Lok Sabha Question No. 4 (STARRED), answered on 2024-07-22
Subject: Steps to Reduce Pending Litigation under Companies Law
Ministry: CORPORATE AFFAIRS
Asked by: Smt. Kriti Devi Debbarman, Shri Jagdambika Pal

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

STARRED QUESTION NO. *4 ANSWERED ON MONDAY, 22 nd  July, 2024 31 Ashadha, 1946 (Saka)

STEPS TO REDUCE PENDING LITIGATION UNDER COMPANIES LAW

## QUESTION

- *4   Smt. Kriti Devi Debbarman: Shri Jagdambika Pal:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a) the steps taken  by  the  Government  for  reducing  the  number  of pending litigations under the Companies Law;
- (b) the data regarding the number of cases withdrawn or reduced as part of the efforts of the Government to reduce the litigation burden; and
- (c) whether the Government is taking any steps to improve the ease of doing  business  and  boost  the  corporate  governance  framework  in  the country?

## ANSWER

Minister of Finance & Corporate Affairs           (Smt. Nirmala Sitharaman)

(a) to (c): A statement is laid on the Table of the House.

Contd…2…..

## STATEMENT  REFERRED  TO  IN  REPLY  TO  LOK  SABHA  STARRED QUESTION NO. *4 FOR ANSWER ON 22.07.2024.

- (a) & (b) :  The Ministry of Corporate Affairs (MCA) has taken several steps to review pending prosecutions in various courts.  In 2017 and later in 2022,  a  committee  of  senior  officers  of  MCA  was  set  up  to  give recommendations regarding withdrawal of prosecutions.  The objective was to free Judicial Courts from dealing with offences that are procedural and technical in nature to ensure that such courts are able to focus on serious offences.  It was envisaged that cases of procedural and technical nature may be handled through an adjudication process.

Accordingly, 14,247 prosecutions were withdrawn in Special Drive-I conducted in 2017.  Further, a decision has been taken for withdrawal of 7338  compoundable  cases  identified  in  Special  Drive-II  in  2023.    Till 15.07.2024,  6294  applications  for  withdrawal  have  been  filed  before various  courts.  However,  serious  /  non-compoundable  offences  will continue to be prosecuted.

- (c): To improve ease of doing business and enhance corporate governance, MCA has taken several steps in the recent past including some major steps as under:-
- (i) Decriminalization of 63 offences under the Companies and LLP Acts. One of the objectives of decriminalization has also been reduction of litigation burden in judicial courts and shifting the prosecution cases towards adjudication;
- (ii) Setting up of a Centralized Registrar of Companies (CRC) for incorporation;
- (iii) Setting up of a Centre for Processing Accelerated Corporate Exit (C-PACE) for voluntary exit of companies;
- (iv)
- Setting up of a Central Scrutiny Centre (CSC) for centralised scrutiny of e-Forms filed under Straight Through Process (STP);

- (v) Conversion of more than 50 forms to STP which earlier required approval of field offices;
- (vi) Setting up of a Central Processing Centre (CPC) for centralised processing of specified non-STP e-forms;
- (vii) Introducing  a  new  e-Form  SPICe+  along  with  a  linked  form called  AGILE  PRO-S  for  providing  different  services  at  one place such as Name Reservation, Incorporation, allotment of PAN,  TAN,  DIN,  EPFO  Registration,  ESIC  Registration,  GST number,  opening  of  Bank  Account  etc.    at  the  time  of incorporation of  company to start the  business immediately. Similarly, new eForm FiLLiP (Form for incorporation of Limited Liability  Partnership)  was  introduced  for  providing  the  same services in a single application;
- (viii)  Definition of small companies has been amended by increasing the threshold limit of a small company, having a paid-up capital not exceeding Rs. 4.00 Crore and turnover not exceeding Rs 40.00  Crore.      Similarly,  concept  of  small  LLP  has  been introduced which is subject to lesser compliances, lesser fee to reduce the cost of compliances;
- (ix) Zero fee for incorporation of company with authorized capital up to Rs.15.00 Lakh;
- (x) Extended fast track process for mergers under the Companies Act, 2013 to include mergers of Startups with other Startups and with small companies, so that the process of mergers & amalgamations is expedited;
- (xi) Convening Annual General Meeting (AGM) and Extra-ordinary General Meeting (EGM) of a company through Video Conference (VC);

Contd…4….

- (xii) Zero cost for shifting of the registered office of a company;
- (xiii)  The Ministry has issued Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 allowing Indian public companies to list  their  equity  shares  on  international  stock exchange(s) at GIFT IFSC;

In  addition  to  the  above,  as  intimated  by  Securities  &  Exchange Board of India (SEBI), for ease of doing business and enhance corporate governance various steps have been initiated such as:-

- (i) Introduced Corporate Governance requirements for listed entities to improve transparency in their functioning and ensure enhanced disclosures to investors. Regulations 15 to 27 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) deal with corporate governance requirements for listed entities.
- (ii) Introduction of pre-filing of offer documents, simplifying the buyback process and reduction in timelines, rationalizing methods for complying with minimum public shareholding norms, reduction in timeline for listing of shares in public issue from T+6 days to T+3 etc.
- (iii) Strengthened the corporate governance framework  for listed entities  in  last  one  year  through  measures  like  introduction  of  BRSR (Business  Responsibility  and  Sustainability  Report)  Core,  rationalizing disclosure of material events or information by listed entities, empowering shareholders at listed entities etc.
- (iv) As  far  as  the  debt  listed  entities  are  concerned,  the  corporate governance  norms  are  applicable  to  High  Value  Debt  Listed  Entity (HVDLE),  i.e.,  a  listed  entity  which  has  listed  its  non-convertible  debt securities  and  has  an  outstanding  value  of  listed  non-convertible  debt securities of Rs.500 Crore and above. Currently the said provisions are applicable on a 'comply or explain' basis until March 31, 202 5 and on a mandatory basis thereafter.

********