Passage of the new Companies Bill by Lok Sabha and introduction of the Competition Commission of India (Amendment) Bill 2012 in the Parliament are the

highlights of the achievements of the Ministry of Corporate Affairs during 2012

Year-end Review 2012

Passing of the new Companies Bill by the Lok Sabha:

The passing of the Companies Bill, 2011 by the Lok Sabha on 18th December 2012 has been a great achievement of the Ministry of Corporate Affairs during the year. On its enactment this new Companies law will allow the country to have a modern legislation for growth and regulation of corporate sector in India. The existing statute for regulation of companies in the country, viz. the Companies Act, 1956 had been under consideration for quite long for comprehensive revision in view of the changing economic and commercial environment nationally as well as internationally. In view of various reformatory and contemporary provisions proposed in the Companies Bill, 2011, together with omission of existing unwanted and obsolete compliance requirements, the companies in the country will be able to comply with the requirements of the proposed Companies Act in a better and more effective manner.

In October the Union Cabinet approved the proposal to make official amendments to the Companies Bill, 2011. The Companies Bill, 2011 had earlier been introduced in the Lok Sabha on 14th December, 2011 and was considered by the Parliamentary Standing Committee on Finance which submitted its report to the Speaker, Lok Sabha, on 26th June, 2012. The report was laid in the Parliament on 13th August 2012. Keeping in view the recommendations made by such Committee it was decided to make certain modifications in the Companies Bill, 2011 through official amendments after which it was presented in the Lok Sabha which passed it.

Competition Commission of India (Amendment) Bill 2012:

The year also saw the introduction of a Bill in the Lok Sabha on 7th December 2012 by the Ministry of Corporate Affairs to further amend the Competition Act, 2002, with a view to fine tune it and to meet the present day needs in the field of competition, in the light of the experiences gained in the actual working of the Competition Commission of India in the last few years.

Major amendments proposed in the Bill relate to changing the definition of “turnover”, “Group”, reducing the overall time limit of finalization of combinations from 210 days to 180 days and insertion of a new Section 5A enabling the Central Government to lay down, in consultation with the Competition Commission of India, different thresholds for any class or classes of enterprises for the purpose of examining acquisitions, mergers and amalgamations by the Commission. The other amendments relate to procedural aspects in working of the Commission.

The proposal after its initial consideration in April, 2012 was referred to a Group of Ministers to examine it in details, with particular reference to jurisdiction of sectoral

regulators on Competition related issues.

The Group of Ministers considered the issues referred to it by the Cabinet and while endorsing the original proposal also proposed amendment in the Competition Act requiring other regulators to mandatorily refer matters impinging on “Competition” to the Competition Commission of India, and vice-versa to concerned regulators by CCI, on matters relating to those regulators. To this extent the original proposal has been modified.

National Competition Policy:

With a view to make the ‘culture of Competition’ an intrinsic part of governance at each tier of administration- Centre, State or local body, the Government is considering bringing out a National Competition Policy. During the year Ministry had sought the opinion of the State Governments on the said policy and the State Governments are broadly in agreement with the proposed policy. The Ministry also invited comments and initiated consultations thereon with various sections of the society such as Stakeholders, Industry, Law Firms, Researchers, Economists etc. and incorporated their responses suitably in the Policy. The Policy is expected to be finalized shortly.

Continuation of the MCA21 Project in its new avatar:

During the year the Cabinet Committee on Economic Affairs approved

continuation of the flagship programme of the Ministry: the MCA21 Project for its second cycle from January, 2013 to July, 2021. The project will benefit all the companies and LLPs registered in India. In addition, the project benefits citizens through its IEPF sub-portal for investor awareness and disclosures. Banks and financial institutions also benefit immensely from MCA21 as it acts as a repository of charge information on company/company`s assets. MCA21 project has also benefited various state governments through innovative use of electronic stamps (e-stamp).

MCA21 e-governance programme has already resulted in improved service delivery and in its second cycle it is expected to continue the same. In addition, the project will improve corporate governance through better scrutiny of company disclosures, better enforcement of corporate laws and paperless working.

The "MCA21 Project" of the Ministry of Corporate Affairs, launched in February 2006, is a major e-Governance initiative covering all aspects of incorporation and regulation of companies as defined under the Companies Act. It is an end-to-end e-Governance program envisaging electronic filing of documents, registration of companies and public access to corporate information online through a secure interactive portal. The portal services can be accessed/ availed from anywhere, at any time that best suits the corporate entities, professionals and the public at large.

The Ministry of Corporate Affairs has proposed similar service delivery model as in first project cycle. In addition to continuing all the services being provided presently, Ministry of Corporate Affairs will extend e-governance to its OL offices, connect attached

offices like SFIO and CLB, etc. in its second cycle. Ministry envisages redesigning of the portal to improve the stakeholder`s experience. New services like SMS and mobile enabled interfaces will be provided for improved service delivery. A new vendor for running the portal in its new cycle was also chosen during the year.

Another record achieved in Peak Filing:

With the strengthening of the MCA 21 portal, the filing of Annual Report and Balance Sheet has further streamlined resulting in a new record for the peak filing during 2012. The Ministry had done special preparatory work under MCA 21 for the smooth conduct of the processes during the peak filing months of October and November. As a result about 15.76 lakh filings (all forms) were received in the month of October and November 2012 – which is about 2.74 lakh filings more than the previous year. The final figure for this entire year is 17.40 lakh filings – as against 15 lakh filings made last year.

A total of 6.69 lakh annual filings (Annual Reports and Balance Sheets) were received which is about 1.02 lakh more than the previous year. Also, the MCA 21 received 88,119 FILINGS ON ONE SINGLE DAY on 21st November 2012 which is highest ever compared to previous years – 24% more than the last year’s peak filing on a single day. Notably, this progress is achieved in addition to XBRL filings.

Release of MCA XBRL Validation Tool (Final Version):

Final version of the MCA XBRL Validation Tool (for Financial Statements based upon new Schedule VI of the Companies Act, 1956) was released during the year. Under this initiative XBRL filings of financial statements for accounting year commencing on or after 01.04.2011 were enabled on MCA website with effect from 14.10.2012. For end users a ‘Filing Manual’ was made available on the XBRL portal of the Ministry’s website for filing the financial statements in XBRL format.

MCA XBRL Validation Tool (for costing taxonomy) was also released and XBRL filings of Cost Audit report and Compliance report were enabled on MCA website with effect from 02.12.2012.

As per General Circular number 39/2012 dated 12.12.2012, time limit to file financial statements in XBRL mode (for the financial year commencing on or after 01.04.2011) without any additional fee has been extended up to 15th January´2013 or within 30 days of AGM of the company, whichever is later. As per latest available data more than 1,500 filings have been done under XBRL which will zoom to new records when the last date approaches.

Integration of LLP with MCA 21 system:

In order to enhance and extend the operational convenience to the stakeholders and grouping of all registry related functions on a single platform, Limited Liability Partenership (LLP) e-governance was integrated with MCA 21 from 11th June 2012. With this integration, the filing and approval of ‘LLP forms’ is being done through MCA 21

website and the stakeholders are now availing all existing facilities of MCA 21 for LLP forms filing including online payment or use of internet banking from designated banks in addition to credit card payment.

In addition, the regulation of LLPs has been decentralized amongst 20 Registrars of Companies across country, enabling direct promotion of the new form of corporate entity in their region. This was earlier being handled centrally by the Registrar of Companies, Delhi.

Continuous effort to improve Corporate Governance: The Damodaran and the Godrej Committees

A committee has been formed under the Chairmanship of Mr. M.Damodaran, former Chairman, to suggest a road map for improvement in ease of doing business in India. The aim is to have a measurable target in terms of improvement in the rankings within a period of next 3 to 5 years and place India at one of the top five positions with zero hassles. The Committte completed the exercise of collecting background materials. The Committee is likely to submit its report by end of June 2013.

Ministry of Corporate Affairs constituted a committee to formulate a Policy document on Corporate Governance under the Chairmanship of Shri Adi Godrej on 07.03.2012. The committee has since submitted its report to the Central Government suggesting adoption of certain ‘guiding principles of Corporate Governance’. It is proposed to obtain comments/suggestions of public to the recommended principles before deciding further course of action in the matter, the Minister said.

The Ministry is also working towards developing a business confidence index for the corporate sector in India based on robust economic parameters which would reflect true strengths and quicker analysis of the corporate sector in India. It is expected that such index for the corporate sector in India based on robust economic parameters which would reflect true strengths and quicker analysis of the corporate sector in India. It is expected that such index will be in place in the near future.

Investor Awareness Programmes :

A large number of Investor Awareness Programmes have been conducted during the year in partnership with the 3 Professional Institutes i.e. ICAI, ICSI and ICSAI to educate the investors, including the young investors, about the various investments options. These programmes cover various cities and towns (including Tier II and Tier III towns) across the country. During the year till November 2012, about 1,200 investor awareness programmes had been organized through.

The Ministry organized the ‘India Corporate and Investor Meet’ during February 2012 to reach out to the investors and educate them for greater participation in the corporate economy of the country.

During the year a new website was set up for the companies to file details of unpaid and unclaimed amounts of investors for last 7 years and not yet transferred to the Consolidation Fund of India. This website enables the investors to search and locate the relevant information of such amounts. More than 4,500 companies have uploaded their data on this website.

Salient Features of Banking Laws (Amendment) Bill 2012

The Banking Laws (Amendment) Bill 2011 was introduced in order to amend the Banking Regulation Act, 1949, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980. The said Bill has been passed by both the Houses of Parliament during its just concluded Winter Session.

This Bill would strengthen the regulatory powers of Reserve Bank of India (RBI) and to further develop the banking sector in India. It will also enable the nationalized banks to raise capital by issue of preference shares or rights issue or issue of bonus shares. It would also enable them to increase or decrease the authorized capital with approval from the Government and RBI without being limited by the ceiling of a maximum of Rs. 3000 crore.

Beside above, the Bill would pave the way for new bank licenses by RBI resulting in opening of new banks and branches. This would not only help in achieving the goal of financial inclusion by providing more banking facilities but would also provide extra employment opportunities to the people at large in the banking sector.

The salient features of the Bill are as follows:

• To enable banking companies to issue preference shares subject to regulatory guidelines by the RBI;

• To increase the cap on restrictions on voting rights;

• To create a Depositor Education and Awareness Fund by utilizing the inoperative deposit accounts;

• To provide prior approval of RBI for acquisition of 5% or more of shares or voting rights in a banking company by any person and empowering RBI to impose such conditions as it deems fit in this regard;

• To empower RBI to collect information and inspect associate enterprises of banking companies;

• To empower RBI to supersede the Board of Directors of banking company and appointment of administrator till alternate arrangements are made;

• To provide for primary cooperative societies to carry on the business of banking only after obtaining a license from RBI;

• To provide for special audit of cooperative banks at instance of RBI by extending applicability of Section 30 to them; and

• To enable the nationalized banks to raise capital through “bonus” and “rights” issue and also enable them to increase or decrease the authorized capital with approval from the Government and RBI without being limited by the ceiling of a maximum of Rs. 3000 crore under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980.

Certain additional official amendments have been proposed on the basis of recommendations of the Standing Committee of Finance which gave its report on the Bill on the 13th December, 2011 and has recommended enactment of the Bill, subject to the following modifications:

i) Voting rights in banks may be restricted up to 26%.

ii) The Depositors’ Education and Awareness Fund may be used for the purpose of promoting depositors’ interests.

Further, pursuant to the discussion with Indian Banks’ Association (IBA), RBI and Industry Associations, the following additional amendments are proposed:

a) to exempt guarantee agreements of banks from the purview of the section 28 of the Indian Contract Act, 1872 to bring finality to redemption of such guarantees;

b) to allow select Directors on the Board of RBI a fixed maximum tenure of eight years with terms of not more than two terms of four years each either continuously or intermittently in consonance with the directions of the ACC;

c) to exempt conversion of branches of foreign banks to wholly owned subsidiary entities of foreign banks and transfer of shareholding of banks to the Holding Company structure pursuant to guidelines of RBI from payment of stamp duty; and

d) to ensure that unnecessary inspections are avoided and to encourage regulatory coordination, a condition has been added such that the inspection of the associate enterprise of a banking company would be conducted by RBI jointly with the sector regulator.

Rollout of Direct Benefits Transfer to begin from 1 January 2013

A decision was taken in the meeting of the National Committee on Direct Cash Transfers held by the Prime Minister that Direct Benefit Transfers will be rolled out from 1 January 2013 in 43 identified districts. The purpose of Direct Benefits Transfer is to ensure that benefits go to individuals bank accounts electronically, cutting down delays and diversions.

What is Direct Benefits Transfer and what does it cover:

1. Government will transfer cash benefits like scholarships, pensions, NREGA wages, etc. directly to the Bank or Post Office Accounts of identified beneficiaries under the Direct Benefits Transfer (DBT) programme. The shift to this would done in a phased, time-bound manner after ensuring that the necessary systems are in place for Direct Benefits Transfer.

2. Direct Benefits Transfer will not be a substitute for delivery of public services which would continue to take place as per the normal delivery channels.

3. Direct Benefits Transfer will not replace food with cash under the Public Distribution System. The Government is committed to legislating the National Food Security Act.

What does Rollout on 1.1.2013 mean in practice:

4. For the rollout beginning on 1.1.2013, 43 districts in 16 States have been identified for the first round of Direct Benefits Transfer under 26 selected schemes. The selection of 43 districts has been done on the basis of coverage of bank accounts and Aadhaar.

5. The rollout has been phased based on;

(a) The next instalment being due either on 1.1.2013 or at a later date.

(b) The list of beneficiaries being digitized in the district concerned.

(c) The opening of bank accounts for beneficiaries in the district concerned.

(d) Enrolment for Aadhaar numbers in the district concerned.

(e) Seeding of bank accounts with Aadhaar numbers in the district concerned.

(f) Availability of funds.

6. Based on the level of preparedness and the ongoing nature of the rollout, Direct Benefits Transfer will begin to take place from 1st January, 2013 as follows:

i. There will be a Direct Benefit Transfer on 1.1.2013 through a cash transfer into beneficiaries` bank accounts in 7 schemes. These schemes are spread over districts as below:

a.Post-matric scholarship for SC students - 7 districts; 48,000 beneficiaries

(Puducherry, Nawanshahr, Fatehgarh Sahib, Gurdaspur, Anantpur, East Godavari, Diu)

b. Pre-matric scholarship for SC students - 1 district; 24,000 beneficiaries

(East Godavari)

c. Post-matric scholarship for OBC students - 6 districts; 105,000 beneficiaries (Puducherry, Alwar, Anantpur, East Godavari, Daman, North Goa)

d. Post-matric scholarship for ST students - 3 districts; 4,800 beneficiaries

(Tumkur, Waynad, Harda)

e. Indira Gandhi Matrutva Sahayata Yojana - 6 districts; 55,000 beneficiaries (Dharwar, Puducherry, NW Delhi, Diu, North Goa, Amaravati)

f. Dhanalakshmi Scheme - 1 district; 8,000 beneficiaries

(Fatehgarh Sahib)

g. Stipend to trainees under the scheme of welfare of SC/ST job seekers through Coaching-cum-Guidance and Vocational Training - 10 States, 650 beneficiaries

(Karnataka, Kerala, Haryana, Punjab, Delhi, MP, Rajasthan, AP, Maharashtra, Jharkhand)

On 1.1.2013, over 2 lakh beneficiaries will start receiving benefits through Direct Benefits Transfer.

ii. In 20 of the 43 districts, all future benefits transfers under all the 26 schemes, whenever they are due after 1.1.2013 as per their cycle, will be through Direct Benefits Transfer. There will be some phased rollout in a few schemes in some of these districts. In a sense, these 20 districts go "live" for Direct Benefits Transfer from 1.1.2013.

iii. In 11 of the 43 districts, all future benefits transfers under all the 26 schemes, whenever they are due after 1.2.2013 as per their cycle, will be through Direct Benefits Transfer. In a sense, these 11 districts go "live" for Direct Benefits Transfer from 1.2.2013.

iv. In the remaining 12 of the 43 districts, all future benefits transfers under all the 26 schemes, whenever they are due after 1.3.2013 as per their cycle, will be through Direct Benefits Transfer. In a sense, these 12 districts go "live" for Direct Benefits Transfer from 1.3.2013.

v. By 1.3.2013, Phase 1 of Direct benefits Transfer would have rolled out in all 43 districts and all benefits would be flowing electronically to beneficiaries accounts in the 43 districts as and when their payments become due.

7. It may be the case that not all 26 schemes may be present in all the 43 districts. Further, under some of the 26 schemes, the next installment will be due only next financial year.

Other Arrangements for Direct Benefits Transfer

8. Direct Benefits Transfer from the Centre will take place either directly to the account of the beneficiary or through the State Government into the account of the beneficiary.

9. Withdrawal arrangements are being strengthened. Initially beneficiaries will be able to withdraw from their own bank branches or ATMs or Business Correspondents (BCs) wherever they exist. The system of micro-ATMs and multiple BCs will roll out subsequently with full inter-operability gradually. The one lakh Common Service Centers set up by the Department of IT are being engaged to serve as a BC in Gram Panchayats where BCs are not functional today. Banks have also been asked to expand their reach to provide banking services to every 1000-1500 households through a BC or CSC. Work is being done to make the BCs interoperable over a period of time. Banks have floated a tender for 20 lakh Micro-ATMs which will be inter-operable and will have facility for biometric scanning and Aadhaar authentication.

Next Steps in Rollout

10. Once the programme has stabilized in these 43 districts, it will be rolled out in phases in other parts of the country over 2013 after a careful assessment of readiness.

11. Direct Transfer of Subsidies for food, fertilizer and kerosene is not being contemplated at present. This will take more time as the issues of entitlement are more complex.

National Mission on Food Processing for Ensuring Growth Impetus and Value Addition to FOOD Processing Sector

Ministry of Food Processing Industries (MoFPI) had launched a Centrally Sponsored Scheme - National Mission on Food Processing (NMFP) during 2012-13 of 12th Five Year Plan through States / UTs.

The basic objectives of NMFP are:

(i) to realize the Ministry’s next leap forward in terms of ensuing requisite growth impetus and value addition to the sector;

(ii) decentralized approach;

(iii) greater role of State/UTs;

(iv) better outreach and

(v) effective supervision and monitoring

The Major Programmes/Schemes to be covered under NMFP during 2012-13 are:

(i) Scheme for Technology Up-gradation/Establishment/ Modernisation of Food Processing Industries.

(ii) Scheme for Cold Chain, Value Addition and Preservation Infrastructure for Non Horticultural Products.

(iii) Scheme for Human Resource Development (HRD)

(a) Creation of Infrastructure Facilities for Running Degree/Diploma/ Certificate Courses in Food Processing Technology.

(b) Entrepreneurship Development Program (EDP)

(c) Food Processing Training Centre (FPTC)

(iv) Scheme for Promotional Activities

a. Organizing Seminar/Workshops

b. Conducting Studies/Surveys

c. Support to Exhibitions/Fairs

d. Advertisement & Publicity

The State Governments are responsible for implementation of National Mission on Food Processing (NMFP).

Under the mission State Governments receive the applications for various schemes of NMFP and thereafter sanction as well as release the grants-in-aid to the eligible beneficiaries. NMFP also provides flexibility to States / UTs in the selection of beneficiaries, location of projects etc. for the development of food processing sector. This initiative of the Ministry would give an impetus to food processing industries and also help in reducing the spoilage / wastage of fruits & vegetables.

To assist the entrepreneurs and domestic agro-processing industries for adoption of new technology, Ministry of Food Processing Industries (MFPI) implemented the Scheme for Technology Upgradation / Establishment / Modernization of Food Processing Industries during 11th Plan. During 12th Plan (2012-13), the same has been subsumed under Centrally Sponsored Scheme – National Mission on Food Processing (NMFP).