Ministry of Corporate Affairs towards Building Ethical and Sustainable Organization

The Ministry of Corporate Affairs is an Indian government ministry. It is primarily concerned with administration of the Companies Act 2013, the Companies Act 1956, the Limited Liability Partnership Act, 2008, Insolvency and Bankruptcy Code, 2016 & other allied Acts and rules & regulations framed there-under mainly for regulating the functioning of the corporate sector in accordance with law. It is responsible mainly for regulation of Indian enterprises in Industrial and Services sector. Ministry is mostly served by the civil servants of the ICLS cadre. These officers are being selected through Civil Services Examination conducted by Union Public Service Commission. Brilliant talent pool of the country serves MCA in different capacities. The highest post of DGCoA is being fixed at Apex Scale for the ICLS. The current Minister of State for Corporate Affairs is Nirmala Sitaraman.

An expert panel set up by the ministry of corporate affairs (MCA) has proposed a new regime for businesses to report how sustainable and responsible they are in addition to being compliant with the law.

The panel led by Gyaneshwar Kumar Singh, a joint secretary in the ministry, has recommended two reporting formats a comprehensive reporting regime and a “lite version”. The reporting requirement is to be rolled out in a gradual manner. Eventually, these filings by companies could be used to develop a business responsibility and sustainability index for firms, the panel has recommended.

The idea is to put pressure on firms to pay attention to how they contribute to the society, going beyond meeting the objectives of shareholders and complying with laws. This would also give investors an opportunity to assess how ethical a company is while making investment decisions.

It also signals the thinking in the Union government that the corporate sector can contribute in meeting the sustainable development goals that the country is committed to meeting, such as poverty reduction, gender equality and adoption of clean energy.

“As a long-term measure, the committee envisions that the information captured through BRSR (Business Responsibility and Sustainability Report) filings be used to develop a business responsibility sustainability index for companies,” said the ministry.

The ministry will work closely with the Securities and Exchange Board of India (Sebi) in implementing the reporting regime, according to the government statement, which quoted the secretary in the ministry Rajesh Verma.

Indian companies aspiring to have a global foothold cannot ignore the emerging trend of corporate governance, which is being responsible businesses, the statement quoted Verma as saying.

Due to the trends of environmental, social and governance investing, the demand for non-financial reporting is growing and the proposed business responsibility framework will set the stage for sustainable investing, the statement said quoting Sebi executive director Amarjeet Singh.

The reporting regime will cover a set of guidelines on responsible business conduct brought out in 2019, which is an updated version of voluntary guidelines issued in 2009. Sebi has already mandated the top 1,000 listed entities by market capitalization to file business responsibility reports from an environmental, social and governance perspective. These enabled business to engage more meaningfully with stakeholders, going beyond regulatory and financial compliance, said the ministry.

The proposed reporting framework will cover both listed and unlisted enterprises.