The year 2013, is witnessing a couple of important reforms for the corporate sector. The new Companies Bill, 2012 passed by the Parliament on becoming the law (after passed in the Rajya Sabha followed by the assent of the President) is expected to facilitate good corporate governance, capital raising, corporate restructuring, better corporate transactions, faster economic development etc. The new bill also seeks to improve the transparency and better regulations for business houses in India. However, there are few far reaching provisions in the Bill as mentioned below which will have implications on the corporates and professionals connected with them.
whistle blowing provisions seeking auditors to blow the whistle if he comes across any fraud or fraud about to be committed,
constitution of National Financial Report Authority with the power to punish the erring auditors and
appointment of Independent Directors with role and responsibilities, etc.
A large chunk of the provisions are reserved for rules which could make this new law either dynamic or may be even ad hoc. In my opinion there will be a paradigm shift in the compliance and governance practises for which the corporates will have gear up. Overall the new bill places more responsibilities and accountability on company management. Professionals on the other hand will need to sweat in order to familiarise themselves with the new provisions of the changing compliance requirement but at the same time it will open up immense opportunities for all professionals.
The MCA portal switch over was completely mishandled by the Ministry. This being a gateway for various filings by the companies and professionals there should be zero downtime. Companies and professionals have suffered heavily for not being able to incorporate companies, file charge documents which in turn put the sanctions on hold by the lenders etc. These issues need to be promptly addressed and resolved.
I would like to move on to the other important measures in recent times which include:
Proposal to move the Goods and services Tax bill, an important welcome news.
Bring Single Window Clearance Mechanism in place to attract more investment into India, particularly in the manufacturing sector, as a measure to implement National Manufacturing Policy with the objective of enhancing the share of manufacturing in GDP to 25% within a decade and creating 100 million jobs. Though it was announced laudably by the Ministry a couple of days back, the details of the scheme are yet to be seen.
Deferment of GAAR implementations to another two years
Marginal reduction of repo rates by RBI to surpass investment and growth
These measures will surely impact the business and help boost the economy. However, a lot needs to be done to stimulate growth for which the Government should take honest and committed measures.
The Finance Minister has hinted the investors that the forthcoming budget will be a responsible one (rather than populist) and many of the decisions taken will be implemented. Let’s hope that he manages to find solutions for many critical issues including the Vodafone tax controversy, New bill for GST, improvement in FDI etc., and takes steps to boost investments.