MCA preps stage for virtual hearings

Once it is launched, all proceedings by the registrars of companies (RoCs) related to company law breaches and defaults will be conducted entirely online. (AFP)
Once it is launched, all proceedings by the registrars of companies (RoCs) related to company law breaches and defaults will be conducted entirely online. (AFP)

Summary

  • The ministry of corporate affairs (MCA) is set to roll out e-adjudication on its statutory filing portal by March

NEW DELHI : Soon, corporate lawyers and executives will no longer have to turn up at company registrar offices for case hearings, with the government preparing the ground for virtual hearings on its MCA21 portal.

The ministry of corporate affairs (MCA) is set to roll out e-adjudication on its statutory filing portal by March, two people familiar with the development said, drawing comfort from the record number of return filings this year. Once it is launched, all proceedings by the registrars of companies (RoCs) related to company law breaches and defaults will be conducted entirely online. “That will include online hearings. This will be rolled out before end of this fiscal year," said one of the two people cited above, both of whom spoke on the condition of anonymity.

At present, government officials communicate with authorized company executives via physical letters, while some proactive officials also email scanned copies of these letters for quicker delivery. The new system is expected to fast-track proceedings, since it eliminates the need for travel every time there is a case hearing.

According to the second official, although the law does not bar virtual meetings, hearings are still predominantly physical since the proceedings require making signatures and recording statements, among other reasons. Some company representatives also prefer physical meetings as they believe they can present more convincing answers at in-person meetings. “As we offer more and more of public services digitally, e-adjudication is the next logical step. The aim is to increase speed, transparency and efficiency," the second official added.

Issues around the legality of electronic evidence collected, communication delivered and statements made are being addressed so that the virtual adjudication system stands to judicial scrutiny, the people cited above said.

The government decided to push ahead with e-adjudication after the MCA21 portal clocked the record number of financial statements and annual return filings in the latest filing season that ended in November. According to MCA data, 1.57 million financial statements and annual reports were filed this season up to 29 November, up 15% from the 1.37 million a year ago.

Experts said e-adjudication will be a key milestone in India’s digitization journey, which follows the decriminalization of offences under the Companies Act.

Virtual hearings are designed to manage the rising volume of adjudication procedures at the RoC and regional directors (RD), said Virender Bhasin, executive director, entity set-up and management at Nexdigm, a business and professional services firms. End-to-end digitization of the adjudication process will make it convenient for stakeholders, he said. “Once deployed, the facility is projected to reduce enterprises’ regulatory burden, thus facilitating ease of doing business," he added.

As part of two rounds of de-criminalization of Companies Act in 2019 and 2020, over four dozen procedural lapses and breaches were brought under the adjudication of RoCs, a move that drove up RoC adjudication, giving relief to firms. In-house adjudication of cases prevents them from ending up in over-burdened tribunals and high courts.

An email sent to an MCA spokesperson seeking comments remained unanswered.

Mint reported on 24 November that the number of orders issued by RoCs against firms for violations of company law provisions has surged after the two rounds of decriminalization.

In 2021 and 2022, 248 and 369 orders were issued, respectively, more than the number in 2019. Up to 23 November, 765 orders were issued by RoCs.

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