Mahindra
through its subsidiary was declared as highest bidder/ strategic investor in a
fair, transparent and open bidding process. Company Law Board too confirmed the
aforesaid induction vide its order dated 16th April 2009. With the
completion of process of public announcement under Securities and Exchange
Board of India, Substantial Takeover Regulations on 01.07.09, the Central
Government moved an application before CLB for withdrawal of its nominee
Directors and the same was permitted on 17.07.09. By Order dated 17.07.09, the
Central Government has withdrawn Sh. Kiran Karnik, Sh.
Deepak Parekh, Sh.Tarun Das & Sh. Suryakant Balkrishna Mainak from the Board of Satyam
and Sh. T.N. Manoharan and Sh. C. Achutan are allowed to
continue on the Board till further orders to ensure the compliance of
requirements contained in the above mentioned Company Law Board order dated
17.07.09.
(iv). The
Central Govt. ordered investigation on 13.1.09 under section 235 of the
Companies Act into the affairs of Satyam through
inspectors drawn from Serious Fraud Investigation Office apart from inspection
of books of accounts on 08.01.09 under section 209A of the Companies Act in
eight connected/associated Companies of Satyam.
The Serious Fraud
Investigation Office has carried out investigation in to the Satyam in coordinated manner by associating Securities and
Exchange Board of India/Central Board of Investigation/Enforcement Directorate
etc. On 13th April 2009, Serious Fraud Investigation Office has
furnished the investigation report of the Satyam to
the Ministry. Serious Fraud Investigation Office has been asked to carry out
further investigation on the issue of diversion of funds by promoters within India and outside India.
(v). CBI, ED and SEBI are taking action
regarding violation of the laws relating to them. CBI has filed charge sheets for IPC
offences. On the issue of pure Company Law violations reported in the
investigation report, the Serious Fraud Investigation Office has been
authorized to file eight number of complaints vide instruction dated
13.11.09. Serious Fraud Investigation
Office has informed that seven complaints have been filed in Hyderabad.
C. Competition Act, 2002
During the year 2009,
the Competition Commission of India and the Competition Appellate Tribunal
established under Section 7 and Section 53 (A)
respectively of the Competition Act, 2002 became fully operational. One
Chairman and six Members have been appointed in the Competition Commission of
India and one Chairman and two Members have been appointed in Competition
Appellate Tribunal.
With the notification of section 3 & 4
and related section of the Competition Act, Competition Commission of India has
become fully opertainal.
D.
Strengthening of Serious Fraud Investigation Office (SFIO)
Various measures have been taken to
strengthen Serious Fraud Investigation
Office. 58 new posts have been created in various grades including
Joint/Additional Directors, Deputy Directors-Grade II etc. Specialized posts
have been/are being encadred in the specialized cadre
of Indian Corporate Law Service, Indian Law Service and National Informatic Centre. Full powers have been delegated to
Director, Serious Fraud Investigation Office to engage outside technical
experts in accordance with General
Financial Rules (GFRs).
E.
MCA21 Project and e-Stamping Process in MCA21 Project
v
Ministry
of Corporate Affairs has launched MCA21, an ambitious e-Governance project.
This is aimed at transforming the Ministry’s mode of working from traditional
paper to paperless format.
v
This
initiative delivers over 100 services to citizens electronically covering
almost completely the Companies Act of 1956.
v
This
project is the first successful Mission Mode Project under the National
e-Governance Plan and has received the Prime Minister’s Award for Excellence in
Public Administration.
v
These
services are provided in easy and secured manner via Ministry of Corporate
Affairs portal.
v
This
is the first portal to use Digital Identity for users.
v
It
offers flexible Payment Options as mentioned – Challan,
Credit Card, Debit Card, Internet Banking
v
It
provides uninterrupted service delivery we have contingency plan implemented
through Data Centre and Disaster Recovery Centre.
v
Service
Level Agreements are maintained and regularly monitored with the operators to ensure high performance
v
Before
introduction of e-Stamping, stamp instrument has to be submitted physically in
paper format at Registrar of Companies office. This causes delay in service
delivery. In the entire process of
electronic filing this is the only process which uses paper extensively. In
order to eliminate this bottleneck and to increase the efficiency of service
delivery, e-stamping was envisaged.
v
21
States and 3 Union Territories have authorized Ministry of Corporate Affairs to
collect stamp duty and generate stamp electronically.
v
We
have introduced e-Stamping in selected Forms (Form 1, Form 5, Form 44,
Memorandum of Association and Articles of Association) where the Stamp Amount
is large.
v
Stamp
Duty will be collected along with Ministry of Corporate Affairs fees and
e-Stamp will be generated and affixed on the forms or will be attached with Memorandum
of Association and Articles of Association as a separate sheet.
v
In
case of any differences in the Stamp Duty, Registrar of Companies will be able
to ask the applicant to pay additional stamp duty through a different form –
Form 67.
v
E-stamp
will be generated and affixed only when the Registrar of Companies is satisfied that prescribed stamp duty has
been paid.
v
This
process was introduced with effect from 13th September 2009. State
of Kerala and Union Territory of Lakshadweep
gave its consent on a later date and the e-Stamping process was introduced from
19th November 2009. We are extending the acceptance of physical
stamp papers till 31st December 2009 thereafter which e-stamps will
be made mandatory. This is applicable only for those States and Union Territories which have given their consent to
Ministry.
F. Indian Institute of Corporate Affairs
Indian Institute of
Corporate Affairs (IICA) has been set up to be a holistic think-tank, capacity
building and service delivery institute to help corporate growth, reforms
through synergized knowledge management, partnerships and problem solving in a
one-stop-shop mode. The Institute would
provide support to the Ministry in review/ revision of existing corporate laws,
rule and regulations, as well as in framing of new ones, as per requirements of
a dynamic economic environment. In addition, it would provide the much-needed
training to Indian Corporate Law Service (ICLS) and other officials working for
the Ministry, and support organizational reforms initiatives. Indian Institute of Corporate Affairs would also help in continuous
improvement of service delivery in diverse areas like MCA-21, corporate
governance, corporate social responsibility, investor education and protection,
etc.
This is the first-ever Plan Scheme
of the Ministry and involves an outlay of Rs. 211.00 crore over the Eleventh Plan period. The Indian Institute
of Corporate Affairs Society has been registered under the Societies
Registration Act, 1860 on 12.09.2008.
The Campus of the Institute
is being constructed at IMT, Manesar on a 14 acre
plot and the construction of the same has commenced with effect from last week of August 2009 and the
same is expected to be completed by February, 2011. However, the functioning of
the Institute has started pending completion of the physical infrastructure
from September 2008 onwards itself. Since then following activities have been
undertaken under the aegis of Indian Institute of Corporate Affairs in the year 2009-10:
- A 4-week training of Indian Corporate Law Service
(ICLS) officers was conducted in
March, 2009
- Indian Institute of Corporate Affairs conducted an
Induction Training Programme for the Competition
Commission of India (CCI) officers in July, 2009. Indian Institute of Corporate Affairs is also conducting an
Advanced Professional Programme for Competition Commission of India.
- The Ministry of Corporate Affairs in association with
Indian Institute of Corporate Affairs and INSOL International organized a
Roundtable on
Policy & Regulatory Issues in
Insolvency on 27-28 April 2009 at New Delhi.
- Indian Institute of Corporate Affairs is funding the
Quality Review Boards (QRBs) of the three
professional Institutes under the Ministry of Corporate Affairs viz.
Indian Chartered Accountants Institute, Indian Company Secretaries
Institute and Indian Cost & Work Accounts Institute. The move is aimed
at providing greater operational autonomy to the Quality Review Board. A
meeting of the Quality Review Board of Indian Chartered Accountants
Institute was held at Paryavaran Bhawan on 24th April 2009.
- Two programmes on Company Law
Administration have been conducted by Institute of Corporate Affairs in 2009-10.
- Indian Institute of Corporate Affairs has taken up a project
to develop an Indian concept along with national guidelines and disclosure
framework on Corporate Social Responsibility
in partnership with GTZ, Germany. An
expert group set up under this project is proposed to be expanded in the form
of a Forum on socially responsible corporate governance.
·
International Workshop on Cross-Border Insolvency
and Developments in the Indian Regulatory Framework was held at New Delhi on April 27-28, 2009
·
One day
Workshop on Investigation of Corporate Fraud was held at New Delhi on 20th, August, 2009.
- Two days Workshop on Derivatives Demystified
was held at New Delhi on 26-27 October, 2009.
- Workshop on Derivatives and their Implications
for Financial Systems was conducted on 2nd December, 2009 for
officers of the Department of Financial Services, Government of India.
- In the year 2009-10 Indian Institute of Corporate
Affairs proposes to hold a Professional programme
on Inspections and Investigations, an
Advanced professional programme on investigations under the Companies Act, 1956,
a Programme on Liquidation and Winding up of
Companies and Capacity addition programme for
Official Liquidators staff.
G. India Corporate Week 2009:
The Ministry organized
the first ever ‘India Corporate Week’ between December 14-21, 2009. This event,
conceived as an annual event in the third week of December every year, was
organized to showcase the contribution of Corporate Sector in the social and
economic development of the country as well as to highlight the initiatives of
the Ministry towards enlightened regulations. For this, the Ministry had
collaborated with the leading trade and industry chambers as well as the
professional Institutes and a total of 125 events on various themes organized
during this week throughout the country. In the concluding events, held on
Dec., 21, 2009 at Vigyan Bhawan,
New Delhi, the President of India, Smt. Pratibha Devisingh Patil, gave the recognition of excellence to some of the
leading chambers and the professional Institutes. The Corporate Affairs
Minister, Shri Salman Khurshid, released the Voluntary Guidelines on Corporate
Governance, Voluntary Guidelines on Corporate Social Responsibly and a
Compendium titled “Corporate India 2009”.
Vision of the Ministry:
To
be a leader and partner in initiatives for corporate reforms, good governance
and enlightened regulations with a view to promote and facilitate effective
corporate functioning and investor protection.
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KKP