View source for Corporate Affairs: India

 {| class="wikitable"
|-
|colspan="0"|<div style="font-size:100%">
This article has been sourced from an authoritative, official <br/>publication.  Therefore, it has been ‘locked’ and will never be <br/> thrown open to readers to   edit or comment on.<br/>

After the formal launch of their online archival encyclopædia, <br/> readers who wish to update or add further details can do so on <br/> a ‘Part II’ of this article.  </div>
|}
[[Category:India|C]]
[[Category: Economy-Industry-Resources |C]]
[[Category: Government |C]]
[[Category: Law,Constitution,Judiciary |C]]

==The source of this article==
''' INDIA 2012 ''' 

A REFERENCE ANNUAL

'' Compiled by ''

RESEARCH, REFERENCE AND TRAINING DIVISION

PUBLICATIONS DIVISION

MINISTRY OF INFORMATION AND BROADCASTING

GOVERNMENT OF INDIA
=Corporate Affairs: India =

INDIA'S corporate sector is one of the major driving forces of its economic growth.
From major multinational corporations to small and medium enterprises and ranging
across a wide diversity of sectors, including manufacturing, construction, telecom
and services, corporate sector has played a significant role in the economic
development of the country. This growth and development of corporate sector was
enabled by the liberal reforms introduced in the country from time to time.
=GROWTH OF CORPORATE SECTOR=
 [[File: Corporate Affairs.PNG ||frame|500px]] 
To meet the expectations of the Corporate Sector and its stakeholders in the
changing national and global business environment, Ministry of Corporate Affairs
has extended its efforts through a number of initiatives to bring about 'Good
Governance'. These initiatives aim at improvement in the legislative framework
and administrative set-up to enable easy incorporation and exit of the companies,
convenient compliance of regulations with transparency and accountability in
corporate governance.

The Ministry is primarily concerned with the administration of the Companies
Act, 1956 and other related statutes, and has taken up a series of initiatives to meet
the needs of the Indian corporate sector. These initiatives include the implementation
and stablization of an ambitious e-governance project known as MCA21 as one of
the Mission Mode Projects of the Govt. of India under the National E-governance
Plan; comprehensive revision of the Companies Act, 1956 through a wide
consultative process; introduction of a new legal framework on the Limited Liability
Partnerships; amendments to the Acts governing the three professional Institutes
of Chartered Accountants, Cost and Works Accountants and the Company
Secretaries; amendments to the Competition Act, 2002; developments and
notification of Accounting Standards; creation of physical infrastructure in order to
meet the requirements of offices and provide for an efficient work environment;
and proposed establishment of the Indian Institute of Corporate Affairs.

The Corporate Sector, apart from creating wealth for the nation, plays a
significant role in the national economy by providing investment and employment
opportunities to millions of our people in India.

The corporate sector consists mainly of non-government companies which
form 99.8 per cent of the total sector whereas government owned companies are a
negligible 0.2 per cent. The companies are of three types—companies limited by
shares, companies limited by guarantee and companies with unlimited liabilities;
companies limited by shares forming the major chunk of the corporate sector (97.9
per cent).

The industrial sectors having major concentration of Indian companies are
the manufacturing sector, finance, insurance, real estate and business activities,
wholesale and retail trade, hotels and restaurants and construction. Each of the
manufacturing sector 26 per cent and finance, insurance, real estate and business
sector constitutes 27.58 per cent of the Indian corporate sector. The industrial sector
with the activities of wholesale and retail trade, hotels and restaurants forms 14.64
per cent whereas construction forms 8.68 per cent of the corporate sector.

==State-wise distribution of Indian companies==
The three largest states constituting 54.22 per cent of the corporate sector are
Maharashtra, Delhi and West Bengal. The top fifteen states having largest
concentration of Indian companies are Maharashtra, Delhi, West Bengal, Tamil Nadu,
Andhra Pradesh, Gujarat, Karnataka, Uttar Pradesh, Rajasthan, Kerala, Punjab,
Madhya Pradesh, Haryana, Bihar and Orissa in that order. These states constitute
95.59 per cent of the sector.

=STATUTORY REFORMS=
The Ministry has been working on wide ranging reforms in the statutory framework
relating to the corporate sector. Some of the major initiatives taken in this direction
are as under :

==Companies Act==
Keeping in view the developments taking place nationally as well as internationally
and with a view to modernize the structure for corporate regulation in India and
represent a major reform statement by the Government to promote the development
of the Indian corporate sector through enlightened regulation, a decision was taken
to revise the existing Companies Act, 1956 comprehensively. Accordingly, the
Companies Bill, 2009 was introduced in the Lok Sabha on 3rd August, 2009 and
was referred to Hon'ble Parliamentary Committee on Fiance for examination and
report. The Hon'ble Committee consulted various experts and stakeholders on the
provisions of the Bill and received a large number of suggestions. The Committee
also heard the Ministry of Corporate Affairs on a number of occasions.

After examination of such suggestions and consultation with various
stakeholders, the Committee submitted its report to the Parliament on 31st August,
2010. Various recommendations made by Hon'ble Committee in its report are under
examination in this Ministry. Keeping in view such recommendations and other
inputs being received, this Ministry has initiated the exercise of revising the
Companies Bill, 2009 in consultation with concerned stakeholders. After such
examination, consultation and also after obtaining due approvals, the revised Bill
would be introduced in the Parliament.

On the basis of the suggestions received and in-house examination of Forms
prescribed under Companies' (Central Government's) General Rules & Forms 1956
in the Ministry, a review was undertaken to revise the existing forms which would
bring further improvement and enhancement in service delivery under MCA-21 e-
Governance Project. Four forms namely Form 1, Form 32, Form DIN I & Form DIN
3 were undertaken for revision and implemented in the system for use by the
stakeholders. The objectives of the revision of aforesaid Forms were to make the
filing easier and more clarified to the users, to make simple the back- office processing
of e-forms for prompt response to the user and to bring further improvement in the
e-forms by changing/adding or deleting fields therein to elicit information in
accordance with the provisions of the Companies Act, 1956.
==Limited Liability Partnerships Act, 2008==
The provisions of the newly enacted Limited Liability Partnership Act, 2008 have
been notified for implementation with effect from 31 March 2009. The Limited
Liability Partnership Rules, 2009 have been notified on 1 April 2009. The provisions
relating to conversion of partnership firms, private company and unlisted public
company into LLP came into effect from 31 May 2009. LLP is a new business vehicle
in the body corporate form and therefore a separate legal entity which limits the
liability of the partners to their agreed contribution. Any two or more individuals
or bodies corporate may incorporate an LLP for carrying on a lawful business with
a view to profit. LLP structure is not restricted to any specific trade, business,
profession or service. LLP is a legal entity separate from its partners and has
perpetual succession. Ministry of Corporate Affairs has set up a single central
Registry at Delhi for registration of LLP and filing of further returns with Registrar
LLP on-line on its website namely, www.llp.govin on 1 April 2009.
Through the notification no. GSR 914(E) dated 15th November 2010, the Central
Govt. has made amendment in Form 10 of LLP Rules, 2010 regarding "Intimation of
Changes in Particulars by Designated Partners".

==Convergence of Accounting Standards with International Financial Reporting
Standards (IFRS)==
Accounting Standards are policy documents relating to various aspects of
measurement, treatment, presentation and disclosure of accounting transactions
and events. The purpose of Accounting Standards is to standardize diverse
accounting policies with a view to eliminate incomparability of financial statements.
The objective is to provide a set of standard accounting policies which are in
conformity with generally accepted principles and policies.
==Competition Act==
India has responded to the current world-wide trend of globalization by opening
up its economy, removing controls and resorting to liberalisation. As a natural
corollary of this, it was felt that the Indian market should be geared to face
competition from within the country and outside. It was also felt that the existing
Monopolies and Restrictive Trade Practices Act, 1969 has become obsolete in certain
respects in the light of international economic developments relating more
particularly to competition laws and there is a need to shift out focus from curbing
monopolies to promoting competition. Hence the Government decided to enact a
new law for bringing competition in the Indian market.

The Competition Act, 2002 was passed by the Parliament in the Winter Session
of 2002 and received the assent of President in January 2003. Consequent upon a
challenge to certain provisions of the Act and the observations of the Hon'ble
Supreme Court of India, the Act was amended by the Competition (Amendment)
Act, 2007. The Competition Act, 2002 as amended, provides for setting up of the
Competition Commission of India (CCI) comprising a Chairperson and a minimum
of two and maximum of six members. In addition, it also provides for establishment
of a Competition Appellate Tribunal to hear and dispose of appeals against the
orders of the Commission and also to adjudicate on the claims of compensation
that may arise from the findings of the Commission or orders of the Appellate
Tribunal.

In accordance with the provisions of the Amendment Act the Competition
Commission of India and the Competition Appellate Tribunal have been established.
The provisions of the Competition Act relating to anti-competitive agreements and
abuse of dominant position have been brought into force with effect from 20 May
2009 and the Commission has started dealing with cases under the provision.
Competition Act lays responsibility on the Competition Commission of India
to take appropriate measure for the promotion of competition advocacy, creating
awareness and imparting training about competition issues. In pursuance of these
objectives, the Commission organizes interactive meeting, workshops and seminars,
etc. with different regulatory bodies, policy makers, trade organizations, consumer
associations and the public at large to create awareness of competition issues. The
Commission also develops research capability in the area of competition economics,
law and policy among the various stakeholders, ministries/departments, research
community, regulators, lawyers, industries, etc.
==Investor Education and Protection Fund (IEPF)==
The Ministry of Corporate Affairs has established the Investor Education and Protection
Fund (IEPF) under the provision of Section 205C of the Companies Act, 1956 with the
objectives of promoting investors' awareness and protection of their interests. Under
this initiative, the Ministry while promoting the concept of prudent and informed
investment decision making, also provides services related to making available
informational and educational content for investors, investor grievance redressal and
technical assistance to organizations engaged in investor education activities. The
activities undertaken through the aegis of IEPF include the following :

l Providing (simple user friendly) educational and awareness content to all the
investors through the website www.lepf.gov.in.

l Providing the material Registry of economic offenders through the website
www.watchoutinvestors.com which covers all entities who have been found to
be guilty under different economic laws of the country.

l Providing on-line investor grievance redressal facility through the website
www.watchoutunvestors.com.

l Undertaking investor awareness programmes in partnership with Institute of
Chartered Accountants of India (ICAI), Institute of Company Secretaries of India
(ICSI) and Institute of Cost and Works Accountants of India (ICWAI) specifically
targeting investors in tier-II and tier-III cities.

l Providing technical/financial assistance to voluntary organizations for
undertaking investor awareness related activities.

l Undertaking multi-lingual media campaigns to reach out to investors across the
country.
===(some dated facts, retained only to show the range of Ministry activities)===
The Ministry organized India Investor Week from July 12-17, 2010 in order to
bring a national focus on the subject of investor awareness.
The Ministry also observed "Investor Day" in Bhubaneswar on 28th August, 2010
in partnership with the Department of Public Enterprises of the Government of Orissa.
On this occasion, the Ministry's investor education website, www.iepf.gov.in was
launched in Oriya along with the booklet "A beginner's Guide to the Capital Market".
The Ministry's initiative on investor awareness is progressing well. Over 3500
programmes have been organized in different parts of the country till November, 2010
by partner organizations. The financial support was given to only professional institute,
namely ICSI, ICAI and ICWAI.

"India Corporate Week" was organised from December 14-21, 2010 with the theme
"Sustainable Business", It was inaugurated by Hon'ble Prime Minister of 14th December,
2010 in Vigyan Bhawan, New Delhi.

===National Foundation for Corporate Governance===
Ministry of Corporate Affairs has set up National Foundation for Corporate
Governance (NFCG) as a not-for-profit Trust to provide a platform to deliberate
issues relating to good corporate governance and to sensitize corporate leaders on
the importance of good corporate governance practices, to facilitate exchange of
experiences and ideas between corporate leaders, policy makers, regulators, law
enforcing agencies and non-government organizations.

The NFCG has a three-tier structure for its management, viz, the Governing
Council under the Chairmanship of Minister of Corporate Affairs, the Board of
Trustees and the Executive Directorate.

The NFCG has been sponsoring orientation programmes for Directors through
the various Institutes of Excellence and has been organizing seminars and
conferences to propagate the need for following good corporate governance
practices.

Over the last few years, NFCG has undertaken various initiatives to create
awareness about the importance of implementing good corporate governance
practices both at the level of individual corporations and for the economy as a whole.
Following are some of the initiatives undertaken by the NFCG during the current
year.

1. National Seminar on Corporate Governance on 20th February, 2010.

2. National Seminar on Corporate Governance: The Way Forward on 20th
February, 2010

3. National Conference on Corporate Governance & the Role of Independent
Directors on 10th March, 2010.

4. Conference on CSR-From Awareness to Leadership: Making CSR an Actionable
Business on 20th March, 2010.

5. National Conference on Inclusive & Responsible-The Next Face of India Inc.
on 24th March, 2010.

6. Seminar on Limited Liability Patnership on -27th March, 2010.

7. National Seminar-Corporate Compliance Management and Due Diligence on
27th March, 2010.

8. Seminar on Limited Liability Partnership on 28th March, 2010.

9. Developing Corporate Governance Norms for SMEs (completed and
submitted in June, 2010).

==Serious Frauds Investigation Office (SFIO)==
Serious Fraud Investigation Office (SFIO) has been set up by the Government of
India in the Ministry of Corporate Affairs by way of resolution dated 2.7.2003 after
it was approved by the Cabinet vide its note dated 9.1.2003. This office was set up
after considering the recommendation of the Naresh Chandra Committee to
investigate corporate frauds of serious and complex nature on the line. The SFIO is
a multi-disciplinary investigating Agency, wherein experts from banking sector,
capital market, company law, law, forensic audit, taxation, information technology
etc. work together to unravel a corporate fraud. 

At present, SFIO is carrying out
investigation under provisions of the Companies Act, 1956 from Sections 235 to
247. However, as approved by the Cabinet, a separate legislation would be enacted
for SFIO in second phase to provide adequate powers and reach to this organization.
For this purpose, Vepa Kamesam Committee set up by Ministry of Corporate Affairs
to look into the issue related to SFIO and make suitable recommendation has already
submitted the report in April 2009. The recommendations of the Committee are
under examination in Ministry of Corporate Affairs.

During the period from 1st April 2010 to 31st December 2010, six cases were
ordered for investigation under section 235/237 of the Companies Act, 1956 by the
Central Government under separate orders. So far, 79 cases have been referred to
SFIO for investigation. Out of these, SFIO has submitted investigation reports in 52
cases till 31.12.2010, two cases have been either stayed or dismissed by Courts and
the remaining 25 cases (as per Para 3.1 and 3.2 above) are under investigation. Till
31.12.2010, 823 cases of prosecution have already been filed in the different Courts
against the persons involved in fraudulent activities in the companies.
==Indian Institute of Corporate Affairs (IICA)==
Indian Institute of Corporate Affairs (IICA) has been set up to be a holistic thinktank,
capacity building, see delivery Institute to help corporate growth, reforms
through synergized knowledge management, partnerships and problem solving in
a one-stop-shop mode. The Institute would provide support to the Ministry in
review/revision of existing corporate laws, rules and regulations, as well as in
framing of new ones, as per requirements of a dynamic economic environment. In
addition, it would provide the much-needed training to the officers of Indian
Corporate Law Service (ICLS) and other officials working for the Ministry, and
support organizational reforms initiatives. IICA would also help in continuous
improvement of service delivery in diverse areas like MCA21, corporate governance,
corporate social responsibility, investor education and protection, etc. This is the
first-ever Plan Scheme of the Ministry and involves an outlay of Rs 211.00 crore over
the Eleventh Plan period.

==MCA21 e-Governance Project==
The Ministry of Corporate Affair has implemented MCA21 e-Governance Project.
It is one of the Mission Mode Projects of the Government of India under the National
e-Governance Plan. The Project envisages easy and secure on-line access to all
registry related services provided by the MCA, including registration and filling of
documents, throughout the country for all the corporate and other stakeholders at
any time and in a manner that best suits them. During the year, e-stamping has
been introduced in MCA21 portal. This has enabled the stakeholders to make
payment of stamp duty on MCA21 portal itself. 

The revenue collected by way of
stamp duty is remitted to RBI at the end of the week and the RBI remit the same to
respective States Government within a day's time. E-Governance system for LLP
was made operational on 1st April 2009. The system was designed and developed
by NIC. All e-Forms except Form 11 (Annual Returns of LLP) is available for users
for filing. Payment via credit card is also enabled. Currently there are 1055 LLPs
registered as on 31st March, 2010 including conversion from companies & firms.
5246 DPINS are allocated. It is planned to introduce other modes of payments like
net banking & challan, as in MCA21.

During the year 2009-10, a number of initiatives were taken in this direction.
17 e-forms were revised and a new e-form 68 was introduced for rectification of
mistakes made in form IA, 1 and 44 to improve the operational efficiency and enhance
compliance. Operation of the system was switched over from the Data Centre in
Delhi to the Disaster Recovery Centre in Chennai to establish that the disaster
recovery centre is fully geared to handle full MCA21 processing in case of a diaster.
Following operational statistics bring out the stability in the system, increased
volume of filings and improved compliance:
 [[File: Corporate Affairs1.PNG ||frame|500px]]

=INTERNATIONAL COOPERATION=
International Cooperation involving interaction with foreign government
authorities/organizations/institutions is essential, as the Indian business
environment is getting increasingly integrated with the global business environment.

It enables the professionals as well as the Ministry to understand the developments
taking place in the world. Also to showcase the initiatives of the Ministry in the
areas of corporate governance, corporate social responsibility and the development
of the accounting profession, interactions were undertaken by the Ministry with
International Organizations like George Washington University Law School,
International Federation of Accountants (IFAC), Indian Medical Association (IMA),
US India Business Council (USIBC) in USA, Global Reporting Initiatives (GRI),
Institute of Certified Management Accountants Sri Lanka (ICMASL) at Colombo,
European Academy of Business in Society (EABIS), Federal Antimonopoly Service
(FAS) of Russia, World Bank Institute at Belgium, and Organisation for Economic
Cooperation and Development (OECD).

=PART II=
=Corporate  governance=
==2018: Kotak panel recommendations accepted==
[https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F03%2F29&entity=Ar02907&sk=E2F79859&mode=text  Sebi asks listed cos to split CMD post, March 29, 2018: ''The Times of India'']

[[File: 2018- Kotak panel recommendations accepted by SEBI.jpg|2018: Kotak panel recommendations accepted by SEBI <br/> From: [https://epaper.timesgroup.com/Olive/ODN/TimesOfIndia/shared/ShowArticle.aspx?doc=TOIDEL%2F2018%2F03%2F29&entity=Ar02907&sk=E2F79859&mode=text  Sebi asks listed cos to split CMD post, March 29, 2018: ''The Times of India'']|frame|500px]]


''Makes It Mandatory To Disclose Reasons For Auditors’ Resignation And Their Perks''

The Sebi board took a slew of key decisions which included separating the posts of managing director (MD)/ chief executive officer (CEO) and chairman, making it mandatory for listed companies to disclose reasons for the resignation of auditors and fees paid to them, and reducing the number of companies in which a person could be director to 8 from 10.

Accepting the Uday Kotak panel recommendations on corporate governance, Sebi also directed the top 1,000 listed companies to have a minimum six directors. It asked the top 100 listed companies to webcast annual general meetings. The Sebi board cut costs for some mutual fund schemes. It has decided to strengthen rules that govern trading in the derivatives market, mainly by retail investors.

The Sebi’s decision to separate the posts of MD/CEO and that of the chairman of board of directors would lead to stricter scrutiny of the management by its board, industry professionals said. Currently, several companies have merged the two posts as chairman-cum-MD, leading to some overlapping of the board and the management, which could lead to conflict of interests. The Sebi recommendation will come into effect from April 1, 2020 for top 500 listed entities.

The Sebi board said that all listed companies will have to disclose the expertise of its directors and should have at accepted, some have been referred to government agencies and other regulators.

A release from the regulator said, “The board decided to refer certain recommendations to various agencies (government, other regulators, professional bodies, etc), considering that the matters involved relate to them. Such recommendations, inter alia, include strengthening the role of ICAI, internal financial controls, adoption of Ind-AS, treasury stock, governance aspects of PSEs (public sector enterprises), etc.”

The Sebi approved expanding the eligibility criteria for independent directors, enhanced the role of audit, nomination and remuneration, and risk management committees of the board of a listed least one independent woman director. All these were part of the series of recommendations given by the Sebi-appointed Kotak committee. Sebi chairman Ajay Tyagi said that while a large number of recommendations by the committee were modification, 15 with some modifications, while eight have been referred to government agencies and other departments.

Tyagi also said that in the derivatives market, a framework has been approved that will take care of product suitability for every retail investor who trades in the derivative market. “Individual investors may freely take exposure in the market (cash and derivatives) up to a computed limit based on their disclosed income under their Income Tax Return (ITR) over a period of time. For exposure beyond the computed limit, the intermediary would be required to undertake rigorous due diligence and take appropriate documentation from the investor,” the release said. company. It also said that companies will now have to disclose details about utilisation of funds raised through qualified institutional placement (QIP) and preferential issues.