Corporate Affairs Ministry (MCA) is now looking to leverage artificial intelligence to understand the level of corporate compliance and act on erring companies and professionals. For this purpose, it has set up a Central Scrutiny Centre (CSC) for carrying out scrutiny of Straight Through Processes (STP) e-forms filed by companies under the Companies Act.
After scrutiny, this CSC will forward findings to the concerned Registrar of Companies (RoCs) for further necessary action under the Company law, the MCA has said.
The CSC, which will be located at the Indian Institute of Corporate Affairs (IICA) in Gurgaon, will function under the administrative control of the e-governance cell of the MCA.
Aseem chawla, Managing Partners, ASC Legal said " To enhance the oversight process and improve verification related process & checks and balances; the constitution of Central Scrutiny Centre is being envisioned. It would be interesting to see what protocols are put in place including AI related assistance by the newly proposed centre"
Manu Varghese, Partner, White & Brief Advocates & Solicitors said that Rule 10 of the Companies (Registration Offices and Fees) Rules, gave powers to the Registrar to examine STP e-forms, at any time after filing. This indefinite period was a cause for concern for persons filing through STP. With the establishment of the CSC, one can hope that the indefinite wait is over and time limits will be specified for scrutiny of STP e-forms, bringing much needed certainty and clarity to filings under the Straight Through Process, Varghese said.
Raj Bhalla, Partner, MV Kini, law firm saiid “In short, ROC Forms which are filed on Straight Through Processing (“STP”) will be under Scrutiny by CSC which will be more of a concern for those who certify these forms. It will be checked if all the compliances required for the said forms are in place and whether the requisite attachments are there or not”.
Seemingly it may appear to cause a delay as another stage of scrutiny is introduced but actually it would result in quicker approval as all the requirements would be ensured, Bhalla added.
Kalpana Unadkat, Partner, Khaitan & Co, said that the important test for the Central Scrutiny Centre (CSC) would be whether the new process helps in improving the user experience or it will become another layer of activity thereby defeating the objective - of ease of doing business.
If the CSC is able to assist in identifying non-compliances by the defaulting companies and help in better enforcement, it will be an improvement on the existing system, she added.