New minister, new Act for a brave new corporate world
Sachin Pilot is rocking. When the then Reserve Bank of India Governor C Rangarajan commissioned a study on "How to prevent bank frauds and the need for amendment to company law" by the National Institute of Banking in Pune in the aftermath of the Harshad Mehta scam in the early 1990s, Pilot was most likely in his school.
But, it was the young minister for corporate affairs who managed to take the Companies Bill, dubbed by corporate lawyers as the 'tragedy king' for its repeated failure to see the light of day under scores of ministers, many of them much-more seasoned politicians.
But, Pilot was there at the right place at the right time to take home the Bill, dubbed by some as the second most important piece of legislation in the country, after only the Constitution. Of course, critics would pounce saying he had little to do with the script. But, that is not why I said Pilot is rocking.
Under him, the ministry is showing signs of becoming a quick-on-feet unit that is keeping its eyes and ears open and is responsive to constructive criticism. For an entity that manages some 800,000 companies in the country, the transformation was long overdue. Scams, vanishing promoters, shell companies and benami directors were running amok as the ministry seemed to have been caught in a time warp.
When the whole world was barking (literally) up the wrong tree in Nagpur, Street Food on October 30 (The Joke is on You, Mr MCA. Read here: http://bit.ly/S86tCK) pointed out the flaws in the system of registering addresses and lack of diligence at the Registrar level for the menace of companies with fake addresses.
Though this may not have been the first such suggestion, it certainly seemed to have tipped the scale. (A little birdie even saw a paper cutting of the Street Food in the ministry's files.)
Pilot's ministry last week announced sweeping measures that are likely to improve the reliability of addresses in the Register of Companies maintained by the ministry through its Registrars of Companies (ROCs) across the country.
"The suggestion was there to strengthen the system. This is to ensure that there are checks and balances and everything is online and transparent," Pilot told media.
While this is only a first step in the long fight ahead, at least a degree of accountability has been brought to the entire process. Companies can no longer vanish into thin air; certainly not, if the rules are enforced diligently. At least, the certifying professionals, such as chartered accountants, are now accountable. You know whom to catch if the promoters run away.
A significant process improvement has also been commissioned with the award of the contract to revamp the MCA21 site. Pilot's experience in the IT ministry should put him in the perfect position with the necessary knowledge and understanding to demand and extract the best from the contractor.
It takes a lot of courage and humility to accept constructive criticism and act on it curbing the general tendencies to hide, ignore, manage or even gag. Not everyone can do that. Which is why Sachin Pilot is rocking. May he in the New Year, that will usher in the new Act, bring us a clean, transparent and rocking corporate world that will bring prosperity and progress to all stakeholders.