The ministry of corporate affairs (MCA) will have a bunch of priority areas to deal with in the new regime, including revamping of the insolvency and bankruptcy code (IBC), framing a new legislation on digital competition bill (DCB), increasing the strength of NCLT, creating specialised benches for IBC and M&A matters, and amending the Companies Act 2013 to promote the ease of doing business (EODB).
In April, the MCA had started the consultation process on seven key areas under IBC such as insolvency proceedings under NCLT, resolution process for personal guarantors, pre-packaged insolvency process, etc.
Experts said that changes in IBC regulations should also be aimed at ensuring that the entire process should complete within the stipulated timeline. “The inordinate delay defeats the purpose of IBC. Further, the provisions and process should be streamlined so that the cases should be completed with proper resolution plans rather than ending in liquidation,” said Diviay Chadha, partner, Singhania & Co.
The other big task for finance minister Nirmala Sitharaman who also heads the MCA is to tackle the proposed DCB which has received flak from a wide number of stakeholders. Even though the consultation process is over, there are demands from different lobby groups, representing tech giants like Google, Meta and Apple, to relook at the legislation.
Experts also said that the MCA must immediately fill the vacancies at NCLT which has been working well below its full quorum. For instance, the current strength (51 members) is below its approved strength (63). “After the reprimand by the Supreme Court last year, the focus should be on appointment of members with domain expertise,” said a company law expert.
On the EODB front, a lot of work is required to be done. For instance, the company law experts said that there’s a need to remove the provisions in the Companies Act, 2013 wherein the administrative approvals from MCA are required such as shifting of registered office, etc.
“The human intervention in the approval process of non-STP (straight through process) forms is the main obstacle and MCA should take immediate steps to streamline this process. MCA should also come up with company law settlement scheme (CLSS) under which companies who are non-compliant with certain provisions of law are given chance to settle their cases with minimum penalty. It’s been almost 5 years since last CLSS was introduced by the ministry,” said Chadha.