Ministry of Corporate Affairs comes out with uniform norms for pre-legislative consultations

The Ministry of Corporate Affairs and regulatory bodies under it such as the Competition Commission of India and Insolvency and Bankruptcy Board of India will now follow a standard policy of seeking public comments before finalising any legislation or regulation.   

Effective January 1, the ministry and its related agencies and regulators will put out draft regulations and amendments on their websites for public consultation for a period of 30 days. All regulators and agencies under the MCA will also initiate a comprehensive review of existing rules and regulations from this month, which will be completed within financial year 2024- 25.  

To this, effect, the MCA has invited comments for review of regulations and rules under the Companies Act and the Limited Liabilities Partnership Act.   

“The Ministry has taken a decision to frame a policy for pre-legislative consultation and for comprehensive review of rules and regulations... The concerned Divisions of the Ministry and the regulators constituted under various Statutes being administered by the Ministry would comply with the Policy as far as practicable and within the respective statutes,” the ministry of corporate affairs said in a recent circular.  

The policy aims towards carrying out public consultations both at the time of framing original rules and regulations, and at the time of review, it further said.  

In case of regulations which are of emergent nature or where in public interest it is expedient that they be issued earlier may not be placed for stakeholders’ consultations or may be placed for comments for a shorter period than 30 days, it further said, adding that the decision on the necessity or feasibility as well as period of public consultation shall be taken by the regulator.  

The move is expected to bring more transparency and involvement of stakeholders. Previously, the legislative department in 2014 had also highlighted the process of pre-legislative consultation for principal legislations as well as for subordinate legislation.  

More recently, finance and corporate affairs minister Nirmala Sitharaman had in the Union Budget 2023-24 underlined the need for public consultations in financial sector regulations. “To meet the needs of Amrit Kaal and to facilitate optimum regulation in the financial sector, public consultation, as necessary and feasible, will be brought to the process of regulation-making and issuing subsidiary directions,” she had said.   

To simplify, ease and reduce cost of compliance, financial sector regulators will be requested to carry out a comprehensive review of existing regulations, she had further said, adding that they will consider suggestions from public and regulated entities. “Time limits to decide the applications under various regulations will also be laid down,” the finance minister had said.  

MCA is primarily responsible for administering the Companies Act, 2013, LLP Act, 2008, IBC-2016, Competition Act, 2002 and legislations relating to the Three Professional Institutes (PIs), namely Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI) and Institute of Cost Accountants of India (ICOAI). Various Rules have been prescribed by the Ministry under respective legislations. The Regulators , including IBBI, Competition Commission of India, ICAI, ICSI, ICoAI established under respective Statutes have framed regulations as required. The National Financial Reporting Authority of India does not, at present, have statutory authority to make regulations.  

Also Read: More trouble for Zee: SC upholds HC ruling to send Siti Networks' loan default case to arbitration