Improving EoDB: MCA Eliminates RoC Approval For Most Corporate Filings

In a step which is expected to improve the ease of doing business, especially for startups, the Ministry of Corporate Affairs (MCA) has reportedly simplified the process for corporate reporting on its website by eliminating the need for the approval of the Registrars of Companies (RoC) in most cases in a new system called “file and forget”.

The MCA would now allow companies to fulfil their reporting obligations with an online acknowledgement, which is equivalent to approval by the RoC, sources aware of the development informed Mint.

The change is a part of the ongoing revamp of the MCA’s statutory filing website MCA21. The first phase of its new Version 3 (V3) was launched on January 23.

Almost 56 out of about 100 forms, which the companies file as part of their compliance requirements under the Companies Act, were migrated to the web-based version last month and 30 more web-based forms will be launched soon.

“Among these, the majority of the critical ones, such as allotment of securities or shares, are now out of RoC approval requirement. Online acknowledgement is enough, and they are taken on record under an auto-approval process. Earlier, barring a few, most forms filed by companies used to go to RoCs for their approval,” a source was quoted as saying.

The ministry is reportedly also setting up a centralised processing centre for corporate filings under the Companies Act, which would be similar to the Income Tax Department’s centralised processing centre in Bengaluru.

Speaking on the development, Siddarth Pai, founding partner of 3one4 Capital, said that the ‘straight pass through’ of these forms will help improve the ease of doing business for Indian companies, especially startups.

“Rounds have often gotten delayed to the time taken to obtain such approvals, which affected capital raises and sentiment. SH 7 and MGT 14 (forms) in particular are critical as they’re central to any capital raise by a startup. This move will help Indian startups become more agile and spend less time on compliance and more on corporate building,” Pai added.

As per the publication’s report, the new system has also improved security features like two-factor authentication for company incorporation and other filings. 

However, it must be noted that startups till recently were facing tech glitches on the MCA website during its transition to the new version.

Finance Minister Nirmala Sitharaman set up a special team last week to monitor the issues on a daily basis.

One of the sources aware of the ongoing development told the publication that filings have now stabilised. The number of filings in this fiscal is also at levels comparable with that of the previous year, or better.

The person also said that changes in the authentication process for statutory filings will help check attempts to form shell companies with dummy directors.

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