With India being ranked 142th on Ease of Business Doing Index and 158th on Ease of Starting a Business, startups in India find it a tough task to outshine amongst the well-established corporate firms in India. However, the Ministry of Corporate Affairs have been bringing reformations in regulations over the decade. In addition to relaxations in the Companies Act of 2013, MCA further announced in June 2017 highlighting certain provisions in the act which would benefit not only the private companies but the startups as well.
The exemptions introduced in the Act would only benefit the Department for Promotion of Industries and Internal Trade, (DPIIT) recognized startups. Moreover in 2015, MCA exempted the corporate sector from obligations related to minimum paid up capital.
Entrepreneurship and its horizons
Entrepreneurship revolves around business development and management involving certain risks in order to gain profits. The Ministry of Corporate Affairs took up an intense drive in-
Government Process Re-designing (GPR) and dispatched the
Simplified Proforma for Incorporating Company Electronically (SPICe) e-Form,
on the event of Gandhi Jayanti, 2016. SPICe is a more flexible structure than INC-29 and influences on advanced innovation by disposing of the requirement for printed versions of genuinely marked archives being appended to an e-structure. SPICe is presently the sole, simplified and versatile structure accessible for incorporation of an organization in India.
The Ministry has likewise coordinated the MCA21 System with the CBDT for issue of PAN and First TAN to an organization utilizing the Simplified Proforma for Incorporating Company Electronically. Shareholders can successfully submit their applications for incorporation and PAN & TAN (allotted by Income Tax Department) altogether thus reducing the time and processes for blooming startups.
Within the MCA directive, stern decisions have been made to improve the legitimate system, work on techniques and accelerate dynamics for simplicity of working together to introduce a solid climate for venture and corporate development. Many efficient corporate dialogues and cognitive consultations have been accomplished by the Ministry of Corporate Affairs to replenish conventional business standards and ensure smooth facilitation of Companies Act, 2013. Statutory implementations to ‘remove difficulties’ have been acknowledged and appreciated in the corporate sector. Furthermore, Lok Sabha introduced encourage business friendly and growth inducing provisions as:
Bringing forth amendments for minimum capital with best foreign practices
Stern lawful processions against frauds or disagreement in set regulations for deposits identified during audits
With declaration in SPICe e-form replacing affidavit for various filings, documentation mandates for foreign nationals to be Director of Indian corporate firms has been deduced to a much greater extent.
The Ministry of Industries and Commerce have developed e-business portals for collective procession of DIN, Company Incorporation and Commencement of Business. Nominal fee is charged by authorities for small scale corporate firms. To direct the flow of Indian business towards international capital markets, IndAS i.e. new accounting standards have been implemented in accordance with IFRS (International Financial Reporting Standards).
Safeguarding Businesses
Serious Fraud Investigation Fraud (SFIO) has been quite operational to avoid corporate delinquency by taking legal course of actions against companies failing the compliance of Companies Act, 2013. Steps were taken to cause merger of NSEL Limited with its parent company Financial Technologies (India) Limited to guard the interest of investors in NSEL on account of its regulatory defaults and the failure of the holding company to exercise oversight, the first ever initiative. With respect to Investment Education Initiatives, 1380 programs were organized to educate and create awareness amongst small investors regarding highs and lows of investments.
Central Registration Centre (CRC), organized for flawless procession of incorporation of companies, works in 2 phases, former one including “application filing for accessing name through e-form INC-1 and later one being “incorporation of companies through e-form”.
Why CRC?
With reengineering in cycle and foundation of Central Registration Center which was established under section 396 of Companies Act, joining of an organization is finished in a single day. Sustaining of Directors Identification Number (DIN), Permanent Account Number (PAN) and the main Tax Deduction Account Number (TAN) are subsumed in the incorporation and there is no different interaction.
All incorporations with an approved capital of INR 15,00,000 are not charged by MCA vide notification G.S.R no.180(E) dated 06.03.2019 amending the Rule 38(2) of the Companies (Incorporation) Rules, 2014.
Rule 38A was added to Companies (Incorporation) Rules, 2014 to merge the functioning of MCA21 with registration of EPFO, ESIC, GST while filing for incorporation of the company in SPICe e-form.
For convenience in incorporation of Section 8 companies, MCA vide notification no. 411 (E) dated 07.06.2019 centralized licensing and incorporation via single form and that being SPICe.
Reforming the corporate framework
With earlier limits for paid up capitals and annual turnovers for small firms being INR 50 lakhs and INR 2 crore respectively, Finance minister renewed the mandates for small companies in Union Budget 2021 granting special provisions like exemption from statutory audits, non-requirement for cash flow statements, holding board meeting once in every 6 months ( in accordance to 90 days of gap between to consecutive board meetings), filing of Annual Returns through Form MTG-7A for the financial year 2020-21 onwards.
As per MCA, common seal under Companies Act, 2013 has been made optional since 29.05.2015. Accordingly, all Banks have been directed by the Indian Bank Association (IBA) to avoid asking for affixation of either common seal on the application form for opening of Bank Accounts by companies. With almost all of the government and corporate sector services made available online, MCA facilitated:
Deployment of common form for registration under labor related laws for EPFO and ESIC on the 'Shram Suvidha portal'
Final registration for Delhi VAT and Maharashtra VAT within a day through online mode
One single Registration Application Form for all the Acts administered by Maharashtra Sales Tax Dept. (MSTD)
Registration of Delhi Shops and Establishment Act, 1954 and Maharashtra Shops and Establishment Act, 1948 fully online
Central Registration Center for name availability and incorporation expanded the horizons for big corporate firms as well as small companies to go through filing procedures witnessing lesser complications.
The time period for processing incorporation applications under CRC saw a drastic decline from 5-15 working days in June, 2004 to 0.6 working days in March, 2017.
Companies could be allotted with their name availability applications within 0.4 working days in 2017. 90% of applications are being authorized in a day.
Increasing the transparency for shareholders, Ministry vide notice no. GSR 309(E) dated 30.03.2017 has recommended w.r.t related party transactions, where the consideration is equivalent to over 10% assets of the organization, the equivalent will be approved by the members of the organization. This has expanded the investor rights with respect to casting a ballot and exposure of a connected gathering exchange.
National Company Law Tribunal Rules substituted Company Law Board (CLB) in June, 2016. NCLT is initially located at ten places across India, equipped with requisite infrastructure and support staff, including Delhi, Mumbai, Kolkata, Hyderabad and Chennai.
NCLT is foreseen to be a more authoritative platform for adjudication of disputes on corporate law matters through disposal of such cases in a time bound and speedy manner.
CONCLUSION
The Ministry of Corporate Affairs (MCA) has transformed the dynamics of private companies and provided the corporate sector with an entire range of budding opportunities and privileges for rising entrepreneurs mostly with e-governance initiatives.
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