IBBI marks high for low-profile Corporate Affairs Min in 2016

New Delhi: From making the Insolvency and Bankruptcy Board a reality to tweaking norms for improved ease of doing business, the Corporate Affairs Ministry strived to strike the right note this year even as further amendments to the new companies law got entangled in Parliament logjam.

Pushing forward with implementation of pending provisions in the Companies Act, 2013, the National Company Law Tribunal (NCLT) replacing the Company Law Board (CLB), and its appellate authority were also put in place.

Seen as one of the key reforms of the NDA regime, the Insolvency and Bankruptcy Board of India (IBBI) came into existence in a short span of time this year soon after Parliament gave its nod to the legislation in this regard.

IBBI officially started functioning from December 1 bringing into force the Insolvency and Bankruptcy Code that seeks to ensure insolvency resolution of corporate entities, partnership firms and individuals in a time-bound manner.

Reflecting its importance, a senior government official recently described the implementation of the Code as the start of a "new regime". Insolvency professionals as well as agencies have also been registered with IBBI.

Aimed at addressing difficulties in terms of compliance as well as to facilitate the ease of doing business, the ministry introduced the Companies (Amendment) Bill 2016 in Lok Sabha in March.

The Parliamentary Standing Committee on Finance submitted its report on the Bill earlier this month. But the legislation was among those which could not be taken up for discussions amid a virtual washout of Parliament proceedings in the Winter Session that ended on December 16.

As part of larger efforts aimed at improving the ease of doing business in India, which is one of the fast-growing major economies, the ministry came out with a simplified and completely digital form for incorporation of companies.

Corporate social responsibility (CSR), a showpiece provision in the revamped companies law, remained a topic of discussion among the stakeholders as the ministry persisted with efforts to clarify about relevant rules and ensure compliance with the framework.

2016 saw Arjun Ram Meghwal getting the Minister of State charge of the ministry while Finance Minister Arun Jaitley continues to be at the helm of the Corporate Affairs Ministry. The ministry as well as its officials kept a relatively low profile during the year.

Apart from a raft of clarificatory circulars, 2016 saw the ministry seeking explanation from certain companies for non-compliance with CSR norms. Besides, the ministry is to conduct workshops to create sensitisation about CSR norms.

Seeking to provide an impetus to corporates, the ministry has also started work for establishing CSR award spread across various categories.  Last month, the government informed Rajya Sabha that an assessment of CSR spending of 7,334 companies for 2014-15 indicated that 4,195 firms did not incur any expenditure on the same.

As many as 3,139 companies together have shelled out a total of Rs 8,803 crore towards CSR activity in 2014-15, with funds mostly spent on healthcare projects, environment and animal welfare, among other areas.

Under the Companies Act, 2013, a certain class of profit making entities has to shell out at least 2 per cent of three-year annual average net profit towards CSR activities.  In case of non-spending, they have to provide reasons.

Taking note of concerns expressed by several domestic audit firms about negative impact on them due to various practices that lead to circumvention of regulations, the ministry set up a three-member panel to look into the issues in September.

The committee, headed by Teri Chairman Ashok Chawla, is examining various issues related to audit firms and is expected to submit its report next month. Continuing with its pursuit to secure and protect the interest of shareholders in the Rs 5,600-crore NSEL scam, the ministry ordered an SFIO probe into the affairs of FTIL and its 18 associate companies.

As the new year approaches, this relatively low-profile ministry seems to have its task cut out, driven by the motto of ease of doing business.