Ministry of Corporate Affairs (MCA): Understand Its Functions, Objectives, and Legal Framework

In the 1950s, the Department of Company Affairs was first constituted after which it remained either a Department or a part of Ministry of Law, Ministry of Finance or Ministry of Commerce until 2004 after which it turned into a ministry and got its present name in May 2007.

What is the Ministry of Corporate Affairs?

The Ministry of Corporate Affairs or MCA was established by the Central Government. This Ministry is responsible for administration of the Companies Act, Limited Partnership Act, and the Insolvency and Bankruptcy Code. ‘Sustained corporate growth with enlightened regulation’ is the vision of MCA.The main duty of MCA is the regulation of Indian businesses operating in the industrial and service sectors. Most of the civil servants in this ministry are ICLS cadre’s members. These officers are chosen based on their ranking in the Union Public Service Commission’s Civil Services Examination (UPSC). The highest position in MCA is that of the Director General of Corporate Affairs and is set at the Apex Scale for the ICLS. Nirmala Sitaraman is the current minister of MCA since 2019.

The Ministry of Corporate Affairs currently administers the following acts:

• The Companies Act of 2013
• The Companies Act of 1956
• Insolvency And Bankruptcy Code, 2016
• The Competition Act of 2002
• The Monopolies and Restrictive Trade Practices Act of 1969
• The Chartered Accountants Act of 1949 (As amended by the Chartered Accountants (Amendment) Act, 2006)
• The Company Secretaries Act of 1980 (As amended by The Company Secretaries (Amendment) Act, 2006)
• The Cost and Works Accountants Act of 1959 (As Amended By The Cost And Works Accountants (Amendment) Act of 2006)
• Companies (Donation to National) Fund Act of 1951
• The Indian Partnership Act of 1932
• Societies Registration Act of 1860
• The Companies Amendment Act of 2006
• The Limited liability Partnership Act of 2008

Functions and Objectives

Some of the key functions and objectives of MCA are mentioned below:

• The Ministry of Corporate Affairs watches over the incorporation and registration of companies in the country under the Companies Act of 2013. It includes various types of companies, which can be public, private and foreign companies.
• It encourages responsibility, ethics, and transparency in corporate governance and makes rules, guidelines and policies which are helpful in corporate governance practices across various companies.
• It protects the interests of investors and builds confidence of the investors in financial system by enacting policies to stop fraud.
• It plays big role in the resolution of insolvency and bankruptcy cases through the Insolvency and Bankruptcy Code (IBC). It speeds up the resolution process and maximizes asset value.
• It ensures compliance with legal requirements and regulations.
• It supervises filings of the companies, performs inspections, and takes enforcement action against non-compliant businesses. It helps to protect the integrity of the corporate structure.

Legal Framework

MCA enforces laws, rules and guidelines that control the activities of businesses. 

• • Companies Act, 2013: It states rules related to the company’s incorporation, governance and management.
  • Insolvency and Bankruptcy Code (IBC): IBC, which was enacted in 2016,  provides a detailed structure for dealing with insolvency and bankruptcy cases. It helps with quick resolutions and protection of interests of the creditors. IBC promotes the ease of doing business.

• SEBI Regulations: The MCA works closely with the Securities and Exchange Board of India (SEBI). SEBI is regulates the securities market in the country to ensure compliance with the corporate governance norms.
• National Company Law Tribunal (NCLT): The National Company Law Tribunal adjudicates corporate disputes and insolvency cases and provides speedy resolution. It was established under the Companies Act of 2013. 

Conclusion

MCA plays an important role in regulation and administration of corporate affairs in India. Due to the regulatory frameworks and initiatives taken by MCA, there is transparency in the corporate sector, investor protections and also economic growth.  

Frequently Asked Questions (FAQs)

Q1. What are the functions of the Ministry of Corporate Affairs?

Functions of this Ministry broadly fall under the following categories –(i) Policy formulation in order to regulate corporate affairs in the country, (ii) administration of policies which have been formulated, (iii) establishment and internal administration.

Q2. What is the aim of the Ministry of Corporate Affairs?

The primary aim of MCA is to provide and sustain in the democratic society in India an ethical business culture in order to facilitate world class governance of corporates so that the country’s investors as well as lenders can confidently commit their funds. MCA promotes competition in the market, protects the interest of consumers; and guarantees freedom of trade carried on by other participants across the country.

Q3. What is the organizational structure of MCA?

The Ministry of Corporate Affairs has a well-defined organizational set-up viz. the Secretariat/Headquarters located at New Delhi; seven Regional Directorates (RDs) located at Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabad and Shillong; fifteen Registrars of Companies (ROCs); fourteen Official Liquidators (OLs) and nine Registrars of Companies-cum-Official Liquidators in States and Union Territories.