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The Corporate Affairs Ministry (MCA) has released a policy for pre-legislative consultation and comprehensive review of existing rules and regulations prescribed under legislations administered by it.
It has also decided to initiate a comprehensive review of all the rules prescribed under the legislations.
Comments/ suggestions on the rules have been invited from stakeholders through the e-consultation platform on the MCA website. The deadline for comments/suggestions is 30 days from the posting of the rules on the e-consultation module. In the first phase, rules relating to Companies Act 2013 and LLP Act 2008 would be posted for comments/suggestions with effect from January 25.
Currently, the MCA administers seven legislations for framing of rules.
Norms for public consultations
MCA has framed a new comprehensive policy — in effect from January 1 this year — for public consultations both during the f framing and review of rules and regulations, as outlined in para 100 of Budget Speech (2023-24). A separate policy has been prescribed for the framing of rules by the ministry and by regulators.
Finance and Corporate Affairs Minister Nirmala Sitharaman had said in her budget speech, “To simplify, ease and reduce cost of compliance, financial sector regulators will be requested to carry out a comprehensive review of existing regulations. For this, they will consider suggestions from public and regulated entities. Time limits to decide the applications under various regulations will also be laid down”.
The MCA has made it clear that the divisions concerned and the regulators constituted under various statutes administered by it would comply with the policy as far as it’s practicable and within the statutes.
Also, where there is a statutory provision on the subject, or manner of consultation, it must be followed, MCA has said.
Effective January 1, the new policy stipulates that for framing of rules by MCA, the draft principal rule or any draft amendment to the principal rule (including any form annexed to the rules) must be prepared along with an explanatory note.
This explanatory note must mention the issue/difficulty that the proposed amendment seeks to address; the manner of implementation of the proposed rule; and the manner, process and timelines for receiving comments from public.
Also, after approval by the authority concerned, the draft formulation and the explanatory note must be placed on the ministry’s website for at least 30 days. However, the necessity/feasibility, as well as the period of public consultation would be decided by the division concerned, it added.
Where public consultation has been completed for a new rule or amendment, the division concerned may also consider publishing a general response to the comments, not later than the date of notification of the rule.
Also, the date of enforcement of rules should ordinarily be 30 days from notification.
Regulators’ policy
As regards framing of regulations by regulators, the MCA has said that all principal regulations as well as amendments may be placed in public domain for consultations for at least 30 days. The decision on the necessity/feasibility as well as period of public consultation would be taken by the regulator.
Regulators would have to devise a template for seeking public consultation on the proposed regulation, including clause-by-clause feedback.
Regulators may also consider and decide whether public consultations must precede issuance of guidance notes/FAQs.
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