The latest circular issued by the ministry of corporate affairs (MCA) amounts to a self-goal. How else would you explain why a new company law makes e-voting mandatory for a large number of companies but words the provisions so confusingly that they are forced to defer mandatory e-voting to next year? But then, why be surprised, the MCA is playing to lose. It has been doing that since late last year.
On August 29, 2013, the Companies Act, 2013, received Presidential assent. The next day section 1, of the 470 sections, was notified. The rest remained in limbo as the rules to the new Act were yet to be finalised. Indias new company law is slimmer than before but is accompanied by more voluminous delegated or secondary legislationrulemaking in simple English. The Act has more than 300 rules.
The first set of draft rules were published for consultation by the ministry on September 9, 2013. Just three days lateron September 12, 2013the MCA, with no prior notice, notified 98 sections of the Act. Granted that these were sections with no rules attached, yet it was not clear why the ministry was in such a hurry to force a sudden, piecemeal implementation of the Act. Companies were stuck between two laws, between 1956 and 2013, with no clarity on the timeline for a full transition. Thereafter, six sets of draft rules were published through September, October and November last year. They reportedly generated over 30,000 responses. As 2013 ended, we had a new law, with 99 sections implemented, 371 sections pending and draft rules under consultation.
January, February and most of March were suspenseful months. If the Act was to be fully effective on April 1, 2014, as was the expectationfuelled by ministry sourcesthen surely the final rules would be issued at least a month in advance? How else would companies, directors, auditors, etc, familiarise themselves with the full extent of the law and be in compliance?
But the MCA seemed apathetic to those concerns. On March 26, 2014, with the final rules nowhere in sight, the MCA announced that an additional 183 sections would come into effect starting April 1. Some sections pertaining to NCLT (National Company Law Tribunal) were held back as the Tribunal is yet to be operationalised. Besides, it is currently being challenged by the Madras Bar Association in the Supreme Court.
Then, barely five days before 282 sections and 7 schedules