Not seeing spurt in IBC cases during pandemic
After taking giant steps in enabling ease of entry as well as ease of conducting business, the Corporate Affairs Ministry (MCA) has now set its sight on facilitating ‘ease of exits’.
India has made huge strides in development of start-up ecosystem in recent years on the back of a conducive regulatory environment and huge inflow of venture capital money flowing into the country to support mushrooming start-ups. India’s start-up ecosystem had in 2021 bagged record investment of nearly $36 billion in privately held companies as demand for digitisation grew manifold in the backdrop of Covid-19 pandemic.
MCA had in May last year launched a data analytics driven version of MCA-21– MCA21 V3.0 to strengthen enforcement, promote ease of doing business, improve user experience and facilitate seamless integration and data exchange among regulators. MCA 21, which was India’s first mission mode e-governance project, is an online portal of MCA that has made all company related information accessible to various stakeholders and general public. It was initially launched in 2006.
While presenting the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman had said that the government will use data analytics, artificial intelligence, machine learning to launch MCA21 3.0, which will add the facility of e-scrutiny, e-consultation, e-adjudication and compliance management among others.
MCA is very keen that that corporates do their filings in time and is therefore making its system of e-governance more robust by upgrading MCA21 versions. “We want to improve the level of compliance at companies. In advance jurisdictions, it is at 98 per cent level. We want strike off on default should be minimised to the maximum extent in India,” the official said. MCA had few years back taken a giant clean up drive that saw it striking off over 3 lakh defaulting companies from its register of companies.
Asked if MCA will look to implement individual insolvency regime in 2022, the official said that it is already operational in case of personal guarantors to corporates. For other individuals, the decision of commencement will be taken in due course of time, the official added.
On whether the system was seeing any rise in IBC cases during the pandemic, the official replied in the negative. “Don’t see any rise in IBC. We are not seeing much pressure on invocation of IBC also. Don’t see much coming up either,” the official said.
As for the issue of whether pre-packaged insolvency will be extended to large corporates as well, the official noted that stress was more in MSMEs. “Only few cases of MSMEs have been filed. We are keeping a watch as to how it is progressing.. We have to still see how courts are administering the new regime. Even if cases are filed, I don’t think any case has been finalised as yet. We are yet to gain that experience and based on that experience, we will take a call (on whether it can be expanded to large corporates as well),” the official added.
(inputs from K R Srivats)