The Ministry of Corporate Affairs (MCA) has firmed up a policy framework for “pre-legislative consultation” relating to the framing of rules and regulations under laws administered by it. It suggests the explanatory note and the proposed changes will have to be placed for stakeholder comments for at least 30 days.
However, there could be exceptions for emergency cases, according to the framework. Also, clarifications or reiterations of extent provisions won’t be put up for public comments. The framework also retains flexibility for authorities to seek customised inputs.
At present, while public comments are usually solicited when rules and regulations are made under a law for the first time, they are not often sought during subsequent changes.
The latest move is aimed at bolstering public consultations in a structured manner and making it obligatory for authorities to seek stakeholder inputs.
It’s part of broader efforts by the government to make the entire process more participatory, to reduce India Inc’s compliance burden and ensure greater ease of doing business. It’s also in sync with the 2023-24 budget announcements.The policy framework is effective from January 1. Using this, the MCA and the regulators may seek stakeholder inputs for changes to extant rules and regulations at different stages.In the first phase, the MCA has sought comments for rules relating to Companies Act, 2013, and the LLP Act, 2008, within 30 days from January 25 via its e-Consultation Platform.
The proposed framework would also cover the legislations relating to the three professional institutes, such as the Institute of Chartered Accountants of India (ICAI), the Institute of Company Secretaries of India (ICSI) and the Institute of Cost Accountants of India (ICOAI).
Similarly, the framework for regulations would apply to the watchdogs, such as the Insolvency and Bankruptcy Board of India, the Competition Commission of India (CCI), ICAI, ICSI and ICoAI.
The explanatory note will state “the issue/difficulty that the proposed amendment seeks to address; rule-making/regulatory practices on the subject matter, if any; manner of implementation of the proposed rule; and the manner, process and timelines for receiving comments from the public”, according to the framework.
The Companies Act, 2013 introduced a broad range of changes, including the corporate social responsibility, female directors, key managerial personnel and class action suits. It also tightened the corporate governance framework, among other key steps. Subsequently, the rules and regulations were firmed up periodically to enforce the law. All these rules will now be considered by stakeholders for suggesting appropriate changes.
Similarly, several changes to rules and regulations followed the adoption of the LLP Act, 2008, which essentially focussed on bringing in more transparency in the way they operate and compounding of certain offences.
Finance and corporate affairs minister Nirmala Sitharaman had announced in her budget speech in February 2023 that financial sector regulators and relevant entities would be asked to undertake a comprehensive review of existing regulations “to simplify, ease and reduce cost of compliances”.
Sitharaman had earlier said the current NDA government had scrapped 39,000 unnecessary compliances and 1,500 archaic laws.
