Online Indian Corp Data MCA21, a flagship e-governance initiative, will help establish a healthy business eco-system PRITHVI HALDEA Posted online: Wednesday, December 28, 2005 at 0000 hours IST A lender wishes to find details of all orders passed by courts, CLB and NCLT against a specific company. A bank in Chennai wants to ascertain the charges created by a company located in Guwahati. A court wishes a notice to be sent to all present directors of a company. A government agency wishes to reach a company at its latest registered office address. An investment banker is seeking information for due diligence on the unlisted companies of a group. Or a venture capital company is looking at potential investment opportunities. A pharma firm wants to research targets for acquisitions. A new FMCG firm wants to check up on scores of companies across the country who have shown interest in its franchise offer. A journalist wants to find out the antecedents and shareholders of a company he is writing about. An investor wants to ascertain the name change of a company he has invested in. A person in Mumbai wishes to know about the financial condition of a real estate firm, located in Kolkata, offering flats in Mumbai. Literally, endless scenarios. While most of this information is easily available for the 9000+ listed companies, there is a huge problem with regard to the nearly six lakh unlisted entities. Though for these too, theoretically, information can be obtained even in the present set up, but only through a physical visit to one or several of the 20 offices of the registrar of companies (RoCs) in the cities where the target companies? registered offices are located. This is a cumbersome, expensive and time-consuming job?so tedious that it renders itself significantly unusable. Soon, this is going to change, courtesy MCA21, the ambitious flagship e-governance initiative of the ministry of company affairs. The portal, expected to be operational in phases starting January 2006, will facilitate among other things, filing of statutory information, inspection of company documents and requisition of certified copies?all online. This will ensure speed and certainty in the delivery of MCA services. Significantly, MCA21 will also undo the errors and omissions of the past 50 years in the upkeep of corporate information, as the project is also cleaning up the present information resource. By its very unique design, MCA21 shall contribute to the establishment of a healthy business eco-system and facilitate statutory compliance. All records, which currently occupy substantial space in the RoC offices and make it difficult to file and retrieve, are being scanned into electronic documents. How mammoth is this project? It involves digitisation of nearly six crore sheets of existing documents?not only memoranda and articles of association, certificates of incorporation and subsisting charge documents, but more significantly, mandatory documents such as annual returns, balance-sheets as well as annual reports from 2003-04 onwards. It will also include several other statutory forms. All this will be done on an ongoing basis for existing as well as new entities. ? For corporates, it will become simpler to incorporate a new firm and file returns ? Public access to records and investor grievance redressal will improve ? Moreover, government will be able to ensure proactive, effective compliance It is interesting though, that MCA21 is viewed by most as an e-filing mechanism to make life easy for corporate India and for RoC offices. What I see in this initiative are totally different dimensions?the opening up of vital corporate information to the public, better compliance of laws by the corporates and a more efficient system for redressal of investor grievances. The online facility of inspection of documents or obtaining certified copies of documents is an empowerment that has not yet been recognised, and about which little has been written or talked about. In my assessment, only about 5% of economic activity in India is in the listed domain; 95% is out of it. So typically, it is very difficult to obtain information on this large segment. Even for the listed companies, not all corporate or financial information in easily available...for instance, information about the unlisted holding companies that are often closely held, or articles and memoranda of association, or even the latest registered office addresses or the latest lists of directors. MCA21 will open up a whole new world of information on the Indian corporate sector, by becoming the largest ever repository of corporate information that is internet-enabled. Over a period of time, this will only grow with new electronic documents. When the system goes live, the records of any company can be viewed from anywhere through the internet, for a fee. Significantly, those who do not have the necessary computing infrastructure can seek the services of a facilitation centre at 53 locations across the country. What is also likely to emerge is that the new information resource will be increasingly utilised to produce derivative and value-added products, quite like what is being done by scores of analytics companies who draw upon raw data on listed companies from the BSE/NSE websites and then offer intelligent services. In fact, MCA21 offers value to almost everyone. For corporates, it will become simpler to incorporate a new company and file annual returns and other statutory documents quickly. Public will get easy access to relevant records. Professionals will be able to offer efficient services to their client firms. Financial institutions will find registration and verification of charges easy. Investors would find the system for redressal of their grievances more efficient. Additionally, at another important level, the government will be able to ensure proactive and effective compliance of relevant laws. A hidden benefit of the new system is the pressure it would put on companies for compliance. Presently, companies get away by paying small fines, for example, even for non-filing or delayed filing of annual returns; a transparent publicly-accessible system would lead more companies to avoid public shame and media criticism. The challenge for MCA21, of course, would be to ensure smooth and seamless functioning, and continuing adaptation with the rapidly changing market scenario. The writer is the managing director of PRIME Database