Author Name:   gauravsharma

February 18, 2006 will go down as a landmark day in the history of corporate governance in India. On this day, the MCA-21 project portal www.mca21.gov.in was launched in Coimbatore...

February 18, 2006 will go down as a landmark day in the history of corporate governance in India. On this day, the MCA-21 project portal (www.mca21.gov.in) was launched in Coimbatore. This project of the ministry of company affairs (MCA) is expected to provide 21st century services to business, government and the citizens of India, hence the name. This portal will be the entry point for online registration, filing of returns, reporting financial results and requests for permissions by businesses—their number has grown from 30,000-plus companies in 1956, when the ministry was formed, to 6, 50,000 today. It will also be a tool for the public to report investor grievances. It will help the government to exercise control on erring corporations who delay or deny information. In fact, when fully operational, MCA-21 will usher in a new phase in the history of corporate governance in India. The project has several interesting aspects. Though administered by the government, this project is executed in PPP (public-private-partnership) mode. Tata Consultancy Services (TCS)—they won the bid through competitive bidding—will design, develop, implement, manage and maintain the project and transfer it to the government in a BOOT (Build, Open, Operate and Transfer) mode. The first phase of the project, signed on March 1, 2005, is to be completed within 60 weeks, i.e. on April 24, 2006. TCS is expected to run the project for six years. TCS will provide computers, printers, scanners, servers, networks and software. With a main data centre in Delhi and a back-up business continuity server in Chennai, all the 24 offices (four regional directorates and 20 RoC’s (registrars of companies) will be networked. A number of innovations are incorporated in the project. While it envisages electronic filing, permitting a near-paperless transaction, 53 facilitation centers, called PFOs (Physical Front Offices) are also planned. At a PFO, authorized facilitation personnel will help companies not comfortable with e-filing to use the MCA-21 portal. Online payments through credit cards/debit cards will be the norm. However, for those uncomfortable with online payments, these can also be made through bank drafts. Five banks and 200 branches have been identified for offline payment. Online processing itself imaginatively uses the ‘forms’ feature of Adobe PDF file, which Online processing itself imaginatively uses the ‘forms’ feature of Adobe PDF file, which permits data filling without modifying the form itself; downloadable paper-based forms that can be filled offline may also be used. Companies who want to transact online have to take digital certificates so that authenticity and accountability are maintained, in addition to security. The Indian government has already put in place the necessary Controller of Certification Authority (www.cca.gov.in). Several Certification Authorities have been licensed by CCA. The legislation to allow e-filing was also provided recently, through an ordinance in early 2006. This mammoth project costing Rs 345 crore($75 million) is one of the largest e-Governance projects being planned and monitored under the National E-Governance Plan (NEGP) by the National Institute of Smart Governance (NISG). The project is on schedule, a welcome feature in India, where major projects often run behind schedule for years. Some 60 million paper documents are getting digitized, so that by April 24, 2006, when the project is expected to go live, the MoA (Memorandum of Association) of 6,50,000 companies and their two-year annual statements will be available online. With due access control, such valuable information will be available for use by the public, leading to greater transparency. In the process, it will improve the confidence of the citizens at large. It will also create a healthy eco-system for fair practices in the Indian business scenario. With a similar system in place for income tax, value added tax and customs duty collection, there will be a fair, friendly and efficient tax collection system in place. Combined with the property tax collection scheme, once implemented, the government would have built a solid revenue collection system. A similar exercise for tax disbursal would plug leakages in the system, a major source of corruption in India. This will be a major achievement for the government over the next three years.

1.1 What is e-governance?
In order to understand the term corporate e-governance it is desirable firstly to understand=d the meaning of Governance and e-governance. “Governance” of a nation is defined as the manner in which power is exercised in the management of a country. The government of India gives a definition of ‘Good governance’ as having certain universally accepted features like exercise of legitimate political power, formulation and implementation of policies and programs that are equitable, transparent, non-discriminatory, socially sensitive, participatory and above all accountable to the people at large (GOI, 2002). Good governance integrates government system seamlessly to meet these expectations.

Although the term ‘e-Governance’ has gained currency in recent years, there is no standard definition of this term. Different governments and organizations define this term to suit their own aims and objectives. Sometimes, the term ‘e-government’ is also used instead of ‘e-Governance’. Some widely used definitions are listed below:

According to the World bank,
“E-Government refers to the use by government agencies of information technologies (such as Wide Area Networks, the Internet, and mobile computing) that have the ability to transform relations with citizens, businesses, and other arms of government. These technologies can serve a variety of different ends: better delivery of government services to citizens, improved interactions with business and industry, citizen empowerment through access to information, or more efficient government management. The resulting benefits can be less corruption, increased transparency, greater convenience, revenue growth, and/ or cost reductions.”

Thus, the stress here is on use of information technologies in improving citizen-government interactions, cost-cutting and generation of revenue and transparency.

UNESCO defines e-Governance as:
“Governance refers to the exercise of political, economic and administrative authority in the management of a country’s affairs, including citizens’ articulation of their interests and exercise of their legal rights and obligations. E-Governance may be understood as the performance of this governance via the electronic medium in order to facilitate an efficient, speedy and transparent process of disseminating information to the public, and other agencies, and for performing government administration activities.”

This definition visualizes the use of the electronic medium in the exercise of authority in the management of a country’s affairs along with articulation of citizens’ interests leading to greater transparency and efficiency.

The council of Europe has taken e-Governance to mean:
“The use of electronic technologies in three areas of public action:

- Relations between the public authorities and civil society;
- functioning of the public authorities at all stages of the democratic process (electronic democracy) and
- the provision of public services (electronic public services)”

In this case, the focus is on making use of electronic technologies with a view to encourage better interaction between government and citizens, promote democracy and provide public services.

The US E-Government Act of 2002 defines “electronic Government” to mean:
“The use by the Government of web-based Internet applications and other information technologies, combined with processes that implement these technologies, to-

(A) Enhance the access to and delivery of Government information and services to the public, other agencies, and other Government entities; or

(B) Bring about improvements in Government operations that may include effectiveness, efficiency, service quality, or transformation”.

This definition reflects the strategy of the US Government regarding the use of ICT in improving Government operations on the one hand and enhancing the access and delivery of information and services to citizens and government entities on the other.

Basically, e-Governance is generally understood as the use of Information and communications Technology (ICT) at all levels of the Government in order to provide services to the citizens, interaction with business enterprises and communication and exchange of information between different agencies of the Government in a speedy, convenient efficient and transparent manner.

5. Dr. APJ Abdul Kalam, former President of India, has visualized e-Governance in the Indian context to mean:
“A transparent smart e-Governance with seamless access, secure and authentic flow of information crossing the interdepartmental barrier and providing a fair and unbiased service to the citizen.”

1.2 MCA 21: First step to Corporate E-Governance
India, hitherto a laggard in e-governance, has realized in recent times that principles of business ethics and corporate social responsibility can be effectively integrated within the arena of corporate law. Such moves naturally result in strengthening the structure of company law as a whole, as well as the promotion of regulation. It further underscores the need for best practices on the part of the corporate sector. It is necessary to throw some light on what changes e-governance can bring about in the corporate sector as well as how it represents a natural progression in the Information Communication Technology (ICT) movement in a developing country like India.

The phenomenal growth of corporate sector in India - from 30,000 companies at work in the 1950s to around 7.26 lakh in March, 2006 - calls for prompt and efficient delivery of services by India’s Ministry of Company Affairs (MCA) to enable the businesses compete globally. It however became increasingly difficult to deliver services in an efficient manner in a paper-based filing system. The growing number of companies meant that the monitoring of compliance with various provisions of the company law became even more difficult. The existence of India’s weak business regulatory environment (as far as e-governance in the corporate sector was concerned) was adequately illustrated when the country was recently ranked at 77th place in terms of business organisation and efficiency.

Government-corporate relation in India is all poised for all round transformation with the launch of a revolutionary new initiative at the behest of Ministry of Company Affairs. The project launched formally in the middle of this year (2006) is seen as a mission ‘niche’ programme that has been identified as one of the major agents of change in governance in India. Once in place the web enabled transactional window is all set to revolutionize the relations between Ministry of Company Affairs (“MCA”) and the corporate world. This would change the entire corporate dealings in India. In addition the project is considered as a learning experience for the government and private partners to deal with incoming transactional challenges.

In the government’s own words, “…The regulatory framework must facilitate compliance of rules and regulations at minimum cost with maximum convenience to the stakeholder in order to enable Indian corporate to remain ahead in a competitive environment.” Conscious of its responsibility towards the Corporate Sector and requirements of the current business environment, the MCA has initiated this ambitious e-Governance programme, which has been christened “MCA21”. For the first time, there appears to be a palpable shift in the Ministry’s attitude towards companies- from patronizing regulator to a partner in progress. There is also an acknowledgment of the need for Indian companies to compete with their counterparts in the western world, and a realization that global best practices in the corporate regulatory framework need to be introduced into the Indian scenario post-haste.

Spurred on by the Report of an official committee set up to recommend changes in India’s company law, MCA has rightly accorded the ICT initiative pride of place in its reforms drive. Conceived as a Mission Mode Project of the Government of India under the National e-Governance Plan, MCA21 is therefore envisaged as a comprehensive service delivery project and is being implemented following a Public-Private Partnership model. The programme, launched with a view to introducing efficiency and transparency in delivery of services, focuses on a customer-centric approach as the principal driving factor and transform the manner in which working of the corporate sector is regulated.

Corporate E-Governance
E-governance in the corporate sector would mean “efficient, transparent and convenient services for the betterment of the Indian corporate & all stakeholders and ultimately for the maintenance of healthy Indian corporate scenario.”

2.1 Beneficiaries of MCA 21 – A wind of corporate e-governance
Winds of e-governance now started blowing in the field of Indian corporate sector and there are large varieties of beneficiaries (i.e. stakeholders) who are the biggest beneficiaries of this transformational change which take place in the corporate sector.

The possibilities offered by technology to simplify the interfaces between the Government and the stakeholders have been effectively adopted to address this challenge. Towards this end the Ministry of Corporate Affairs has embarked upon an ambitious e-Governance project called the MCA21 e-Governance Program. It aims at continuously repositioning MCA as an organization capable of fulfilling the aspirations of its stakeholders in a globally competitive business environment. The comprehensive, end-to-end service oriented solution has helped establish a fine balance between facilitation and compliance – as a blend of well-defined goals and performance metrics. Demonstrable Stakeholder Values MCA21 is an outcome-oriented initiative and the objectives of the program are to address the concerns of all the major stakeholders:

Ø Business: enabled to register a company and file statutory documents quickly and easily and in a convenient manner;

Ø Public: to get easy access to corporate records and get their grievances redressed effectively;

Ø Professionals: to be able to offer efficient services to their client companies;

Ø Financial Institutions: to find registration and verification of charges easy;

Ø Government: to ensure proactive and effective compliance of relevant laws, corporate governance and transparency;

Ø MCA Employees: enabled to deliver best of breed services to all the stakeholders in a speedy and transparent manner

MCA (Ministry Of Corporate Affairs)
3.1 Reasons which compels for MCA21
India, hitherto a laggard in e-governance, has realized in recent times that principles of business ethics and corporate social responsibility can be effectively integrated within the arena of corporate law. Such moves naturally result in strengthening the structure of company law as a whole, as well as the promotion of regulation. It further underscores the need for best practices on the part of the corporate sector. This paper is thus an effort to throw some light on what changes e-governance can bring about in the corporate sector as well as how it represents a natural progression in the Information Communication Technology (ICT) movement in a developing country like India.

The phenomenal growth of corporate sector in India - from 30,000 companies at work in the 1950s to around more than 8.5 lakh in March, 2010 - calls for prompt and efficient delivery of services by India’s Ministry of Company Affairs (MCA) to enable the businesses compete globally. It however became increasingly difficult to deliver services in an efficient manner in a paper-based filing system. The growing number of companies meant that the monitoring of compliance with various provisions of the company law became even more difficult. The existence of India’s weak business regulatory environment (as far as e-governance in the corporate sector was concerned) was adequately illustrated when the country was recently ranked at 77th place in terms of business organization and efficiency.

Government-corporate relation in India is all poised for all round transformation with the launch of a revolutionary new initiative at the behest of Ministry of Company Affairs.

Spurred on by the Report of an official committee set up to recommend changes in India’s company law, the MCA has rightly accorded the ICT initiative pride of place in its reforms drive. Conceived as a Mission Mode Project of the Government of India under the National e-Governance Plan, MCA21 is therefore envisaged as a comprehensive service delivery project and is being implemented following a Public-Private Partnership model. The programme, launched with a view to introducing efficiency and transparency in delivery of services, focuses on a customer-centric approach (emphasis supplied) as the principal driving factor and transform the manner in which working of the corporate sector is regulated.

3.2 About the MCA
Ministry of corporate affairs is the union ministry which act as regulator over the corporate affairs in the country and it administers the following legislations:-
• Administration of Companies Act, 1956
• Competition Act, 2002
• Supervision of Professional Bodies, ICAI, ICWAI and ICSI.
• Over 8,00,000 Companies registered

MCA has done the following work enormously:
• 4,000 is the Average no of Companies Registered per month
• Promotion and supervision of companies
• Compliance
• Vanishing Companies or ‘’Fly by night operators’’

Ministry of corporate affairs have a full control over the corporate sector in India and its laid down the norms under which the Corporate of India have to act and it also take care of the registration of the companies. It is necessary to understand the organizational set up of the MCA before talking about the MCA.

3.3. Organizational Set up of MCA
MCA has a 3-Tier organizational set-up
Ministry Of Coporate Affairs
New Delhi

Regional Director’s Office
Mumbai, Kolkata, Chennai and Noida
Registrar Of Companies (Roc’s)
In States And Union Territories

3.4 Mca21: E-Governance Project
3.4.1 An Overview of MCA set up
The MCA mainly administers the Companies Act, 1956 and The Monopolies and Restrictive Trade Practices Act 1969. Besides, it also administers the following Acts:
(a) The Competition Act, 2002
(b) The Chartered Accountants Act, 1949
(c) The Costs and Works Accounts Act, 1959
(d) The Company Secretaries Act, 1980
(e) The Partnership Act, 1932
(f) The Societies Registration Act, 1860
(g) The Companies (Donation to National Fund) Act, 1951

The MCA, which functions under overall direction and supervision of the Minister of Company Affairs, has a three tier organizational set‐up for administration of the Act, namely, the Headquarters at New Delhi, the Regional Directors at Mumbai, Kalkaska, Chennai and Noida and the RoCs in States and Union Territories. The Official Liquidators who are attached to various High Courts functioning in the country are also under the overall administrative control of the Ministry. The Company Law Board, a quasi‐judicial body, has its Principal Bench at Delhi, an additional Principal Bench for Southern States at Chennai and four Regional Benches located at Delhi, Mumbai, Kolkata and Chennai.

The four Regional Directors are in‐charge of the respective regions, each region comprising a number of States and Union Territories. They supervise the working of the offices of the RoCs and the Official Liquidators working in their regions. They also maintain liaison with the respective State Governments and the Central Government in matters relating to the administration of the Companies Act. Certain powers of the Central Government under the Act have been delegated to the Regional Directors. There is also an inspection unit attached to the office of every Regional Director for carrying out the inspection of the books of accounts of Companies under Section 209A of the Companies Act.

RoCs appointed under Section 609 of the Companies Act and covering the various States and Union Territories are vested with the primary duty of registering companies in the respective States and the Union Territories and ensuring that such companies comply with statutory requirements under the Act. These offices function as registry of records, relating to the companies registered with them, which are available for inspection by members of public on payment of the prescribed fee. The Central Government exercises administrative control over these offices through the respective Regional Directors.

The four regional directors are in-charge of the respective regions, each region comprising a number of states and union territories. They super wise the working of the offices of the RoC’s and the official liquidators working in their regions. They also maintain laisons with the respective state and governments and the central governments in matters relating to the administrations of the companies Act. Certain powers of the central government have been delegated to the regional directors. There is also an inspection unit attached to the office of every Regional Director for carrying out the inspection of the books of accounts of Companies under Section 209A of the Companies Act.

RoCs appointed under Section 609 of the Companies Act and covering the various States and Union Territories are vested with the primary duty of registering companies in the respective States and the Union Territories and ensuring that such companies comply with statutory requirements under the Act. These offices function as registry of records, relating to the companies registered with them, which are available for inspection by members of public on payment of the prescribed fee. The Central Government exercises administrative control over these offices through the respective Regional Directors.

3.4.2 MCA21 Projects Objectives
1) For Business
· Enabled to register a company.
· File statutory documents quickly and easily.

2) For Public
· To get easy access to relevant records
· Effective grievances redressal.

3) For Professionals
· To be able to offer efficient services to their client companies.

4) Financial Institutions
· To easily find charges registration and verification

5) Employees
· To ensure proactive and effective compliance of relevant laws and corporate governance

3.4.3 What does MCA21 provides you?
• Easy secure access: MCA21 portal provides an easy and secure access to the record of the company which was filed by the companies and they can access the portal just by entering the login name and password.
• Automated all process of compliance: Know with the introduction of the MCA21 all the filing of the documents starts from the birth of the company are to be filed online without any physical movement to the office of ROC.
• 24 hours / 7 days from anywhere and any place: MCA21 also provides the service which is available 24 hrs and 7 days from any place of the country and the person can easily file the documents and it provides hassle free environment.
• No need to visit physical office of ROC
• Complaints can be on e-mode: if there is any complaint which is to be filed than can also be filed in an electronic form without any paper work.

3.4.4 Key benefits of MCA21
• Incorporation of Companies online
• Simplified and easy mode of filing
• ROC services online
• Better compliance management
• Total transparency
• Building-up a central database
• Inspection of public documents anytime any where
• Timely redressal of investor grievances

3.4.5 Services available under MCA21
The following services will be available under the MCA21 Project:
• Registration and incorporation of new companies
• Filing of Annual Returns and Balance Sheets
• Filing of forms for change of names/address/Director’s details
• Registration and verification of charges
• Inspection of documents
• Applications for various statutory services from MCA
• Investor grievance redressal

3.4.6 MCA Portal – The Gateway to Citizens & Corporate
MCA portal is a gateway to citizens and corporate of India. In order to use this gateway various steps are to be followed and by following these steps a citizen or a corporate can easily use this uniquely designed portal and can access it hassle free. The portal is designed by the TATA consultancy services and it is really helpful to the various stakeholder involved in the company.

Keeping in tune with the e-Governance initiatives the world over, Ministry of Company Affairs (MCA), Government of India, has initiated the MCA21 project, which will enable an easy and secure access to MCA services in a manner that best suits the corporate entities and professionals besides the public. MCA21 is intended to achieve all the objectives of a versatile e-governance project.

My MCA Portal Home Page At The Time Of Launch
3.4.7 Advantages of MCA21
MCA 21 is a pioneering initiative that has been adopted as a “Mission Mode” project under the National e-Governance Plan of the Government of India. The advantages of such a project are numerous. Though the initiative has taken some getting used too, companies across the country have overwhelmingly given it their seal of approval. Transparency and efficiency are seen as the twin hallmarks of the project. Add to this, the project is sure to make Indian business more competitive globally.

Through e-enabling of various services, the MCA 21 project is poised to facilitate creation of single windows for clearance of projects and schemes, and evaluation of the same. This way business could be made easier for business and governance easier for the government/s. With the corporate sector soon to align with the new process more closely, compliance to relevant norms and procedures will be made easier and faster through integrated service delivery and reengineered existing processes. While enabling a one-stop filing window the project will enable companies and corporate bodies and firms to file just once for all government-related purposes and commitments.

All the business processes and services of the office of Registrar of Companies are now made available on the e-governance Mode. E-governance has immense potential to bring about legal compliance at a lower cost. It can be cost-effective to companies, including small and one-person companies, easy to use and accessible to all stakeholders and general public. It enables the process of registration, filing for disclosures and retrieval of data efficiently and at a low cost. The MCA 21 system has adequate capacities to handle the likely growth in the corporate sector in India in the years to come as well as the increase in disclosure requirements that may be mandated by the legal and regulatory framework. All statutory filings made compatible to e-filing by devising suitable e-forms can be kept securely and be identifiable through digital signatures.

Furthermore, the system enables quick disposal of the registration and incorporation processes with the use of self operating e-systems, minimizing physical interface and use of discretionary statutory powers by registering authorities. All companies require specifying authorized signatories with authority to sign and authenticate filings digitally. It is thus hoped that the MCA 21 regime as well as the corresponding changes to the Companies Act will provide a suitable legislative frame work for levy of user charges that facilitate operation of e-governance initiative in a sustainable manner.

Banks and financial institutions will also benefit extensively from online availability of information relating to companies. They can avail the advantages of this information in improving credit evaluation procedures and the quality of credit extended to the corporate sector and the like. Besides, the project will provide the facility to provide for cross-referencing of financial statements of companies filed with the RoCs and other regulatory institutions like tax authorities, the central bank, and the capital markets regulator.

The benefits of the new system as far as combating corporate fraud is concerned are also slowly becoming evident. The MCA feels that the DIN will be an effective tool in nabbing executives in case the company vanishes after raising money from the public. Besides, the Ministry will also use the e-governance project to identify and send notices to companies which default in filing statutory documents. Currently, the cost and the labour required in identifying such firms, sending notices to them and following it up by post is proving to be a handicap in its efforts to penalise a large number of defaulting firms. Such steps will also help the government take swift action on investor grievances such as non-receipt of dividend, shares and matured deposits. The manpower thus saved could then be used to conduct more inspections on companies.

A major factor for the absence of transparency, accountability and effectiveness in company law administration in India is corruption in RoC offices and in the central bureaucracy in charge of company law. While e-filing will reduce public interface with RoC offices thereby minimising the scope for corruption, unless comprehensive e-governance embracing all aspects of company law administration is introduced, rule of law for the corporate sector will remain a distant dream. It is thus felt that MCA 21 should be used imaginatively as a stepping stone for total e-governance. While e-filing of mortgages is possible in India today, it should also be possible to secure a certificate of registration of mortgages through e-filing with a marginal change in the law. The approvals under the company law should be available through e-filing in one or two months. Wherever approvals are delayed or denied, clear reasons for the same should be posted on the MCA website. This can prove to be yet another innovative offshoot of the MCA 21 initiative.

3.4.8 Challenges faced for achieving the objectives of the MCA 21
The MCA 21 has by and large been implemented without hitches. But gray areas in the functioning continue to appear. Critics have had a field day since the system has got off to a rather slow and chaotic start. But as the days and weeks have passed, the situation appears to have witnessed a marked improvement.

For instance, many are of the opinion that getting into the working mode with the new system especially filling up e-forms, using digital signatures, dealing with Director Identification Number (DIN), Corporate Identification Number (CIN) will create a lot of initial troubles. This prophecy has already come true when one notices the fact that getting a DIN is proving to be a cumbersome and time-consuming process. The success of the MCA 21 also depends on speeding up plans to enable outreach through virtual front offices that are being created under the project. Further, these offices should be in a position to provide internet-based services at work and home of potential Clients. Another challenge is scanning and digitization of such a large volume of documents (though no exact figure is available, it is estimated to be in the tens of millions.)

Most importantly, analysts have raised concerns over the mindset of the officials in the MCA and the various RoCs. To effect the changes from paper works to electronic transactions needs a transformation in the mindsets of those who will be handling the project. Adaptation to the new mode of operation and transactions based on electronic processes is quintessential to reap the multiple benefits associated with MCA 21. Other issues include identifying and earmarking space for setting up scanning stations close to the record rooms at each of the RoC offices, weeding out records, preparing record files, segregating documents to be scanned, preparing an index of the same, restoring documents into the company files and so on.

Recently, questions have been raised about the ‘legality’ of the MCA 21 project. This is mainly due to the fact that the proposed amendments to India’s company legislations, enshrined in a Bill, are yet to get an official stamp of approval from India’s Parliament. In the meantime, the co-existence of the old filing system and the new electronic methods of filing have been the source of some discomfiture.

The ‘Statement of Objects and Reasons’ in the Companies (Amendment) Bill, 2006 explains that the proposed new Sections 610B, 610C, 610D, and 610E in the Companies Act, 1956 are essential for the successful implementation of the MCA-21 project. It further states that “after the proposed amendments to the Companies Act, 1956 have been enacted, the documents in electronic form duly authenticated with digital signatures shall be accepted under the provisions of that Act.” The controversy that is now brewing has relation to the status of manual filing of documents. In the views of experts, the hair-splitting is unnecessary, since manual filing is always a legally prevailing option. The prevailing wisdom points to the fact that e-filing cannot be insisted upon, at least until the Section to the Act has been amended. Since the Bill is still pending before India’s Parliament, status quo would appear to prevail and manual filing can continue to co-exist with the system envisaged by the MCA 21 project. “Mission Mode” projects similar to MCA 21 have been positioned as major change agents in the e-governance space in India. This project has been successfully completed and the roadmap for further enhancements is also in the process of being drawn up. Such initiatives of change in the way of government functioning will hopefully bring real and tangible benefits to all the stakeholders. Though it is far too early to take a call as to whether the programme has fully achieved its stated objectives, the dramatic improvements in all spheres over the ‘old’ system are clearly visible.

4. MCA 21: Road Ahead
4.1 Next Generation MCA 21
The ministry of corporate affairs is contemplating creating a special purpose vehicle (SPV) for their mega project ‘Next Generation MCA 21’ which means that there would be no bids invited from the IT firm for the over Rs 500-crore project. This would come as a dampener for IT firms, which have increasingly started looking at domestic orders. In fact, country's largest software firm, Tata Consultancy Services (TCS) had been eyeing the project as it currently manages the MCA 21 portal. Salman Khurshid, minister of corporate affairs told FE, “We are thinking on having a special purpose vehicle and not go in for the bidding process for the next-generation MCA 21, which is many steps ahead of the present MCA-21 but we will take a final call only after consulting some other ministries".

Next Generation MCA 21 is supposed to be an advanced information sharing system with regulators like SEBI, RBI and government ministries to replace the present MCA- 21 which is the e-governance database for the 9-lakh companies in India.

A senior MCA official told FE, “The ministry wants to have an SPV because it does not want to get fully dependent on an IT company for managing its operations. In case of MCA 21, which is the e-governance mode through which companies file their documents online, is handled by the Tata Consultancy Services which is the private partner in MCA 21.”

The MCA official further said that in case of SPV, the ministry would appoint at least 50 to 60 people who will undertake the in-house management and could also outsource some activities if the ministry wants.”

On the issue of the initiatives that would be undertaken by the ministry for creating the SPV, the official noted, “The ministry has not yet decided on the structure of the SPV, the sources of funds and the scope of the work .”

The focus for the Next Generation MCA-21 would be to create an information sharing platform with regulators and ministries to provide an early warning system for the ministry. The website will have an integrated IT gateway system with regulators and other ministries and it would have a direct access to the information that lies with others.

5. Concluding Remarks
With the advent of Information and Communication Technologies in all the sectors today, governments across the world are taking major initiatives with reference to policy changes, business process reengineering, change management and IT Infrastructure creation to incorporate IT in all its processes. They are also realizing that Public Private Partnership is very critical to the success of any e-governance Project. MCA 21 is one such example of a Public Private Partnership in action, which could well change the regulation of companies in India forever. With a political will and commitment at the highest level, e-governance is fast catching up in India, and we shall soon see more and more government processes going online. This will bring less bureaucracy, more transparency and openness. Companies will be able to file any form, application or any other document in the electronic form and get Licenses /certificates online. A beginning has been made, and it is for the government and all the other stakeholders to take MCA 21 and other like initiatives further.

Greater e-governance in the company law has become a catalyst and a channel for e-commerce from the point of view of the corporate sector. Especially important in the Indian context is the fact that it has enabled companies to pay tax online, reducing corruption and bending of laws. Government and the regulators have benefited because the new processes have admirably reduced redundancy and duplication. Crucially, it is submitted, the increasing use of e-governance in Indian company law will benefit the citizen/ordinary shareholders because there is greater transparency, efficiency and integrity in the company’s dealings. Once again it needs to be stressed that this is a radical departure from the archaic practices being followed in India. Indian corporates have for long, used decades-old procedure and legislation to effectively hinder greater information access. Thus, not only do the government’s transactions with the business community become more transparent, the rate of interface between the latter and ordinary citizens and shareholders also increases exponentially.

Today, thanks to the revolutionary suggestions found in the Irani Committee Report for the reform of Company law in India, various “smart initiatives” combining information technology with the needs of corporate law are being encouraged at the governmental level for the first time ever. Digital laws in India and ICT initiatives in particular have progressed to a whole new level altogether. The Report, and its implementation, has resulted in digital laws now having considerable interface with the rigours of company law.

“In sum therefore, it can be safely stated that, uncertainties notwithstanding, the ICT movement is finally getting in sync with the ground reality as represented by Indian regulatory structures governing corporates. The full value of e-governance in the Indian corporate arena can be achieved only if innovative programs like MCA 21 can be used imaginatively as a stepping stone for total e-governance. All future ICT initiatives in the country must be undertaken keeping this as an underlying, and wholly desirable objective.”
~~~~~~~~~~~
References:
Books:
1) “e-Government: From Vision to Implementation” by Subash bhatnagar; Sage Publications; 2004
2) Inaugural address at IIT Delhi during International conference on e-Governance

Reports:
1) World Bank Report on “Doing Business in India – 2005”.

2) Extracts from J.J Irani Committee Report.

Press Release:
1) Press Release issued by the Press Information Bureau, Government of India, Monday, August 14, 2006, ( http://pib.nic.in/release/rel_print_page.asp?relid=19851).

Newspaper Articles:
1) Priyanka Kumari, “How Will The New Company Law Help You?” The Economic Times, Monday, April 3, 2006.

2) “Electronic ID System to Keep Tabs on Directors”, The Economic Times, Monday, December 26, 2005.

3) “Better Working of Company Law Through E-Governance,” The Hindu May 1, 2006.

4) MCA 21: Is It Lacking in Legal Backing,” The Hindu Business Line, Wednesday, April 19, 2006.

5) Corporate affairs min plans SPV for Next-Gen MCA 21, The financial Express, Posted online: 2009-11-06 23:05:33 05:30

Statute:
1) Companies Amendment Bill (2006), Paragraph 4.

Websites visited:
1) MCA 21: e-governance in action & how; Friday March 03, 2006. http://www.financialexpress.com/old/fe_archive_full_story.php?content_id=119249#.
2) (World Bank, 1994)
3) (Satyanarayana, 2004).
4) http://go.worldbank.org/M1JHE0Z280 (extracted on 20/2/2011)
5) (http://portal.unesco.org/ci/en/ev.phpURL_ID=4404&URL_DO=DO_TOPIc&URL_SEcTION=201.html)
6) Source: http://www.coe.int/T/E/com/Files/Themes/e-voting/definition.asp
7) Source: ‘E-Government Act of 2002; http://frwebgate.access.gpo.gov/cgi bin/getdoc.cgi?dbname=107_cong_public_laws&docid=f:publ347.107.pdf
8) Kazi, Syed S., “MCA 21: A Nich Program”, (http://www.dqindia.com/content/egovernance/2006.asp). Budhiraja, Renu, “E-Governance in G2B and Some Major Initiatives,” extracted from http://mit.gov.in/eg/paper on g2b.doc

The  author can be reached at: gaurav.25@legalserviceindia.com

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