R Bandyopadhyay, secretary, Ministry of Corporate Affairs (MCA), is focused on bringing in contemporary management practices into Indian industry. The 1974 IAS officer of West Bengal cadre served as secretary of the department of public enterprises, where the number of navratna companies grew from 12 to 18 during his tenure.

At MCA, ever since he took over last September, Bandyopadhyay has been working on the new companies bill, enhancing investor awareness and modernisation of delivery of services. Edited excerpts from an exclusive interview with Sweta Ranjan:

How do you see your ministry’s role in a fast-developing economy?
Our ministry has two mottos. The first is Corporate Growth with Enlightened Regulations, which means enactment of laws that will boost and not hinder growth. It means we will seek the view of the stakeholders on every rule or law that is revisited. We put up the new version on our website for around six weeks for comments and suggestions from the stakeholders.  Then we collect, collate and analyse all the issues by an internal committee before taking a final view. The second, and equally important, motto is Corporate Development with Inclusive Growth. The general perception is that the corporate sector is meant for just four to five percent of our population. What we feel is that for the stability of the society more and more people should perceive that there is something for all of them in the corporate sector. So, as many people as possible should be involved in its development.
 
So what are you doing to promote public interest in the corporate sector?
We are organising 3,000 Investor awareness programmes across the country, in association with the RBI, UTI, NSE, BSE and MCX, besides trade and commerce bodies like the CII, FICCI and ASSOCHAM, and professional bodies like the ICAI, ICWAI and ICSI.  This is a ten-fold increase.  Last year, which is again the highest ever, we had conducted 300 investor awareness programmes.

By when do you expect the new legislation regulating corporate behaviour?
It’s in the domain of the Parliament now. But I hope that we will have a new Companies Act by the end of the year. Our aim is to enhance corporate growth, ensure greater transparency and prevent any fraudulent activities through the new enactment.

Can we expect more clarity on the accountability of the directors?
Definitely.  The role and responsibilities of the Directors both executive as well as independent should be well defined. There is also a strong argument that non-executive directors should not be held accountable to the same extent as the executive directors. But the present law does not make any distinction. 

It’s been more than a year since the Satyam scandal. What steps has your ministry taken to prevent a repeat of Satyam?
In the case of Satyam, the auditors and executives who have been accused of misconduct and criminal activities, cases have already started against them in the Special Court. In order to see that an unholy alliance does not build up we believe there should be a change and periodical rotation of auditors. The Serious Fraud Investigation Office (SFIO) will also get some more teeth now.

The MCA had also launched the Early Warning System (EWS) in the wake of the Satyam scandal. Has it helped?
The ministry has developed the EWS as a system driven tool and is an on-going process.  Through this method, companies which have shown significant aberrations in different parameters are further scrutinized (technical scrutiny) by the RoCs (Registrar of Companies). Based on the reports of the RoCs, the ministry examines the issue of further detailed scrutiny of the companies where serious violations are observed. It will be naïve on my part to say the system is foolproof. But we are trying to build it up. If you look at Satyam, it was a company every Indian was proud of. It had the best of directors; it had won several awards. So it’s very difficult to say such things can be completely ruled out just by making laws. Vigilance is still very important, vigilance of the shareholders as much as the vigilance from Bankers and Regulators.

Your ministry  has decided  to converge the GAAP (Generally Accepted Accounting Principles) with the International Financial Reporting Standards (IFRS). How soon should we expect the implementation of the new standards?
The ministry has set up a high powered group comprising various stakeholders (CAG, RBI, SEBI, IRDA, ICAI, chambers, accounting and law experts etc) to discuss and resolve implementation challenges. In accordance with the recommendations made by the core group, a roadmap for convergence has been prepared which proposes convergence of accounting standards in a phased manner starting from April 2011. The convergence process will allow Indian standards to retain some of the features that may be required in the national context.

MCA21 is a key mission mode project under the National e-Governance Plan  (NeGP)  that  facilitates  secure  electronic  filing  by companies. How are you planning to scale it up?
MCA 21 is going on nicely with constant improvement like e-stamping, e-forms optimization etc. Earlier you could on-line register but the stamp duty had to be paid to the state government physically. Now, through this e- governance system, all states have agreed to add e-stamping as a process of e-governance. Another thing that we are trying to resolve is the issue of correcting mistakes online. We are putting in additional features regularly to make MCA 21 more adaptable and user-friendly.

Tell us about the two amnesty schemes launched by your ministry.
Easy Exit Scheme and Company Law Settlement Scheme will be there for three months. CLSS 2010 gives an opportunity to defaulting companies to make up for their default by filing a return of the related documents. This we are allowing for one time only at much lesser cost. Under the Easy Exit Scheme 2010, we are giving an opportunity to the defunct companies which do not have any liabilities to avoid lengthy procedures and come out of the register. 

What is your view on the CSR credits trading proposed by your minister?
We have not reached a final decision on this yet. Discussions are going on within the ministry to determine how to measure Corporate Social Responsibility activities and how the proposed system can be administered.

Do you plan to make it mandatory?
It is not mandatory and we don’t want to make it mandatory. What we are trying to do is to develop a culture where you comply or explain to board members and your shareholders. This is what we have said in our guidelines.

Where do you stand in the debate on affirmative action, or reservation, in the private sector?
Actually we don’t look after the recruitment issues of the companies and this is done at the policy level by Labour Ministry or by the respective Administrative Ministry.  We have not examined the details of it because it has not come to us. If it is referred to us at some point of time, our ministry will take a view.