The changes will be based on suggestions from the public and self-regulators of accountants and company secretaries, which arre expected by the middle of March.

Regulators like the Insolvency and Bankruptcy Board of India (IBBI) and the National Financial Reporting Authority (NFRA) will make the changes in regulations that are needed, the person said. 

The ministry has already set up groups of officials to look into specific aspects of the regulatory change and has requested the Institute of Chartered Accountants of India (ICAI) and the Institute of Company Secretaries of India (ICSI) for suggestions, the person said. The review is based on an announcement that finance and corporate affairs minister Nirmala Sitharaman made in her FY24 budget a year ago.

The move is broadly aimed at improving ease of doing business and corporate governance. All rules are being reviewed – whether they are related to accounting, incorporation of companies and LLPs, liquidation, or striking off of defunct companies, the person said.

“Public consultation is on. The ministry has formed groups to look into some of the rules. Conferences are being held by Regional Directors and the Director General of Company Affairs who will receive comments from stakeholders. By 15 March, if suggestions come to the ministry, there will be time to discuss at official level and after the elections, it will be taken forward,” said the person who spoke on condition of anonymity.

While the review is mainly of rules and regulations, any changes that may be needed in the Companies Act can be taken up soon, as the ministry has already prepared a set of proposals for Companies Act amendments that are currently under inter-ministerial consultation. 

If any important proposal comes up, and it is urgent, then they can be included in the proposed amendment Bill, said the person.

“The consultation is essentially about rules and regulations. Most of the suggestions will come on rules, which we can address without having to go to Parliament. Regulations can be amended by the respective regulator. The Finance Minister had announced that it will be a comprehensive review,” said the person.

Experts expect the changes to make it easier to launching and wind up businesses and to lead to greater self-regulation backed by more openness in the affairs of companies. 

“The Companies Act and LLP Act have been put up for comprehensive review and public comments. Aligning to the ministry’s motto of ease of doing business in India, changes can be expected in provisions and requirements for incorporation and winding up of such entities,” said Amit Maheshwari, Tax Partner at AKM Global, a tax and consulting firm. 

Also, changes can be expected in various disclosure requirements that will increase transparency in the affairs of corporations, resulting in self-regulation and better governance, said Maheshwari.

The review covers rules and regulations not only under the Companies Act, but also under the Limited Liability Partnership Act, the Competition Act, the Insolvency and Bankruptcy Code, the Chartered Accountants Act, the Cost and Works Accountants Act, and the Company Secretaries Act – seven laws administered by the ministry of corporate affairs.

Besides a review of the regulatory framework, the ministry has revamped its oversight of compliances into a fully automated and faceless regime. On 16 February, the ministry put into force centralized and faceless processing of a dozen filings by companies including alteration in capital, change in name, conversion from public limited company to private limited company and vice versa. 

More forms will be added to this list from April. Already registration of new companies has been made fully automated and a quick window for voluntary closure of companies has been offered. Registrars of companies are now expected to focus more on inquiries, inspection and investigation as routine approvals have been automated.

Emails sent to the spokesperson for the corporate affairs ministry and to IBBI, NFRA, ICAI and ICSI on Monday remained unanswered at the time of publishing. 

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Published: 28 Feb 2024, 03:48 PM IST