Teething troubles pertaining to the implementation of Companies Act, 2013, will keep whoever occupies the corner room in the Ministry of Corporate Affairs busy from the very first day.
Ever since the outgoing government announced the rollout of the new law on April 1 this year, ministry officials have been caught between drafting rules for the Act and issuing clarifications on rules relating to the Act's 98 sections notified so far. In between, they have been patiently listening to industry's woes relating to implementation of the Act, its "draconian" provisions, "drafting errors", "overlaps", and instances in which "rules go beyond the Act".
A sizable chunk of India Inc hopes the new minister will address the challenges relating to implementation of the new law. Corporate India's biggest peeve, in terms of the new law, is it has been a rush-rush job. Rules for 98 sections of the Act were notified only in the last week of March. Companies barely had three-four days to understand the full import of the new law, as it came into effect from April 1.
"Much of the Act is in the rules. One must understand the rules to understand the Act," says Anand Mehta, partner, Khaitan & Co, a corporate law firm. That's where most companies find themselves stumped - strict compliance provisions, most applicable from this financial year. Also, the stringent provisions on related-party transactions mean it will not be business as usual for most companies. The mandatory corporate social responsibility spend of two per cent, too, hasn't been taken favourably by corporate India.
Many industry players say the fact that a new government is taking charge at the Centre will mean a fresh look at the law. Others are taking a more realistic approach.
"This is an opportunity for the new government to bring in more transparency in the way the Ministry of Corporate Affairs handles the new law," says Vishesh C Chandiok, national managing partner, Grant Thornton India.
Most companies say the transition from the old Act (Companies Act, 1956) to the new one could have been handled better. "It is important to restore the confidence of companies in the implementation of the Act," says Lalit Kumar, partner with law firm J Sagar Associates. The new minister has to first see that the 40 per cent of the Act that is yet to be notified is implemented at the earliest. For quicker issue of clarifications regarding the Act, industry has pitched for a single-window within the ministry. This has to be complemented with a time-bound implementation schedule. Creating capacity within the ministry to monitor compliance provisions of the Act will be another key focus area for the new minister.
Getting the National Company Law Tribunal (NCLT), currently caught in a legal quagmire, up and running at the earliest should also be high on the new minister's agenda. Without the NCLT in place, the entire Act cannot be effective, corporate law experts say. The new minister has to address the issue of powers of statutory bodies such as the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India.
The NCLT, according to the new Act, will take on some of the roles and responsibilities currently borne by the two statutory bodies.
Another question worrying some within the ministry is what if the government decides to merge the ministry with the finance, or the law ministry, in keeping with the mood to have fewer ministries? The jury is divided on the impact of such a move.
Ever since the outgoing government announced the rollout of the new law on April 1 this year, ministry officials have been caught between drafting rules for the Act and issuing clarifications on rules relating to the Act's 98 sections notified so far. In between, they have been patiently listening to industry's woes relating to implementation of the Act, its "draconian" provisions, "drafting errors", "overlaps", and instances in which "rules go beyond the Act".
A sizable chunk of India Inc hopes the new minister will address the challenges relating to implementation of the new law. Corporate India's biggest peeve, in terms of the new law, is it has been a rush-rush job. Rules for 98 sections of the Act were notified only in the last week of March. Companies barely had three-four days to understand the full import of the new law, as it came into effect from April 1.
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"Much of the Act is in the rules. One must understand the rules to understand the Act," says Anand Mehta, partner, Khaitan & Co, a corporate law firm. That's where most companies find themselves stumped - strict compliance provisions, most applicable from this financial year. Also, the stringent provisions on related-party transactions mean it will not be business as usual for most companies. The mandatory corporate social responsibility spend of two per cent, too, hasn't been taken favourably by corporate India.
Many industry players say the fact that a new government is taking charge at the Centre will mean a fresh look at the law. Others are taking a more realistic approach.
"This is an opportunity for the new government to bring in more transparency in the way the Ministry of Corporate Affairs handles the new law," says Vishesh C Chandiok, national managing partner, Grant Thornton India.
Most companies say the transition from the old Act (Companies Act, 1956) to the new one could have been handled better. "It is important to restore the confidence of companies in the implementation of the Act," says Lalit Kumar, partner with law firm J Sagar Associates. The new minister has to first see that the 40 per cent of the Act that is yet to be notified is implemented at the earliest. For quicker issue of clarifications regarding the Act, industry has pitched for a single-window within the ministry. This has to be complemented with a time-bound implementation schedule. Creating capacity within the ministry to monitor compliance provisions of the Act will be another key focus area for the new minister.
Getting the National Company Law Tribunal (NCLT), currently caught in a legal quagmire, up and running at the earliest should also be high on the new minister's agenda. Without the NCLT in place, the entire Act cannot be effective, corporate law experts say. The new minister has to address the issue of powers of statutory bodies such as the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India.
The NCLT, according to the new Act, will take on some of the roles and responsibilities currently borne by the two statutory bodies.
Another question worrying some within the ministry is what if the government decides to merge the ministry with the finance, or the law ministry, in keeping with the mood to have fewer ministries? The jury is divided on the impact of such a move.