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Ease of Doing Business in India – Latest Business Initiatives by the MCA


With sustained business reforms since the year 2017, India has consistently improved its performance in the World Bank’s global ease of doing business index jumping 14 spots to be placed 63rd out of 190 countries. The government has clearly indicated its intention of promoting business in India, and has been proactively engaged in several business reforms. As a result of this, there have been several latest business initiatives to simplify the process of registration, operation, taxation and closing down of a business. In this post, we highlight some of these important reforms and also assess their significance in advancing the ease of doing business in India. 


Some of the Latest Business Initiatives launched by the MCA for ease of

doing business:


Business incorporation made easier


Integrated SPICe Form – In a bid to reduce the time taken for registering a company in India, the Ministry of Corporate Affairs floated a new integrated form called SPICe that stands for Simplified Proforma for Incorporating Company Electronically, that allows for eight different registrations such as GST Number, Name registration, PAN, CIN (Company Identification Number), TIN (Taxpayer Identification Number) EPFO (Employees’ Provident Fund Organisation) ESIC (Employees’ state Insurance Corporation). 


Automatic CCI approval – Green Channel 


Another of the latest business initiatives is the green channel for

automatic CCI approval. The Minister of Corporate Affairs has introduced a new

green channel to remove inefficiencies in the procedure of octane in

permissions from the Competition Commission of India. The process has been made

in entirely online and simplified formats are now available. Earlier companies

joining together to form a “combination” as per Competition Act, 2002 such as

undergoing merger or amalgamation had to wait for a long time for CCI approval,

respond to multiple queries, and incur time and cost losses. 


RUN – Reserve Unique Name service for easier name reservation and

change 


Before the RUN service was introduced, all applications for company

names were to be made through the Form INC-1. The names had to be accompanied

with a minimum of 2 Director Identification Numbers and 1 Digital Signature.

Now, the name can be reserved through an online process not requiring the

digital signature. For existing companies undergoing name change, it can be

reserved through the RUN service for 60 days and for new companies, the name

can be reserved via the online process for 20 days. Moreover, this service is

available for almost every company including private limited company, unlimited

company, Nidhi Company, One Person Company, Section 8 companies, etc. 


Reduced fines, fees and liability for offences


  • To promote start-ups and advance easy incorporation of a company, the Ministry has introduced zero MCA fee for incorporation of a company with up to Rs 15 lakh authorized capital.

  • De-criminalisation of several technical & procedural violations existing in the Companies Act such as failure to file returns, issuance of shares at a discount, etc., which are now made only monetary punishments of civil nature. This would not just reduce burden on criminal courts & NCLT but also encourage talented people to assume directorship.

  • However, the provision of mandatory Corporate Social Responsibility contributions, under the Companies Act have been amended to provide for penal liability of directors.

 Simplified norms for Debenture Redemption Reserve (DRR)


Another of the latest business initiatives by MCA is for DRR. Since debentures are unsecured loans, the Companies Act 1956 onwards have provided for creation of DRR as compulsory reserve (of 25% of value of debentures) by every company issuing debentures. This was introduced to offer protection to debenture holders against risks of default in payment by the company. However, this provision impeded growth of capital market by blocking valuable funds of the company. The Ministry has removed the requirement for creation of a DRR of 25% of the value of outstanding debentures in respect of listed companies, NBFCs registered with RBI and registered Housing Finance Companies. For unlisted companies, the threshold has been brought down from 25% to 10%.


Insolvency operations – faster, better resolution and protection of diverse interests


As per the latest Resolving Insolvency Index, India’s ranking jumped 56 places to 52 in 2019 from 108 in 2018. Recovery rate increased from 26.5% in 2018 to 71.6% in 2019 and time taken in recovery improved from 4.3 years in 2018 to 1.6 years in 2019.  The Insolvency Act has been amended to prevent promoters from regaining control through layered and conceited schemes. It is also made investor friendly by providing for faster time bound resolution, protecting interests of home buyers, while also promoting resolution over liquidation by lowering the voting threshold of committee of creditors.


Paving way for an accessible, economical and efficient business regime


In the last three years, India has witnessed registrations of over 1.25 lac companies. We also take pride in having more than 30 unicorn companies in India that have more than $1 billion valuation. With sustained progressive reforms, India could well compete with countries like Singapore that boast of a 24 hour company incorporation window. Revitalising the corporate infrastructure is a key to India’s growth story towards a $5 billion economy.  These Latest Business Initiatives by MCA should definitely help boost business in India and help the process of starting, registering and running a business easier. It will also help increase interest in entrepreneurship and help more companies come up, which will be a boost to the economy.



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