New Delhi: Focused on further improving corporate governance practices, the Ministry of Corporate Affairs will strive to ensure a positive co-relation between high standards for governance and ease of doing business in 2019, according to a senior official.
As the curtains come down on an event 2018 that witnessed the IL&FS crisis and the Punjab National Bank fraud rattling investor sentiments, the corporate affairs ministry will look forward to raise the governance standards as well as move ahead with various other reform measures.
From strengthening the framework for independent directors to changing norms of governing companies and possible reworking of regulations for auditors, the ministry’s plate is full.
Besides, the clampdown on suspected shell companies and stepping up the vigil to curb financial misdoings and actions against perpetrators of fraudulent activities are continuing.
Corporate Affairs Secretary Injeti Srinivas said the objectives of raising corporate governance standards and ease of doing business go hand in hand.
“But when corporate governance standards are coming down or are not high, then having very high standards of ease of doing business is a problem. So they go hand in hand and are positively co-related.
“So, the effort is on corporate governance, raising the standards and along with it promoting ease of doing business," he told PTI in an interview.
There is a need as well as room for lot of improvement in corporate governance in the country, Srinivas said.
Another key initiative is de-criminalisation of corporate offences, which are essentially technical or procedural in nature, under the companies law. The move will help declog special courts as well as the National Company Law Tribunal (NCLT).
In this regard, a bill to replace an ordinance as well as amend the Companies Act, 2013 was introduced in the Lok Sabha this month.
“I think this is a big step and I think if it works well, we should be able to see more and more sections coming into penalty regime vis-a-vis the fine and imprisonment kind of regime. They become civil offences rather than criminal offences or a combination of both civil and criminal offences," the Corporate Affairs Secretary said.
An e-adjudication platform, which would be “non-discretionary" will be put in place soon.
“The idea is that you should have more and more interface with the system rather than having to interact with any regulator. The outcome should be predictable and time-bound. You should make it non-discretionary and transparent," he noted.
In other significant developments, the ministry has set up the National Financial Reporting Authority (NFRA), pushed ahead with electronic Know Your Customer (KYC) requirement for all directors, decided on dematerialisation of securities of unlisted public companies and rolled out various e-governance initiatives.
In the IL&FS matter, the ministry invoked a rarely-used provision to supersede the group’s board and a probe by the Serious Fraud Investigation Office (SFIO) is progressing.
This followed the ministry taking strict action, including ordering SFIO probe into the nearly ₹ 14,000 crore scam at Punjab National Bank.
(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed)