The Ministry of Corporate Affairs (MCA)Revamped IBC (Insolvency and Bankruptcy Code) and introducing a new Digital Competition Bill (DCB). As part of its comprehensive strategy, the MCA plans to bolster the National Company Law Tribunal (NCLT) by increasing its strength and establishing specialised benches for IBC and mergers and acquisitions (M&A) cases. Amendments to the Companies Act 2013 are also on the agenda to enhance the ease of doing business (EODB) in India.
In April, the MCA initiated a consultation process focusing on seven critical areas under the IBC, such as insolvency proceedings under NCLT, resolution processes for personal guarantors, and pre-packaged insolvency processes. Experts stress the importance of timely completion of insolvency proceedings. ‘The inordinate delay defeats the purpose of IBC. The provisions and process should be streamlined to ensure proper resolution plans rather than ending in liquidation,’ said Diviay Chadha, partner at Singhania & Co.
Another significant challenge for Finance Minister Nirmala Sitharaman, who also oversees the MCA, is addressing the controversial DCB. Despite the completion of the consultation process, tech giants like Google, Meta, and Apple are lobbying for revisions to the proposed legislation.
Filling vacancies at the NCLT is also a pressing issue, as it currently operates with 51 members, well below the approved strength of 63. ‘After the reprimand by the Supreme Court last year, the focus should be on appointing members with domain expertise,’ noted a company law expert.
On the EODB front, experts highlight the need to eliminate certain administrative approvals mandated by the Companies Act, 2013. ‘Human intervention in the approval process of non-STP forms is the main obstacle. MCA should streamline this process and introduce a company law settlement scheme (CLSS) for non-compliant companies to settle their cases with minimal penalties. It’s been almost five years since the last CLSS was introduced,’ Chadha added.
With these ambitious reforms, the MCA aims to create a more efficient and business-friendly environment in India. The Ministry of Corporate Affairs (MCA) is charting a transformative path with its ambitious agenda to overhaul the Insolvency and Bankruptcy Code (IBC) and introduce a Digital Competition Bill (DCB). By bolstering the National Company Law Tribunal (NCLT) and streamlining insolvency processes, the MCA aims to enhance corporate governance and ease of doing business in India.
Our Experts emphasise the need for timely insolvency resolutions to prevent liquidations, while the proposed Digital Bill faces scrutiny from major tech players. Additionally, addressing NCLT’s staffing issues and reducing bureaucratic hurdles in the Companies Act,2013 are crucial steps towards achieving these reforms.
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