10 February 2021

Random E-Scrutiny of Corporate filings by the MCA

The Ministry of Corporate Affairs (MCA) is about to launch later this year, a random digital scrutiny of Company filings because it wants to enhance compliances by the Corporates and to improve supervision on their workings.

This new e-scrutiny will be undertaken in the manner as is already been done by the Income Tax authorities in which a few returns are been taken up randomly for scrutiny. This methodology can have a system of red flags, which would include frequent resignation by auditors or directors, Companies with a low paid-up capital but high turnover or high level of related-party transactions etc. The Ministry is deciding upon the percentage of returns that will be taken up for electronic scrutiny.

The new electronic system will instantly alert the Corporates in case they miss the deadline for submitting returns or any other compliance. Similarly, all the Corporates which are in non-compliance can be tracked and can be asked to comply with all the applicable regulations.

In addition, the MCA in order to make compliances more easier, is moving to an auto filing regime for returns. In this proposed system, a web-based form will be implemented that will replace the current system.

The key motive of the Ministry is to improve compliance by the Companies, while undertaking a series of steps to make life easier and to promote ease of doing Business, including through decriminalisation of laws.

Source–Times of India