Ministry Of Corporate Affairs

MCA 21

Abstract:
MCA21, being implemented in the Ministry of Corporate Affairs, is one of
the e-Governance Mission Mode Project of the Government of India under the
National e-Governance Plan. The project envisages easy and secure online
access to all the registry related services being provided by the Ministry
of Corporate Affairs, including registration and filling of documents
throughout the country for all the corporates and other stakeholders at
any time and in a manner that best suits them. The programme is outcome
based and focussed on improving the quality of services to various
stakeholders concerned with the corporate sector in the country. This
paper highlights the objectives of the project, scope of services,
strategies adopted in MCA21 to transform the paper-based process to a
nearly complete electronic system, the innovative methods used, emergence
of best practices in administration which include:- i) empowering the
citizens/ stakeholders by providing access to information on companies
(G2C Services); ii) B2G Transactions; and iii) G2B Transactions. It also
discusses the pre-MCA21 and post MCA21 implementation scenarios.
Introduction:
The Ministry of Corporate Affairs, earlier known as Ministry of Company
Affairs, is concerned with the administration of a wide range of statutes
for the growth and regulation of the corporate sector including the
Companies Act, 1956 and rules and regulation framed there under. The
Ministry has a three tier organizational set up for administration of the
Act, namely the Central Government Secretariat at New Delhi, the Regional
Directors at Mumbai, Kolkata, Chennai and Noida(U.P.) and 20 Registrars of
Companies in various States and Union Territories.

The Ministry has taken a number of initiatives to meet the expectations of

the Corporate Sector and its stakeholders in a dynamic national and global
business environment with a view to bringing about significant
transformation in the manner of doing business in India and introduce the
concepts of ‘good governance’. These initiatives can be broadly classified
into (i) legislative and (ii) administrative categories. On the
legislative front, the Ministry has (i) amended the three Acts governing
the three Professions of Chartered Accountants, Cost & Works Accountants,
and the Company Secretaries for orderly growth of these professions with
increased accountability, (ii) notified the Accounting Standards for
corporate disclosures in a manner compatible with the internationally
followed best practices, (iii) introduced a Bill on the Limited Liability
Partnerships to provide for a new form of body corporate ideally suited
for the growth of professional capacity and knowledge based service sector
in the country, and (iv) a comprehensive revision of the Companies Act,
1956 to provide for a simple, forward looking legal framework that enables
the growth of corporate sector with effective compliance.

On the administrative side, the initiatives include (i) implementation of

MCA21 e-governance project, (ii) restructuring of the ROC offices to focus
on the hitherto neglected regulatory functions, (iii) restructuring of the
Ministry headquarters for introducing efficiencies, and (iv) taking steps
for creation of ‘new look’ office environment that is conducive to
improved productivity and client response. A number of new office
complexes have been planned at different locations and renovation/
refurbishing of the existing offices has been taken up as a part of this
drive. The Ministry is also working on setting-up an Indian Institute of
Corporate Affairs (IICA) to serve as a think-tank, capacity building
facility and delivery of services in respect of investor education and
corporate governance. The project has already been approved in principle
by the Planning Commission and included in the 11th five year plan.
MCA21 e-Governance Project:
It has been the Government’s endeavor to facilitate the maintenance and
growth of a healthy business eco-system that can meet stakeholder
aspirations. It is particularly relevant at this juncture considering the
growth in the number of companies from about 30,000 in 1956 to more than 8
lakh at present. The Ministry of Corporate Affairs (MCA) has the only
authentic information repository on the corporate sector of the country
and serves as the registry for all transactions by the companies under the
Act and filing of annual and event-based statutory documents.

Exceptionally high growth in the number of companies during last one

decade following the policy shift favouring economic liberalization, a
reducing trend in the number of employees and the paper-based mode of
business transactions with various registries was proving to be
inefficient and leading to emergence of undesirable practices. Offices of
the Registrars of Companies (ROCs) were becoming paper dump yards, company
representatives and professionals providing services to the corporate
sector were required to physically visit the ROC offices, peak filing
seasons would witness unending serpentine queues involving a huge waste of
time and effort, regulatory functions took a back-seat in the face of
increased volumes of work leading to low rate of compliance by the
companies and ineffective compliance management and monitoring on the part
of the government. Public access to company documents was becoming
extremely tedious, costly and time consuming as it required physical
visits to ROC offices. Piecemeal computerization was not serving the
desired purpose. The inherent systemic inefficiencies led to delays in
delivery of services and the emergence of undesirable practices impacting
transparency. The gap between the expectations of the stakeholders, who
were increasingly becoming familiar with the international practices, and
the ground realities in delivery of services was widening.

It is in this background that the Government decided to take a major

initiative to transform the situation in order to meet the expectations of
the stakeholders in a globally competitive business environment of the
21st century. Therein lies the genesis of the acronym ‘MCA21’. The
possibilities offered by technology to ease and simplify the interfaces
between the Government and the stakeholders have been effectively adopted
to address this challenge. MCA21 is a modernization and computerization
program that aims at continuously repositioning MCA as an organization
capable of fulfilling the aspirations of its stakeholders in a globally
competitive business environment. Geared to provide anytime, anywhere
services, efficiency is achieved by harnessing the right technology
enablers. The piecemeal computerization effort adopted in the past has
been replaced with a comprehensive, end-to-end service delivery oriented
solution resulting in speed and certainty of delivery of services. Besides
simplification and improvements to the current ways of working, such an
approach has been able to bring about a fine balance between facilitation
and compliance – as a blend of well-defined goals and performance metrics.
MCA21 has by now evolved to provide key learnings on how the finite nature
of paper based systems could be overcome especially in a country with
continental dimensions like India.
Objectives / Aims: :
MCA21 is an outcome based e-Governance program and the goals are oriented
at bringing about significant value to the stakeholders. The objectives of
the program have been succinctly articulated to address the needs of major
stakeholders stated as under:
Business: enabled to register a company and file statutory documents
quickly and easily and in a manner that is convenient and transparent;
Public: to get easy access to relevant company documents available in
the public domain and get their grievances redressed effectively;
Professionals: to be able to offer efficient services to their client
companies;
Financial Institutions: to find registration and verification of charges
easy;
Government: to ensure proactive and effective compliance of relevant
laws and corporate governance;
MCA Employees: improved productivity and enabled to deliver best of
breed services.
Scope of Services
There are more than 100 services covered within the scope of MCA21 and the
major services categories are as follows:
Name Approvals and Incorporation of new companies;
Filing of annual statutory returns and grant of all approvals;
 Registry reference to public records of companies to citizens/investors;

Providing a forum for redressal of investors grievances;

Compliance management and effective regulation;
Formulation of policies governing the corporate sector;
Platform for implementing new value added services;
Interoperability with other Government departments/ ministries/
regulators.
Strategies Adopted
Given the unique nature of requirements and the type of outcomes targeted
in the face of a very broad range of services, a ‘big-bang’ strategy was
adopted in MCA21 to migrate from a paper-based process to a nearly
complete electronic system (with the exception of a small number of
services where physical non-judicial stamp paper is still involved). The
back office operations in particular have been made completely paperless
with the use of electronic workflows and secure digital document
repositories. Due to the project complexity, these strategies were further
broken down into sector-specific strategies, each addressing a specific
facet of the problem, as explained in the following paragraphs:
Service Delivery:
MCA21 is a departure from the conventional ‘computerization’ approach
involving procurement of infrastructure and project related services.
Instead, it has adopted a ‘service delivery’ model where the project
operator would provide the desired service facilitation through a clearly
agreed service level agreement. This approach has enabled Government to
maintain focus on statutory and value-based aspects of the work while
other tasks are largely handled through use of technology.
Consultative and Team Approach:
In addition to the comprehensive, unambiguous technical specifications
(inclusive of a prototype), which ensured the viability of architectural
and engineering aspects, the cross-functional team also included experts
from the business domain, financial modelling and legal professionals who
cohesively addressed the issues during the conceptualization stage.
Subsequently, a wide consultative approach was adopted (and continues to
be followed) for the development of e-forms with participation from the
professional Institutes and practising professionals i.e. Company
Secretaries and Chartered Accounts.
Modernization:
This involved two specific areas of improvement (a) modernization of
offices and (b) process re-engineering including revamping nearly 100
forms for electronic access, re-orientation of work procedures to adapt to
a technology enabled environment and migration of associated data for
electronic use. The process re-engineering is central to the way the new
system performs to ensure speed and certainty in service delivery.
Change Management:
A number of internal and external change interventions including an
 extensive media campaign were carried out over an extended period of time.
The involvement of professional institutes (Company Secretaries, Chartered
and Cost Accountants Institutes) and Industry Bodies right from the
initial stage are noteworthy. To facilitate the transition for the end
user, especially the smaller companies, Facilitation Centres were set up
at 53 locations to address the issues of ‘digital divide’ free of any
charges. Simultaneous action was taken to introduce certain amendments to
the Companies Act involving key enabling provisions for electronic use and
mandating electronic filing. Finding that the number of Facilitation
Centres could still be inadequate, a scheme of Certified Filing Centres
(CFCs) was introduced wherein the practising professionals were encouraged
to provide these facilities against a user charge. More than 900 CFCs were
approved across the country.
Data Migration:
In order to enhance the utility of the system and empowerment of citizens
and investors, about 4.50 crore pages of legacy documents were digitized
and inducted into the electronic registry. These included permanent
documents related to the companies and the subsisting ‘charge’ documents.
These documents are available for online access to any user, thus
empowering the investors and citizens at large. In addition, the project
also involved introduction of a new concept of Director Identification
Number (DIN) and building of the director data-base so as to easily
identify defaulting directors, especially in case of companies that
vanish.
Innovative Methods Used:
An architecture based approach was adopted to define the solution. A
building block called the “Gateway” has also been introduced in the
solution framework. This would enable service interactions across other
governmental systems as and when they are ready. This feature will help
the Government to think ‘out-of-the-box’ in introducing single-window
services that span multiple departments, a feature that can bring about
reduction in the number of transactions as well as simplification of work
processes.

Electronic payment methods using credit cards and Internet banking have
been introduced in the system and these co-exist with the traditional
challan based payment method over the bank counter.

There are number of innovations that have been carried out in the area of
electronic forms (e-forms). These include elimination of repetitive data
that was being sought from the applicants, a facility of automated
‘pre-fill’ of essential data that had to be mandatorily used in some of
the e-forms, a feature for automated pre-scrutiny and authentication of
the form through use of a Digital Signature Certificate (DSC) in
accordance with the IT Act. All these could be done using software that
was available in the public domain where the end-user did not incur any
 additional cost in procuring these software tools.

As the data input in the e-forms is authenticated through use of digital

signatures by the authorized signatories of the companies, this data is
automatically transferred to the databases directly without any human
intervention. Further, a Straight-through-processing (STP) has also been
introduced where a large number of documents, not requiring any approvals,
are taken on record without human intervention with a secure technology
driven process.

The introduction of electronic stamp papers, which has an external

dependency on the States/ UTs, is being currently taken up for resolution,
thereby making the process completely paperless. The viability of this
approach is expected to bring about sweeping changes as this could be
harnessed fruitfully in a very large number of other e-Governance
projects.
Period of Project Initiative / Implementation
Initial consulting was commenced in September 2002 and was completed in
October 2003 culminating in a full-blown proof-of-concept. The Expression
of Interest commenced immediately thereafter and the Request for Proposal
was floated in February 2004. The selected operator was short-listed in
June, 2004.

The MCA21 Project implementation commenced with the signing of contact

with the selected operator (M/s Tata Consultancy Services Ltd.) on
01.03.2005 after obtaining all approvals from the CNE and the CCEA.

The Project had an implementation cycle of 60 weeks and, thereafter, an

operation period of 6 years. The Project implementation was commenced on
schedule with the launch of the initial pilots at Coimbatore and Delhi in
February and March 2006 respectively, followed by a nation-wide roll-out
(12 locations by April, 2006) and completed on 30 July 2006, with the
exception of Jammu, which could be launched on September 4, 2006 due to
connectivity problems. This was followed by mandating e-filing of
documents by all companies w.e.f. 16 September 2006. The project
implementation was provisionally certified on 17 January, 2007 (for
reasons of achieving stability of operations) even though services to the
stakeholders had commenced from 18 February 2006 at select locations and
from 16 September 2006 from all other locations without any major
problems. The implementation of the project has led to a number of best
practices in administration facilitated through the use of ICT. Some of
the best practices that have emerged are explained in the following
paragraphs.
Best Practices:
1. Empowering the citizen/ stakeholder to access information on companies
(G2C services):
Stakeholders and the legal position:
The main stakeholders in respect of the Ministry of Corporate Affairs
comprise the companies, the professionals (Chartered Accountants and
Company Secretaries, etc.), the Banks and Financial Institutions, the
existing and potential investors, the employees of the Ministry, various
Government Departments/ Ministries, Regulators (SEBI/ Stock Exchanges/
RBI) and the citizens in general. Section 610 of the Companies Act, 1956
allows inspection of documents kept by the Registrar by the various
stakeholders on payment of such fees as may be prescribed.
Problems encountered:
Prior to the implementation of MCA21, companies used to file all the
statutory documents in physical mode with the Registrars of Companies, who
in turn maintained the same in physical form and make it available for
inspection to the interested parties. It has been estimated that on an
average, documents containing more than one crore sheet of paper were
filed every year. The stakeholders, requiring inspection of these
documents, would make physical visits to the offices of the Registrars of
Companies (20 in all nation-wide). Space being a major constraint, the
inspection of public documents was a painful experience. Besides
deployment of a battery of employees for retrieval of Document files from
the record rooms and presenting the same for inspection by the stakeholder
in the presence of the employee (in order to ensure the safety of the
records), there were frequent cases when either the stakeholder would be
allowed minimal time to complete his inspection or required to come on
some other date in the case of non-availability of the Document file of
the company (for a variety of reasons such as the file being with an
investigating agency, before the Court or simply being non-traceable).
Moreover, the process of inspection was difficult as the inspecting person
was required to take physical notes of relevant documents. The process of
inspection being manual and difficult, a large number of stakeholders from
the general investing public would hardly take the trouble of accessing
public documents before taking their investment decisions. In terms of
costs to the stakeholders, it would involve the travel costs to the ROC
office, incidental expenses, the statutory fee (which is only Rs. 50/-)
and in many cases the costs for staying overnight at the ROC location if
it was geographically at a distant place. This does not include the time
costs.
The solution and steps taken:
Realising the problems faced in public access to the company documents,
the Ministry decided to scan and digitize all the permanent documents of
companies (MOA, AOA, subsisting charge documents, etc.) and Annual Returns
and Balance Sheets for a period of two years preceding. In the process,
about 4.50 crore sheets of paper have been scanned and digitized and made
a part of the electronic Registry. The electronic Registry has been
further enriched with the e-filing of all the documents in various
Registries with effect from the dates of roll-out of the programme and
further mandated for the entire country with effect from September 16,
2006. The facility of inspection of documents granted under section 610 of
the Companies Act, 1956 has now been converted into the facility of ‘View
Public Documents’ under the MCA21. Further, keeping in view that not all
legacy records were scanned and digitized, a facility of ‘on-demand
scanning’ has been provided. Under this facility, a stakeholder can
request for certain documents (subject to availability) to be scanned and
made available on-line. The features of this facility are as under:-
View signatory details: This window permits the citizens to access the
data-base regarding the Directors/ Manager/ Secretary of the company and
is available without any charge for the present;
View Public Documents: Under this window, a stakeholder can view the
Index of all the documents of a company available in the electronic
Registry and can access the documents on payment of the prescribed
statutory fees. The facility for on-line payment has been made available
and the window remains open for a period of three hours at any one point
of time;
View Charge Documents: The Charge Register is an important document for
the Banks and the FIs besides the company. The Banks and the FIs used to
spend a lot of money on verification of charges in respect of a company.
Now this facility is available in respect of all the subsisting charges
of a company which can be viewed on-line on payment of statutory fees.
Services availed:
The provision of company documents in electronic form and permitting
access to these documents on-line has been perceived as a revolutionary
best practice in empowerment of the stakeholders of the corporate sector.
As on 14 November 2007, more than 3,33,000 services have been availed
using this facility. This number is only in respect of the services
availed for which statutory fee is payable. The number of public view of
‘Company Master Data’ is far higher as this facility has been made
available without any charge and for which no record is being maintained.
Benefits to stakeholders:
As a result of the above facility, an existing or potential investor can
view the companies’ performance on-line, the details about its Directors,
its Annual Report and Balance Sheets. The Profit and Loss Account in
respect of Public Limited Companies is also available in the public
domain. A potential investor can carry out due diligence by taking
recourse to the facility and he is enabled to take informed investment
decisions. The problems on account of mis-placement/ non-availability of
documents have been fully addressed. One does not need to physically visit
the offices of the ROCs for the purpose leading to savings in time and
financial costs. The Banks and FIs can view and verify the status of
charges vis-à-vis the Companies which constitute major borrowers.
Best Practices:
2. B2G Transactions:
Companies are required to interface with the Registrar of Companies
(ROCs), the Regional Directors (RDs) and the Central Government in
accordance with various provisions of the Act. These interactions could be
grouped under three broad categories viz.
transactions requiring approvals from the ROCs, RDs and the Central
Government (e.g. name approval, incorporation, increase in authorized
capital, registration/ modification/ satisfaction of charge etc.);
transactions in which the companies are required to file certain
documents as a statutory requirement but not requiring approvals. These
documents are primarily taken on record of various registries (e.g.
Annual Return, Balance-sheet, change in registered office address,
change in Directors, special resolutions etc.);
transactions wherein the companies are required to respond to the
references from these agencies as a part of compliance management and
regulation.
Difficulties and problems:
Prior to the implementation of MCA21, all filings by the companies were in
physical paper mode requiring a stakeholder or his representative to
physically visit these offices or send the same by post. Handling large
volumes of paper was a major problem in the back offices and there were
complaints on account of all sorts of undesirable practices such as loss
of paper documents, ante-dated filings, replacement of statutory documents
etc. The papers could not be tagged on to the Document files (D-files) of
concerned companies in time due to peak filing season rush and shortage of
staff. There have been instances when these documents were not posted in
the respective D-files for years at end. A check on the quality of filings
(correct and complete information) had virtually become impossible as the
scrutiny of documents was nearly impossible in the face of volumes.
Delivery of services in a transparent and efficient manner had become a
major problem.
Process re-engineering:
E-filing of all documents from B2G was conceived as an alternative. As a
first step, re-engineering of the business processes involved conversion
of physical forms into electronic-forms. This exercise led to reduction of
forms from 75 to 61 in the first instance. All the e-forms were notified
under the relevant rules as on February 10, 2006.The e-forms are available
on-line and can be filled both on-line as well as off-line after
downloading the same from the portal. Process re-engineering has been an
on-going exercise as changes were necessitated in certain forms after
going on-line and the feedback received from the end-users and
professionals. In certain cases, the process changes had to be introduced.
In respect of certain other key forms, an exercise in optimization has
been on-going as a part of the service enhancement.
Special features introduced
The e-forms, once downloaded, can be filled off-line and uploaded
subsequently. There is a built-in feature of ‘pre-fill’ of certain common
fields for which the information is automatically picked up from the
database available in the electronic registry. The most critical
information has been placed under ‘mandatory’ fields which means that the
system would not permit filing of the documents if any one or more of
these mandatory fields are not filled-in. Further, a feature of system
driven ‘pre-scrutiny’ has been provided which ensures that any
information, which has not been filed earlier and which is now being filed
for the first time, would be captured. For instance, if a company files
Form 32 (pertaining to change in directors) to inform cessation of a
director, the system will not permit the filing if the information
regarding appointment of the said director had not been filed by the
Company. Any new information filed through these e-forms automatically
updates the database of the company. A special facility for multiple
‘modification’ of the contents filled-in the form, before it is uploaded,
has been provided. This gives an opportunity to the stakeholders to verify
and make changes in the contents before ‘submission’ of the e-form so as
to ensure that the correct information is being filed.
Payment of statutory fees:
Filing of documents by the Companies entails payment of statutory fees.
Earlier, the fees were paid at the counters in the offices of the ROCs
set-up for the purpose. These could be paid both in cash as well through
DDs/ Pay orders. The day’s collections would then be remitted by the ROC
in the Bank allocated to the MCA. Problems and risks associated with this
system were obtaining here as well.

The system of payment of statutory fees has been re-engineered as a part

of the overall process. Though the system of payment acceptance at ROC
offices was stopped with the roll-out of MCA21, both options i.e. the
conventional challan-based off-line payment and the on-line payment
systems were introduced. The service-seeker is prompted to select between
the ‘off-line’ or ‘online’ mode of payment. Once the stakeholders selects
the ‘off-line’ mode of payment, the system generates a pre-filled challan,
of which a print-out is taken and the challan is presented at the payment
counter of one of the 399 authorised bank branches for remittance. If one
opts for ‘on-line’ payment mode, the system gives him the option to select
the ‘credit card’ or ‘internet banking’ and a receipt is generated on
authorization of payment in the electronic mode. The Banks, on realization
of payment, report this to the MCA21 system upon which the work-item is
initiated to the back-office for processing. Banks are given T+3 days to
report the payment realization. The benefit in on-line mode of payment is
that the payment realization is reported instantaneously and minimum time
is taken in initiation of the work-item and the resultant immediate
processing. The ‘off-line payment’ system delays the initiation of
work-item to the extent of time taken by the Banks in reporting payment
realization to the MCA21 system. As on 31 October 2007, the usage of
on-line system has reached the level of 47% of the transactions whereas
98.5% of the total transactions are being reported by the Banks within the
stipulated time-frame of T+3 days. The Ministry is considering mandating
on-line system of payment w.e.f. April, 2008 for all services except for
the ‘incorporation’ of Companies where both the options are proposed to be
continued.
Integrity and security of documents: use of DSCs
In order to ensure the non-repudiation of authenticity of the documents
filed and provide for features for integrity and security of documents
filed, the use of Digital Signatures (DSCs) has been mandated. The e-forms
have to be digitally signed by the authorized signatory(ies) before filing
the document and, wherever required, provision for multiple DSCs has been
made. For instance, Form 8, which pertains to the registration and
modification of charge, contains a provision for DSC of the authorized
signatories both from the Company as well as the Bank/ Financial
Institution. The stakeholders can obtain their Category-II DSCs from any
of the 7 Certification Agencies, which are valid for multiple
applications. The use of DSC based filings ensures the integrity of the
document and non-repudiation on the part of the stakeholder.
Role-check:
Further, it was observed that even though the documents are being filed
using DSCs, the ministry had no way to verify the antecedents of the
signatory. Now, this feature has been introduced with effect from July 01,
2007 whereby the system of role-check of the signatory has been
implemented. The signatory is now required to register his DSC on the
portal, which is verified by the system against the DIN database created
in respect of the Directors and the professional’ database taken from the
respective institutes of Chartered Accountants, Company Secretaries and
the Costs and Works Accountants. Thus the identity of the signatory is
fully established except in case of signatories from the Banks and FIs
whose database is not being maintained by the Banks and the FIs at any
central location. Steps are under way to find a resolution for this group
of signatories also.
Straight Throughput Process (STP)
The companies are required to file their Annual Returns and Balance Sheets
every year under the statute. These documents become due for filing within
a period of 60 days and 30 days respectively of the holding of AGM by the
companies. The companies are also required to hold their AGMs within a
period of six months of the closure of their accounts (normally
co-terminus with the Financial Year). As a result, a large number of
companies hold their AGMs in the months of August and September and the
filings become due in the months of September/ October. Thus, the period
from September to November constitutes as the peak filing season for the
companies in respect of these documents. As the ARs and BSs do not require
any approval, a system of straight throughput of these documents into the
electronic registry has been introduced. This saves any congestion/
chocking of the system in the back offices when these documents are filed.
These documents can be retrieved from the electronic Registry for view as
per requirement, by the ROC staff or the public, as the case may be. An
exercise is in hand to bring in a few more documents within the fold of
the straight throughput process.
Benefits:
Introduction of the system of e-filing has helped in resolution of most of
the problems in a substantial manner. The stakeholders are no longer
required to physically visit the ROC offices and queue-up for filing their
documents. They can do so from their virtual offices, be it office or home
at any time and from anywhere. Filing times have extended from 09.00 am to
5.00 pm to 24 hours. Weekends or holidays are no longer relevant as the
services are available on a 24x7x365 time frame. Record management is
automatic, paper has largely been replaced by digital records and there is
no question of ante-date filings or loss or substitution of documents.
Elements of speed, certainty and integrity in filing of documents are in
place. The programme has been received very well by the stakeholders.
Sr. No.Name of the ServiceName of Users
1.Average portal hits per day1.7 million
2.Peak Portal hits (29,Nov 2006)6.5 million
3.Maximum Number of Documents Filed on a day (29,Nov 2006)36,242
4.Total filings done till date31.19 lakh
5.Companies registered online82, 034
6.Total DIN issued till date 6.85 lakh
7.Company records viewed online 3.33 lakh
8.Number of Balance Sheet filed 4.98 lakh (1.22 lakh for last
financial year
9.Number of Annual returns filed4.68 lakh (91,260 for last financial
year
10.Number of DIN-3 filed3.60 lakh
11.E-filing through VFO93%
12.Online Payments (By number)About 47%
13.Total DSC Registered203,066
ROC Offices
1.Total no. of Work Items Initiated12,05,771
2.Total no. of Work Items Approved11,52,636
3.Total Work Item Pending User Clarification24,582
4.Total Work Item Pending Re-submission16,784

Best Practices:
3. G2B Transactions:
The Ministry of Corporate Affairs is responsible for a number of functions
vis-à-vis the corporate sector. One of the primary responsibilities of the
Ministry pertains to administration of the Companies Act, 1956. It
involves a two-way work flow process i.e. (i) the companies are required
to seek a number of approvals from the Government and file documents/
returns as stipulated under the statutes, (ii) the Government responds to
the requests for approvals by way of service delivery and regulates the
corporate sector in terms of compliance and enforcement of the provisions
of the Act. The first part would fall in the category of B2G transactions
while the second part would fall in the domain of G2B services. The first
part has been explained separately whereas the second part of the workflow
process is being explained here.
Expectations:
G2B services, in a healthy business eco-system, assume the fulfilment of
the following expectations:-
The stakeholders are enabled to approach the Government in a hassle-free
manner;
The stakeholders are enabled to monitor and follow up the transaction
status;
The processes are simple, cost-effective and render compliance easy;
The services are delivered in a transparent manner with speed and
certainty;
The stakeholders have a smooth access to the public records.
Pre-MCA21 Status:
The main interface points for the stakeholders in the process of
administration of Companies Act, 1956 are the Registrars of Companies
(ROCs), Regional Directors (RDs) and the Central Government in the
Ministry of Corporate Affairs (MCA) in a decreasing order. There are 20
offices of the ROCs, supervised through four RDs throughout the country.
The corporate sector has shown a tremendous growth since 1990s. The number
of companies increased from 30,000 in 1956 to about 2.00 lakh by 1990 and
it has now crossed the mark of 8.00 lakh in 2007. The level of staff in
these offices today is lesser than what it was in the year 1994. Increase
in workload with the increasing number of companies and the staff strength
not keeping pace matching with the increased workload, reduced these
offices only to the delivery of essential services and thereby compliance
management, regulation and enforcement took a backseat. Professionals
(Company Secretaries and Chartered Accountants) came under severe pressure
to build up their relations with the staff in these offices for delivery
of services to their clients. This situation led to emergence of all sorts
of undesirable practices e.g. delays in delivery of services, poor
compliance rate, corruption and inefficiencies. Faced with this scenario
in an emerging globally competitive business environment, the Government
decided to take up an end-to-end outcome based service delivery initiative
in the form of MCA21 e-Governance project. <
Post-MCA21 Implementation:
The implementation of MCA21 has provided an enabling environment for the
stakeholders to approach the Government for seeking the complete basket of
services in an easy and transparent manner. The work flow process gets
completed only with a similar response mechanism from the Government side,
which has been addressed along with the first part through this
initiative. The main features of this process are explained in the
following paragraphs:
Initiation of work items:
Once the stakeholders file their requests through the prescribed e-Forms
along with complete documents/ attachments, the work items remain parked
in the front portal till the realization of payment of statutory fees is
electronically confirmed by the Banking system to the MCA21 system. The
moment the payment realization is confirmed, the work item is ‘initiated’
and made available in the ROC office portal (back office) for processing
by the Dealing Hands (DH) and the Approving Officers (AO). Most of the
processes have been confined to two levels as against multiple levels
earlier with an option to move the work item to the Head of the Office,
wherever required. The work items appear on the Desktops of the Dealing
Hands following a system of allocation of works in FIFO (First in First
out) mode. It follows a ‘Push’ model which means that the moment the
Dealing Hand has cleared one item, the next item on his Dash Board appears
before him. The Dealing Hand, after examination, either recommends it for
approval to the AO or records the deficiencies/ clarifications required.
The items categorized as PUCL (Pending User Clarification) or
‘Resubmission’ on account of deficiencies get conveyed to the stakeholder
in his e-Box. Those meeting the approval standards are pushed on to the
AOs, approved and closed.
Track transaction status and response mechanism
The stakeholder is in a position to track the transaction status at every
stage from the payment status to the processing and ultimately to the
approval status. The clarifications/ queries, if any, are automatically
communicated to him so as to enable him to respond, again electronically.
This is a significant improvement over the earlier system when the
stakeholder would just not know the status of processing of his request.
Assured payment of statutory fees
The system has helped streamline the realization of statutory fees. Any
scope for miscalculation or underpayment has been obviated as the fee
payable is calculated through the system. Though there are a number of
factors (overall buoyancy in the economy and improved compliance rate)
responsible for increase in revenues, it is noteworthy that the total
revenues contributed by the Ministry have increased from Rs. 474 crore in
March, 2005 to Rs. 728 crore in March, 2006 and further to Rs. 1,038 crore
in March, 2007. The implementation of e-governance has enabled plugging
the leakages, especially in the cases of payments on account of increase
in authorised capital of the companies.
Time taken in delivery of services
The time taken in delivery of services has shown remarkable improvement.
The status of total number of documents filed, the number of documents
processed and approved with aging analysis is monitorable at all the three
levels of the ROC, the RD and the Ministry Headquarters. Regular central
monitoring in this behalf has paid rich dividends. The analysis for the
month of August shows that more than 60% of the requests are being
processed/ approved the same day. The number of items under PUCL or
Resubmission categories is only about 4 to 5 per cent of the total number
of work items initiated across all the Registries. The time-lines for
delivery of services, as provided in the Citizen Charter, have been
revised downwards by 50%, though the actual progress being achieved on an
average is better than the timelines prescribed in the Citizen Charter.
Efficiencies achieved in respect of major services are brought out in the
table enclosed as Annex-1.
Best Practices:
4. G2G Services and linkages:
With a forward looking architecture of MCA21, it is capable of sharing
information with other Government Departments/ Ministries/ Regulators on
the corporate sector of the country and introduction of joined-up services
in due course of time. A beginning has already been made with free access
to company documents having been allowed to the following:
Reserve Bank of India;
Finance Intelligence Unit (FIU-IND);
Department of Economic Affairs;
Intelligence Bureau;
Central Statistics Organisation;
The access has been permitted to the designated officers of these offices
through a secure DSC based log-in. However, the scope for extending this
is enormous in times to come. Once the other Departments implement their
e-governance programmes, and have set-up their gateways, the MCA21 system
is built with interoperability options. It could eventually lead to single
stop services. For instance, the corporates could be required to file
their balance-sheets only with the MCA dispensing with the need for filing
the same with the Income Tax Department as the MCA data could be shared
with the Revenue Department.
Other Major Benefits:
Efficient record management
Record management of the documents filed in the Registries, which was a
major area of concern earlier, has undergone a complete transformation.
Now, it is automatic and the electronic Registry is set to be enriched
over a period of time.
Data integrity – Cleaning and validation:
The implementation of MCA21 has enabled the Ministry to recognize the
dimensions of problems associated with the integrity of the database. Now,
the companies can view their Master Data and have been enabled to point
out the inaccuracies in the data for correction to the ROCs. A major drive
for data correction and validation has been taken up on top priority. More
than 80,000 data correction requests have been filed by the companies
while an equal number has been covered through a suo-motu exercise by the
ROCs. It is planned to complete this exercise by March, 2008 when the
Registry would be able to claim a reasonable degree of integrity of the
database on the corporate sector of the country. More than a lakh of
defunct companies have been identified in the system and the process for
striking off their names under Section 560 of the Act has been taken up in
the form of another drive. This would significantly purge the registry of
avoidable administrative burden. Already, more than 81,000 companies have
been placed under the categories of ‘Struck-off/ Dissolved/ Under
Liquidation/ Amalgamated’ etc. These initiatives could not be thought of
in the pre-MCA21 environment.
Improvement in compliance management
It has become possible to manage the compliance of statutory obligations
by the companies. Filing of Annual Returns and Balance Sheets have
registered an increase of more than 60% during one year as is brought out
from the following table. An Action Plan has been put in place for further
improvement during the current Financial Year.
Compliance status as on 31.03.2006 and 31.03.2007
Sr. No.Range of Authorized CapitalNo. of CompaniesNo. of ARs and BSs
filed during 2005-06No. of ARs and BSs filed during 2006-07
BSARBSAR
1234567
1.Up to Rs. 4,99,999/-253407
(32.06%)34759
(13.72%)32667
(12.89%)53129
(20.97%)53033
(20.93%)
2.Rs. 5.00 lakh to Rs. 9,99,999/-170335
(21.56%)31354
(18.41%)33468
(19.65%)49812
(29.24%)49943
(29.32%)
3.Rs. 10.00 lakh to Rs. 24,99,999/-157402
(19.92%)46384
(29.47%)42868
(27.24%)63889
(40.59%)64107
(40.73%)
4.Rs. 25.00 lakh to Rs. 49,99,999/-66433
(8.40%)26805
(40.35%)23894
(35.97%)36274
(54.60%)36252
(54.57%)
5.Rs. 50.00 lakh to Rs. 99,99,999/-53143
(6.72%)23647
(44.50%)20813
(39.16%)31897
(60.02%)31949
 (60.12%)
6.Rs. 1.00 crore and above89632
(11.34%)41397
(46.19%)36542
(40.77%)59220
(66.07%)59056
(65.89%)

Best practices have emerged in a number of other areas. These are proposed
to be documented as an on-going exercise during the year and will be
shared with the Department of Administrative Reforms in due course of
time. As a matter of fact, as a part of the ‘Restructuring of the Action
Plan’ for 2007-08, the field offices have been advised to adopt any one
area of public governance out of the following major identified tasks and
excel in that area in terms of performance:
Service Delivery;
Data Correction and Validation;
Striking off the names of defunct companies under Section 560 of the
Act;
Annex-I A Comparative Statement showing the efficiency improvement in
delivery of Services under MCA21

Sl. NoParticulars of power and functionsPeriod as given in the

Citizen CharterTime taken pre-MCA21Time taken post MCA21
implementation (showing in percentage terms)
Same day2-3 days4 to 5 days
1.Application for approval of name of a proposed company – Section
20 of the Companies Act, 19563 working days7 days15%45%14%
2.Application for registration of a company – Section 33 including
issuance of Incorporation Certificate (Form 1)10 working days15
days81%7%2%
3.Application for change of name of a company – Section 21/31 and
Section 43A(4), 57215 working days15 days15%45%14%
4.Registration of charges, modifications and satisfaction – Section
125 and 141 (Form 8)2 working days10-15 days22%47%13%
5.Issue of certified copy of documents – Section 610 5 days10 days2
days (average)
6.Registration of other documents filed with ROCs60 days60 days
i)Annual Filings (Annual Returns and Balance-sheets)60 days60
daysTaken on record online
ii)Form 32 (Change in Director)60 days60 days55%27%9%
iii)Form 18 (Change in Regd. Office Address)60 days60 days69%15%3%
iv)Form 5 (Increase in Authorised Capital)60 days60 days17%34%19%
7.Inspection of Public DocumentsManual and time-consuming process
requiring physical visits to ROC officesOn-line facility available
through the Internet for all electronic documents (including those
legacy documents digitized)