Firms to face far less red tape for registration

Come October and about 6.5 lakh companies would get freedom from the drudgery of going to Registrar of Companies (ROC) offices for filing documents and paying fees.

Making that possible would be MCA 21, a software package to be implemented by the Tata Consultancy. The Rs 341 crore, six-year service contract, was inked today by Company Affairs Minister Prem Chand Gupta and S Ramadorai, TCS managing director.

Comparing the filing system in India with that in Hong Kong, Gupta said, "Files are piled up like garbage. We have to modernise our offices so that we are at par with the best in the world."

An Indian firm submits at least 10-25 documents each year to the government. This entails multiple visits to the ROC office and considerable wastage of time, approximately 20 million mandays.

This could be converted by corporate India into productive work once the system is up and running, said Komal Anand, secretary, Ministry of Company Affairs.

Instead of dealing with 22 registrar of companies and four regional directorates located all over the country, the companies can deal with them from their own offices, online, 24 hours a day. For the first three years, the system will be free and no filing fee will be charged.

The companies would be issued digital signatures and they would be able to file their documents electronically. The draft rules to the new Companies Act also proposes digital signatures as an acceptable mode for signing a memorandum of understanding. Not just the MoU but other annual documents like financial results and annual returns would also be required to be filed electronically.

From the fourth year onwards, e-filing would be the only way to file any document with the ROC, paying fees and even penalties.

The vast financial data and companies documents already filed with the registrar would also be digitised and made accessible. At present, data and information search, as any visitor to an office of the registrar knows, is an onerous task.

Perhaps the biggest gain will be that check on compliance would become possible. Currently, the enormity of the task of verifying the physical data is such that it has not even been attempted.

With better control over data, the government would be able to be more responsive in matters of corporate governance.

A company has to deal with registrar of companies at every stage. This includes applying for a suitable name, filing documents of incorporation like memorandum of understanding and articles of association and paying filing fees.