NEW DELHI : The Ministry of Corporate Affairs is exploring a series of research projects that reveal its policy agenda for the future, ranging from predicting bankruptcy based on the financial statements filed by companies, integrating the database of companies of the ministry with that of other regulators and the extension of the reporting framework on sustainability to unlisted companies. companies.
In a request for research proposals released on Thursday, the department explained how these projects, which it will fund, will help improve regulatory oversight, provide early warnings of business failures and improve the ease of doing business. .
One of the main research projects is the integration of the Ministry’s database of statutory filings by companies with that of other regulatory bodies. “Integrating the MCA21 database and databases from other departments and regulators will not only help avoid multiple filing requirements, but will also strengthen enforcement,” the ministry said.
According to experts, reducing multiple filings will improve the ease of compliance and this should have been tried earlier. “The same information is provided to different regulators as part of statutory filings, all of which are online. So why not make statutory documents available to all relevant regulators? The idea should be to help companies,” said Rajat Bose, a partner at Shardul Amarchand Mangaldas & Co., a law firm.
This ruling can also help the government verify a company’s compliance with various economic laws.
Another area of research is the design of an early warning system taking into account factors such as the increase in loans granted to the main shareholders (promoters), group companies vis-à-vis the indebtedness of the company, the regular cancellation of loans, the renewal of these loans, the mismatches in the assets-liabilities for the financial companies and the increase in the pledging of the shares of the promoter, the ministry said. Asset/liability mismatches have been cited by experts as the reason for the severe financial stress that non-banking financial companies have experienced in recent years. Non-bank lenders must incorporate.
Using the extensive database of financial statements available from the ministry to develop a model for predicting the probability of business failure is another research proposal the ministry intends to fund.
Improving the ease of doing business is a major area of research. Examining the feasibility of forming advance ruling authorities for the Corporations Act like those that exist for income tax and GST is another area in which the department would like to have a research project. Advance ruling authorities advise on the legal provisions applicable to a proposed transaction, a regime intended to reduce litigation.
Corporate social goals that go beyond achieving shareholder benefits are a key area the department is exploring to inform future policy. One of the research topics proposed by the ministry is the feasibility of extending the Sebi’s Corporate Responsibility and Sustainability Report (BRSR) beyond listed companies and the voluntary report.
The evolution of a corporate governance index is another area of research. In addition to measuring companies’ performance on this front, such an index could offer solutions to identified shortcomings, the ministry said.
Identifying areas of overregulation to improve the ease of doing business is also another area of research.
An email sent to the ministry spokesperson on Friday went unanswered at the time of publication. Insights and insights from the study are expected to be fed to a standing committee on company law issues that helps the department study and formulate policy proposals.